Don’t discount. Differentiate.
There’s an old saying: “Good, fast, cheap—pick two.” If you want a top-notch product fast, you’ll need to pay more. Want your package overnight? Pay more. Want your package by 10:00 a.m.? Pay more. The same principles hold true in B2B sales, but customers don’t instinctively get the message. It’s their job to get the best possible deal, and they will always try for a lower price. Wouldn’t you?
We get what we pay for. We all know that. Cheap products fall apart. So do cheap business solutions. We’ve all had customers who managed to snag a “great deal,” only to find the wheels coming off soon after the transaction was complete. Then they had to spend even more money to fix a problem that shouldn’t have even occurred. It’s our job as salespeople to let our clients know that “cheap” doesn’t always cut it.
In this week’s guest post, Geoffrey James shares six ways to stand out from the cheaper options:
“When you’re selling against a lower-priced competitor, you have two basic choices: discount or differentiate.
Discounting is easy, but it reduces your profit, especially if you get caught up in a price war. Therefore, if you can, it’s always better to differentiate than to discount. There are six ways to do this:
- Differentiate by Feature
Highlight some element of your product or service that the competition’s product lacks. If the customer sees that feature as a “must-have,” it will justify the higher price. Example: The Apple Watch offers more features than the currently available “smartwatches” and is accordingly more pricey.
- 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 by providing objective test results. Example: Television commercial comparisons between (more or less identical-seeming) automobile brands.
- Differentiate by Convenience
Make your product easier to purchase and support as compared to the competitive alternatives. Example: Amazon, unlike traditional brick-and-mortar bookstores, offers buyers the ability to quickly choose from a huge inventory. As a result, they now dominate the book distribution business.
- Differentiate by Special Knowledge
Customers will prefer doing business with your firm (and will pay more) if you are seen as being uniquely knowledgeable about the customer’s business. Example: When CPA firms (like Arthur Andersen) launch consulting practices, companies that hire the CPA firm to audit their books often hire consultants from the same firm. The assumption is, of course, that those consultants are already deeply familiar with the inner workings of the customer’s firm and, therefore, worth the higher cost.
- Differentiate by Strategic Relationship
Customers are willing to pay more for your services when 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 and acting as a purchasing liaison to IBM.
- Differentiate by Personal Relationship
Customers, as a general rule, prefer doing business with people they like personally, even if that means paying a bit more for the same service. Example: I prefer buying insurance from my long-time agent (whom I’ve known and liked for 25 years), rather than trying to find something cheaper on the Web.
Ideally, you want to cultivate as many differentiators as possible, so that your customers see the very idea of jumping to a competitor as impractical and foolish, even if the competitor’s offerings cost less.”
About the Author
Geoffrey James is a contributing editor and sales blogger for Inc.com and the author of Business Without the Bullsh*t: 49 Secrets and Shortcuts You Need to Know.