Walmart has reverted to lowering prices.

Walmart’s recent price cuts indicate that its attempts to change its business model aren’t faring well.  For decades Walmart has enjoyed tremendous success with its “Always low prices, always” strategy.  The length of its run has far exceeded that of most businesses for one simple reason.  Walmart has a passion for cutting costs.

Unfortunately, as is always the case with a low-price strategy, Walmart has hit the floor on cost cutting. You need no further evidence than the change in its tagline from “Always low prices, always” to “Spend less. Live Better.”

To its credit Walmart realizes that it has hit the cost floor and it has been attempting to change its business model. However, it is discovering just how difficult that is.  Walmart’s customers have become accustomed to thinking of “Walmart” and “low price” as synonymous terms.

Any attempt to change a company’s business model, whether it’s Walmart or any other business, involves the creation of a clear, new direction and equally clear communication of that new direction. Otherwise you simply confuse buyers.  It’s counter-intuitive, but clear communication of your new strategy will allow you to minimize the revenue losses you experience during the transition period.

Walmart has not created a clear strategy as evidenced by its recent price cuts in the face of declining sales. It has also has failed to acknowledge that it’s going to lose sales during the transition from its old low-price strategy to its new, albeit ill-defined strategy.  Until Walmart can define and communicate its new direction clearly and concisely, I’m afraid that it will continue to be the victim of its own strategy.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get Pricing for Profit online from Borders.com, BarnesandNoble.com and Amazon.com.

There are lessons to be learned from bankers…

…unfortunately, it’s from their failings.

In fairness to bankers, and you, I have to admit I’ve been a very vocal critic of the banks for decades. Now that I’ve admitted my bias let me share with you why. There are typically two comments that I hear when talking to bankers:

• Money is a commodity.
• Our customers don’t value a banking relationship.

Let’s deal with the commodity comment first. My experience has been that there are many commodity products out there, but very few commodity businesses. There are very few things to which we can’t add value through enhancements or service. Those bankers who feel that money is a commodity aren’t seeing those opportunities. If you’re one of those bankers, or you feel that you’re selling a commodity, bring someone in from the outside to help you add value to your offerings. You won’t be able to do it alone.

To those bankers who feel that their customers don’t value relationships I ask “What kind of relationship are you providing?” The reality is that most banks, at least most of the larger banks, have three operating units – the deposit group, the lending group and the wealth advisory group. Typically these are separate operations so that there is little, if any, collaboration among them. There is also little, if any, bundling of the three group’s offerings to tailor the offerings to the customers’ needs.

Finally, the compensation for those who generate sales in each of these areas is based on gaining new deposits, making new loans or managing new portfolios. Once the sale is made, the account is transferred to the back office for processing. There is little, if any, reason for the person making the sale to continue visiting the customer. Hence the question “What kind of relationship are you providing?”

It’s counter-intuitive, but organizational structure and compensation programs can enhance or diminish the customer’s experience and your ability to command higher prices for your products and services. If you’re not getting premium prices, determine whether or not you’re using a page from the bankers’ handbook – viewing your offering as a commodity or touting a non-existent relationship as a value proposition.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.

You can get Pricing for Profit online from Borders.com, BarnesandNoble.com and Amazon.com.

If you want leverage in a sales call…

…quit selling and start assessing.

At some point in the sales call I’ll say “My experience has been that my clients and I enjoy our greatest success when…(I list the four criteria above).”  I can’t tell you how often I’ve had prospects ask “Do I qualify?”  Talk about changing the dynamics of the sales call!

The prospect learns that they aren’t the only ones who are involved in the decision.  That I am evaluating them as a prospective client as much as they are evaluating me.  That’s as it should be; it should be a joint decision.

It’s counter-intuitive, but the key to closing more sales quickly is letting buyers know that they aren’t in control of the decision-making process.

How do you decide what price to charge?

How well is that working?

Most of us know the shortcomings of our offerings and immediately ascribe higher value to our competitors’ offerings – even though we know that there are aspects of our offerings that outshine theirs.  A better alternative is to look at businesses who target the same market you do, but who don’t compete directly with you.

For example, if you’re selling mid-range bourbons like Seagram’s VO instead of its high-end Crown Royal or low-end Seagram’s 7, you might want to check the pricing at a J.C. Penney’s store to see how their prices compare to Nordstrom’s and Walmart.  You’ll quickly get a sense for the types of price premiums these organizations are getting and what premiums are available to you as well.

Don’t just choose one group though; you could get a distorted view of the market.  In our example, in addition to looking at J.C. Penney’s you might look at mid-range confectioners to see how their chocolates are priced versus the high and low-end chocolates.

You could look at the premiums that Toyota gets for its Camry versus the Avalon or Yaris.  While the premiums might be less for big-ticket items like these cars, this kind of comparison can help you establish a floor for the premiums you charge.

It’s counter-intuitive, but looking at non-competing companies who serve the same markets you do provides a more objective evaluation of the premiums available to you than you can get from your competitors’ pricing.

Discover how easy it is to command higher prices for your products and services, call me at 314-707-3771.