You’ve probably heard the old joke: “It’s okay if we price below cost. We can always make it up on volume!”
Sometimes it can feel as if that’s what clients and customers want us to believe. As far as we can tell, their life’s work can seem as if it’s to bid pricing lower and lower, squeezing every last dime of profit out of our contracts.
The business press has called this endless squeeze a race to the bottom.
I call it a billionaire’s game, that only the very deep-pocketed can win. They’re the only ones who can afford to take losses on specific business units.
The rest of us need to make a profit.
Profits pay the bills.
Every operation has some overhead – even if you’re a one-person consultancy working from the car you paid off years ago.
And unless you’re a professional hermit, you probably aren’t working this hard just to survive. If I may, I’ll presume you got into business to build a life for yourself and possibly a legacy for your family.
None of that can happen without profits, and rather sizable ones at that.
It’s hard to maintain profit margins if you’re competing on price.
If you’re competing on price, you’re not just struggling to hold onto any extra margin. You’re also struggling to hold onto your clientele.
Because at any moment, the business you won (as the low bidder) could leave you at the drop of a hat, for an even lower bidder.
A better strategy: set your solution apart.
I’ll bet you a hot fudge sundae that none of the businesses in your market are exactly the same. There is at least one thing you do better than most of your direct competition. And probably several ways your solution is better for the customer than doing nothing.
If you can make the case that you’re different from your competition, buyers will be able to justify paying a little more for that difference.
Now, if you take time to write down all the things that are better about your solution, you’ll probably come up with a list that looks a little like this:
- Nicer support reps
- Local delivery
- We take credit cards
- Softer cushions
- Meets government certifications
- Easy to set up
In marketing-speak, we call those features: positive attributes of the product or service. To you, they’re vital – you’ve seated bullets of blood over them.
But they mean nothing to someone who hasn’t yet decided to buy.
First, you need to show people what’s in it for them, personally, and then what’s in it for the people around them who might influence the decision.
- Saves time on AB process, so we can deliver xx more units in a month. (And I’ll look like a hero to my boss.)
- Makes bathtime more fun. (So I’ll be less stressed and have more grownup time after they’re in bed.)
- “Nobody ever got fired for buying IBM.”
- Never worry about Problem X again. (So I can concentrate on the things I really care about.)
- “What a great vacation!” (And I’m so smart – nobody else would have known about this resort.)
Your biggest advantage is in how you make people feel about themselves.
Or how they think they’ll look to people they want to impress.
- “I care about the environment.”
- “This might look more expensive, but it’ll last five times as long.”
- “I know the best when I see it.”
- “Phew! Glad that’s off my plate.”
- “See? They know who I am.”
- “This is really fun!”
That’s what we mean by the customer experience.
Did we show potential buyers that we understand who they are (who they want people to think they are)?
Did we treat them accordingly, from the first time they contacted us right through any after-sale support they needed? Did we earn a second sale, a third – and so on? Most customers won’t be profitable until well after the first sale, given the costs an organization often incurs to move that customer along the pipeline.