Everyone likes and appreciates a good deal. There are buyers who just aren’t happy unless they beat you down on price. But there are buyers who are willing to pay a premium price to experience and enjoy the best their money can buy. There’s just something special about extraordinary value that supersedes price. So why is it that so many leaders are quick to whip out their machetes and slash price? Does slashing price make you stand out from the competition? If you believe it does, what’s the hang time on that differentiation? Yes, for that nanosecond, you’ve got the spotlight – until your competitor trumps you with a better price.
Competing on price is an ugly game. Because profit margins are squeezed tight, competing on price forces your company to focus on volume sales. It gives your company permission to dial down its commitment to delivering extraordinary value. And there’s nothing more exasperating than a company that’s frantically busy and not making money. It’s even worse when efforts to compete on price do little or nothing to increase sales. Fact: Competing on price means working harder for less. And in these economic times, working harder for less is not something you want more of.
Here are some no-compromise strategies to compete on extraordinary value:
- Delivering “average” is easy: Competing on price is easy. Competing on a platform of extraordinary value is going to require more work than you’re doing now – a lot more. Value comes from paying attention to details. It doesn’t matter if you’re building a product or delivering a service, delivering “average” doesn’t wow anyone. As leader, it’s your responsibility to set the value bar high – and keep it there. Delivering value must begin with you.
- Make price irrelevant: What would happen if you established a company mandate that any and all strategies that involve price be centered on adding value? Take competing on price off the table and lead your team to apply their innovative thinking to delivering extraordinary value. I bet there are five strategies your company can implement right now that would lay the foundation for making price irrelevant. Things like lifetime guarantees, faster and/or free shipping, after-purchase follow-ups, delivering an unexpected “thank you” gift, a warm smile, or a new and improved spin on features and benefits, can shift attention away from price. Again, making price irrelevant takes work and thinking outside your box.
- Check your audience: If you’ve been getting beat up on price, you may be selling to the wrong audience. Companies, products, services and markets evolve over time. Whether by need or design, business models change and get out of sync with your once tried and true customer base. If your company built its business on price and that strategy is no longer working for you, it’s time to find a new audience that’s in sync with your new business model.
- It’s all about profit margin: Competing on price cannibalizes your profit margins. Shave your profit margins too thin and you’ve opened the door to a self-inflicted cash-flow crisis. It doesn’t matter if you’re in a service business or make or sell products, delivering extraordinary value is the best strategy to protect your profit margins. Groupon is perhaps the easiest and fastest way to destroy your profit margins while helping Groupon protect theirs (even though the company has yet to create profit). Pay attention to and protect your profit margins and you’ll quickly shift your strategy from competing on price to delivering extraordinary value.
- Be bold: Competing on price is exhausting. Competing on extraordinary value is bold and empowering. It’s a commitment to be best in class – to stand out in a crowded marketplace where “average” has become an expectation. What’s the worst that could happen if you competed on delivering extraordinary value? What would happen if the next time you were tempted to discount or compromise on price to make a sale, you shifted to adding value instead? Would it be the end of the world if you walked away from a deal because you wouldn’t cave in on price? No-compromise leaders are not afraid to be bold.
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Neil Ducoff, Founder & CEO of Strategies and author of No-Compromise Leadership
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