November 2011

Shannon Wells

Better Business | by Neil Ducoff

 

Compete on Extraordinary Value -- Not Price

There are buyers who are not happy unless they beat you down on price.

However, there are buyers who are willing to pay a premium price to experience the best their money can buy.

There is 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 prices? Does slashing prices make you stand out from the competition? If you believe it does, what is the hang time on that differentiation? Yes, for that nanosecond, you have 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. There is nothing more exasperating than a company that is busy, but not making money. It is even worse when efforts to compete on price do little or nothing to increase sales. The fact is, competing on price means working harder for less.

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 work.

Value comes from paying attention to details. It does not matter if you are building a product or delivering a service, delivering average does not wow anyone. As a leader, it is your responsibility to set the value bar and keep it there. Delivering value must begin with you.

Make price irrelevant. What would happen if you established a company mandate that 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.

There are five strategies your company can implement right now that would lay the foundation for making price irrelevant. Lifetime guarantees, faster or free shipping, after-purchase follow-ups, thank you gifts or even a warm smile can shift attention away from price. Making price irrelevant takes work and thinking outside your box.

Check your audience. If you have 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. If your company built its business on price and that strategy is no longer working for you, it is time to find a new audience that is in harmony with your new business model.

It is all about profit margin. Competing on price cannibalizes your profit margins. If you shave your profit margins too thin, you have opened the door to a self-inflicted cash-flow crisis. It does not matter if you are in a service business or make or sell products, delivering extraordinary value is the best strategy to protect your profit margins. Pay attention to and protect your profit margins and you will 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 is a commitment to be best in class -- to stand out in a crowded marketplace where "average" has become an expectation. What is 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 would not cave in on price? No-compromise leaders are not afraid to be bold.

Neil Ducoff is the founder and CEO of Strategies, a business training and coaching salon specializing in the salon and spa industry. Ducoff is the author of Fast Forward, and his new book, No-Compromise Leadership, is available at www.amazon.com. For a signed copy, go to www.strategies.com You can email Neil at neil@strategies.com