by Charlotte L. Hanna CMO/Director of PMR/CMBS Global
Competition in the world marketplace is stiff these days. Healthy competition is normally a good thing, but when competitors are offering the same services and products as yours at cheaper prices, it also becomes a challenge to find creative ways to sell more and maintain your level of success.
One easy way to overcome a competitor’s lower pricing is by offering your customers a discount. However, it also carries the increased risk of vulnerability to you should your competitors, in turn, employ further price cuts. Your bottom line may quickly become ‘invisible’…a real danger to the survival of the small business owner.
Geoffrey James, award-winning journalist and author of the “Sales Source” column on Inc.com, offers the following 5 ways to overcome competitors’ cheaper prices without discounting your own. He calls it Differentiating and (though the examples are from large firms) here is what he suggests will work for even the small business owner:
1. Differentiate by Feature
Highlight some element of your product or service that the competition's product lacks, so that the customer sees that feature as a "must-have" that justifies the higher prices.
Example: Apple's devices offer (among other features) a wider range of apps than Android devices, thereby commanding a higher overall price.
2. Differentiate by Quality
Point out that your offering, though superficially similar to the competition's, is actually better made and/or more durable. The best way to do this is to provide objective test results.
Example: Television commercial comparisons between (more or less identical-seeming) automobile brands.
3. Differentiate by Convenience
Note that it's easier to purchase, get support for, or resell your offering, as compared with the competition's.
Example: Amazon.com, unlike traditional brick-and-mortar bookstores, offers buyers the ability to quickly choose from a huge inventory, as well as the option of reselling purchases.
4. Differentiate by Pre-existing Relationship
The customer prefers doing business with your firm because you are seen as a resource with unique and specific knowledge about the customer's business.
Example: When the erstwhile "big eight" public accounting firms launched consulting practices, customers often hired them at premium prices because those customers valued the business understanding that came from auditing their finances.
5. Differentiate by Strategic Relationship
The customer prefers doing business with your firm because your firm is intimately involved in the development of an important part of the customer's own business strategy.
Example: IBM sales reps in large accounts often act as general IT consultants and informal members of the customer’s IT staff–helping to guide overall IT strategy as well as acting as a purchasing liaison to IBM.
Mr. James also goes on to point out the benefits of using multiple strategies for showing promoting your beneficial differences and standout qualities.
Remember also: If you depend on the revenue of one or two larger customers or higher-paying clients, make certain that those one or two know and understand and value what differentiates you from your competitor and be very sure that they also know and understand how much you value their loyalty! Treat them well, leave nothing to chance and keep them wanting more. Help them to see how running to a competitor will not benefit them and could possibly involve unforeseen costs, even though the immediate prices appear to be cheaper.
What successful ways have you discovered to sell more than your cheaper competitors do?