If so…

…should they be?

If I had a nickel for every time a business owner told me that he or she needed to be competitive, I’d need a vault larger than Fort Knox to house them.  Should ‘being competitive’ be a goal?

Not according to Richard ‘Mack’ Machowicz.  In his book, Unleash the Warrior Within, this former Navy Seal says “We (Navy Seals) don’t train to fight, we train to win.”

Applying that concept to business, pricing to be competitive is the equivalent of training to fight. Creating exceptional value (buyers’ perception) and charging premium prices for that value is training to win.

It’s counter-intuitive, but choosing to be competitive is choosing mediocrity.  If that satisfies your needs, stick with it.  It’s not my intent to dictate your lifestyle; that choice is yours and yours alone.

But if you’re tired of working your tail off and getting less than you desire from life, find a way to create value that buyers’ are willing to pay premium prices to get and price your offerings accordingly.  The only downside is that you can no longer claim to be competitive.

To discover how you can break the bonds of industry pricing call Dale at 314-707-3771.

Are you stimulating consumption…

…or leaving it to chance?

Scott Aughtmon in his book, Survive and Prosper in a Recession http://www.RecessionSolution.com, interviewed a host of business growth/development experts and shares their wisdom with you.

One tip that hit a chord with me came from Alex Mandossian http://www.alexmandossian.com who says “If you teach your customers to ‘consume’ more, more often, you’ll literally double your business without acquiring a single new customer!”

He cites Prell and Pantene shampoos that include directions for using their products, Arm & Hammer’s reminder that their baking soda freshens drains and restaurant menus that make wine suggestions for each of its entrees.

The same can be said for services.  Let’s say that you’re in the business of training call center workers. There are two realities that every call center faces – high employee turnover and the human tendency to return to old habits in times of stress.  If you’re not selling ongoing training and coaching to help your customers deal with these issues, you’re not serving your customers well and you’re leaving a ton of money on the table.

None of us, neither Scott, Alex nor I, are suggesting that you recommend consumption that isn’t in your customers’ best interests.  That’s a short-sighted strategy with long-term failure written into its DNA. Buyers can tell when we genuinely care about them and when we’re trying to take advantage of them. Find legitimate ways for your customers to consume more, then share those ideas with them.

It’s counter-intuitive, but educating customers on how to consume our offerings is essential to a great customer experience.  Couple this tip with premium prices based on the value you provide and you’ll enjoy significantly higher sales and profits with a lot less work.

To discover how you can break the bonds of industry pricing call Dale at 314-707-3771.

You can wait for the inevitable…

…or take charge of your destiny.

All excesses are eventually reversed.  Many liken the way world works to a pendulum.  When it moves too far in one direction the pendulum inevitably drops and its momentum carries it to the limit on the opposite side of the arc.  Then the process is repeated.

As I’ve said in previous blogs, we’ve been in a discount economy for three decades or more.  During this time we, as sellers, have trained buyers to focus on price. Eventually we’ll retrain them to buy on value because there is little room to lower prices.  Indeed, we’re seeing the first signs of this trend developing.  Even Walmart has moved from “Always low prices, always” to “Save Money. Live Better.”  A sign that their low-price strategy has run its course, as all low-price strategies do.

Unfortunately waiting for the inevitable when your suffering simply prolongs that suffering.  Those who recognize that the shift from a price focus to value focus is under way and take action to help their buyers understand the value of this shift, will suffer less than those who don’t.  Indeed, the leaders in this movement will enjoy a quicker recovery – a speedier return to the business success they once enjoyed.

Winston Churchill put it this way “If you feel like you’re going through hell, keep moving.”  Those who continue to discount have stopped moving in a hell they’ve helped create.

As sellers we can accelerate the recovery by:

It’s counter-intuitive, but we have a great deal more control over our future than we realize.  Those who lead the charge in ending the discount economy will be rewarded with higher revenues and greater profit margins.  They’ll have the profits and cash flow to invest in creating new value and expanding their lead over their competitors.  The question is “To which group will you belong?”  The choice is yours.

To discover how you can break the bonds of industry pricing call Dale at 314-707-3771.

Great strategy?

Or sheer folly?

It’s early spring.  I’m listening to the radio when I hear an ad for the premier carpet cleaning company in our city. The woman in the ad is telling her friend how awful her carpets after having dirt, sand, salt and grime tracked in all winter long.  Her friend recommends the carpet cleaning company touting all of its benefits.

The ad is clever and well-constructed until the friend says that the company is offering a discount.  What? Offering a discount during peak selling season?  Why would they do that?  Ostensibly, to increase market share, right?

Is that a good strategy?  Let’s play this out to its conclusion.  First, the company is giving up profit margin with its ideal customers to garner a larger share of the market.  It’s peak selling season. They’re already swamped with orders yet they’re pursuing more orders with their discounts.  How is the work going to get done?  Overtime and temporary help.

Employees that work incredible amounts of overtime are fatigued.   They’re going to make more mistakes. That’s going to hurt the company’s reputation. Indeed, given the claims made in their ads, the company has set expectations that they aren’t going to be able to fulfill.

Temporary help is an alternative, but these workers aren’t as knowledgeable about the process.  They, too, are going to make mistakes and damage the company’s reputation.  Plus it’s going to take them longer to complete the work. Not only does the company incur additional costs, it angers a lot of customers because the temps are consistently behind the schedule that they were given.

Then there’s the strain on equipment.  When the company is operating it’s equipment at full tilt 12 to 14 hours a day, six or seven days a week, there’s no time for maintenance.  When the equipment breaks down, which it inevitably does in this environment, it throws the entire schedule off; once again, damaging the company’s reputation.

Of course you could add more equipment to handle the increased demand, but then what do you do with this excess capacity in the off season?  Offer more discounts?

It’s counter-intuitive, but offering discounts in peak selling season to garner a larger share of the market is one of the costliest strategies this company, or yours, could possibly employ.  Don’t fall into this trap.  When it’s peak selling season, hold your price.  You’ll not only enjoy greater profits, you’ll do so with fewer headaches.

To discover how you can get higher prices for your products and services, call Dale at 314-707-3771.

One of my favorite vendors…

I’ve had my cellphone with the same provider for close to six years.  Yes I’m a late adopter when it comes to new technology. What can I say; I’m a dinosaur.

I’ve always been pleased with the friendliness and helpful attitudes of the people at the local store.  In those few instances when I’ve had a problem I received quick, no-excuses resolution of my problem. They’ve also guided me well in terms of the type of phone that would best fit my needs – until now.

During my last upgrade I moved to a PDA that allowed me to keep my contact list and calendar with me at all times in electronic format.  I do not, however, wish to retrieve emails or surf the net via my phone.  I’d rather use my time away from the office to mentally replay my client and prospect meetings to learn more effective ways of helping them.  Or use that time to consider new markets and marketing approaches.

Fortunately, with my last upgrade I didn’t have to purchase the internet access services.  I’ve been told by my supplier that, in the future, I will have to purchase the plan to get a PDA.  Hmmm.  Do I want to continue with a supplier that is forcing to take and pay for things I don’t value?  More importantly, are you establishing offerings that are causing your customers to question whether or not they want to do business with you?

It’s counter-intuitive, but in every business there are customers who desire different levels of quality, service, et cetera.  If you provide what they want, in the form they want it, they’ll pay a higher price to get it.

I would pay more for the PDA device than someone who purchases internet access and still feel good about the purchase.  Why?  Because I’m getting what I want and I understand that people who buy bundled offerings often end up paying less for any given component than they would if they purchased that component separately.  It’s a concept with which most buyers are familiar.

Recognize that your customers’ needs don’t always evolve at the same rate.  Offer options that makes sense for where they are in that evolution and they’ll buy the higher end package when they’re ready. Mandate that they purchase something they don’t want and you lose that potential sale.

To discover how you can break the industry pricing and keep your loyal customers, call Dale at 314-707-3771.

How are your policy decisions…

…affecting your ability to get higher prices?

I’m sure that you can recall a buying experience so exquisite that you drove out of your way and paid higher prices to gain that experience again and again. That’s the experience you want your customers to have.  That’s the loyalty you want from your customers.

What isn’t so obvious are all the factors that influence the customer’s experience.  Here are a few of those factors:

It’s counter-intuitive, but pricing is more than quantifying value and establishing a price.  Any operating practice you employ has the ability to enhance or diminish the customer experience as well as your ability to gain or maintain premium pricing. Today, we’re going to look at the policy decision-making process.

How do policies get set in your organization?  Are they established by the owner of the business, the CEO in larger organizations, by senior leadership within the organization or by senior leaders each of whom have the right to establish policies within their area of operation?  Regardless of how the policies get established here’s a common problem – the policy is reactionary.

Customer payments slow so we install a “no ship” policy for customers whose receivables are over 60 days old.  We also set our credit and collection people about the task of bringing down the average age of the receivables.

Returns are increasing so we initiate a “no return” policy or tighten an existing policy.  But that’s not something we want to publicize, so customers find out after they make the purchase rather than prior to the purchase.

We’ve been providing a free service and now realize that it costs us more than we thought and we being charging for it.  Think airline baggage handling and bank service charges.

Each of the examples above happen everyday.  You can tell from the policy that no consideration was given to the impact the policy would have on the customer’s experience.  So what’s the solution?

Establish a policy-making process that looks first at what your company is doing that causes your customers to behave the way they do.  We live in a reciprocal world which means that if your customers are frustrating you, you’re doing something to frustrate them.

When crafting a solution (policy) make sure that serious consideration is given to the question “How will this impact our customers’ experience?”  If it doesn’t enhance the experience, keep searching for a solution that does.

Establish a policy-making group made up of representatives from each of the major operating areas of your company, who also possess a customer orientation.  That may or may not be the senior leader in that area.  The key is to have people who can effectively evaluate the impact a new policy decision will have on their operations and the customer – with greater emphasis being placed on the customer.

Pricing for Profit is available at Borders.com, Amazon.com and BarnesandNoble.com.  If you’d like to break the bonds of industry pricing call Dale at 314-707-3771.

Marketing messages must be great stories…

…about the true hero.

I wish I could remember the source of this elegant language for the person certainly deserves the credit for this incredible bit of wisdom.  I’m paraphrasing, but after reading a marketing piece, the individual said ‘that’s a great story, but it’s the wrong hero’.

The marketing piece had discussed the company, not its customers.  That’s why it was about “the wrong hero.”

If you want your marketing messages to translate into sales at premium prices, tell stories in which customers and prospects can experience the joy of your offerings – even if they haven’t tried them yet.

One of the fascinating aspects of the human mind is that we can experience emotions as vividly today as when we first experienced them.  Tie your offerings to an experience that everyone has had that elicits joy.

Remember, there are only three things that any of us sells – image, innovation and time-savings.  So when you’re selling image, help them experience the joy of having others admire and emulate them.

With innovation, make the story about the fun and excitement of playing with the latest, greatest toys or our childhood curiosity when everything was fascinating.

For time-savings, the story highlights the joy of spending more time with family and friends, traveling or just kicking back in a hammock on a beautiful spring day.  If you’re selling business to business and the time savings translates into greater revenue-generating capabilities, make the story about the joy of growing a successful business – one that’s the envy of their competitors.

It’s counter-intuitive, but the less said about your company and what you do, the greater the likelihood that your marketing messages will bring buyers through the doors.  More buyers, mores sales, at your price.  Now that’s an experience that’ll bring a smile to your face.

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.

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.