Why You Never Compete on Price

Dangers of Competing on Price

Dangers of Competing on PriceIn August's Insiders' Club Newsletter, one of things we discussed was the danger of selling your product exclusively on price.

This morning, one of my colleagues, Jay Levinson, sent me a quote I thought you should see:

"If you think you can match or sell below your competitor's prices, you need to understand that you will have an ongoing, lifetime gun battle of survival which, sooner or later, you are going to lose. There is nothing that is ever going to make that go away."
- Lawrence L. Steinmetz

Jay also went on to say:

The way to increase your profit margins is by becoming the first and only choice for your customer and prospect. That means you negotiate for the work rather than bidding on it. And the surefire way to do that is to distinguish your business by excelling at customer service.

Easy for me to say. Not as easy for you to do, unless -- you can develop your competitive edge in five areas:

  • Competitive, but not necessarily lower, price
  • Quality that is unmistakable from the moment of ownership on
  • Service that truly does transport customers into a state of bliss
  • Marketing that is aggressive, constant and omnipresent in all media
  • Delivery of absolutely everything you promised and then more

A survey of 500 executive women reported that 79 percent say good service is their prime consideration in selecting a restaurant. A MasterCard study reported that of the top ten reasons diners select the restaurants they do, six have to do with service, three with food quality, and only one with value. None were about the lowest price.

In the area of quality, guerrillas recognize that the true quality comes when you customize the product or service to the client's unique needs. Peter Drucker reminds us that quality in a service or product is not what you put into it, but what the client or customer gets out of it.

In the area of service, one-to-one service is the only name of the game. There is hardly any relationship between good customer service and real customer loyalty. To earn that loyalty,an element of emotion must enter the equation. Your customers must love you and you must be able to meet and exceed customer expectations more than create perfect products.

The best way to render superlative customer service? Let your customers train you. Let them teach you exactly what they expect, what they want, what they need. Learn from them so you can treat them they way they pray you'll treat them. Customer service can only be taught by customers. And only world-class listeners are able to learn from them. They learn then to address the needs of their customers rather than their own needs.

Thank you, Jay!

And to my Insiders, I hope this helps to remind you just how important it is to keep your focus on delivering the greatest advantage and benefit to your clients ... we want you to be the obvious choice so that price is not the primary consideration for you earning their business.

With much gratitude,
Charlie

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