How to Compete on Value, Not Price
March 22, 2013 at 2:11 PM
Use these three steps to get customers to look beyond price to see the value your company truly offers.
There are lots of ways to create value. Value can come from tangible factors, such as the financial return a customer gains from using your product or service, or from intangible ones such as image or “peace of mind”. The fundamentals are always the same. Sell on value not on price.
Make your target customer your best friend.
To successfully compete on value, you need to know everything about your target customer and your market. That includes:
- Who will be using your product or service?
- How will they be using it?
- What product or service will you be replacing?
- How does your prospect make buying decisions?
- What pain points does your prospect need addressed?
- What does your prospect think about your competitors and their offerings?
- How does the competition promote, price and sell its product or service?
Here’s how you’ll build this knowledge base:
- Attend events where your prospects, customers, or other market players are speaking.
- Talk with your current customers and ask questions. Get them to give you honest feedback on your service quality or product performance.
- Be diligent about recording information, analysing patterns, and identifying opportunities, so you can discuss them with your customers and prospects.
Yes, this is a lot of work. But the payoff can be tremendous.
Communicate a compelling promise that is benefit-driven.
Everyone in your organization should know the value promise.
Notice I say “value promise,” not “value proposition.” Everyone has a value proposition, but no one does anything about it. Making a “value promise” will help focus your thinking and delivery.
The promise needs to be consistently communicated in everything your company does, from marketing materials to staff behaviour and customer experience.
In making these changes, you will build on your brand values of, say, uniqueness and excellence. You can further establish your uniqueness with your high quality products and services.
Deliver what you promise.
Check in with your customers. Are they getting what you promised?
Again, talk with them and ask questions. Get them to give you honest feedback on your service quality or product performance. If there are gaps, fill them.
All of these factors above ultimately result in creating points of difference to your competitors so that you will be able to charge higher prices and make more money.
By Gary Walmsley, Director
Gary Walmsley Builders Limited
Tel: 07 574 1784
I come from a long line of builders, doing my apprenticeship through my family's Lockwood building franchise in Paeroa. Once qualified I worked in the building industry locally and then overseas for 10 years, before returning to the Bay of Plenty and establishing my own business.
A Registered Master Builder in Tauranga since 1993, I have extensive experience and expertise in building and renovation.
Since 1995 we have been specialising in all types of housing renovations and additions, including fixing leaky homes and buildings. We cover a wide range of services from minor repairs to major renovations and additions.
The building industry, like many other industries, had been hit by the recession and we've been in a scrambling mode for the last couple of years. It was difficult to keep afloat sometimes. We had work but we had to cut rates in order to stay competitive, we made money but not really a good living!
We had a business plan done a few years ago so I knew that it was the right thing to do now. We needed direction and focus. I heard of the DaltonPlan business plan through word of mouth and Dean and I got to work together last November with the help of a NZ Trade and Enterprise business development grant.
When he showed me his DaltonPlan benchmarks for my industry I was surprised about the figures, although I knew that we were below the necessary rates to keep strong finances. To be able to raise our prices, maintain competitiveness and gain a long term vision and stability, Dean developed with us a plan that is giving us the confidence and control essential to succeed.
We are currently developing some re-branding; a new website and new marketing strategy. We'll then gradually work our way through the plan and carefully establish flow charts for example; they ensure high standards of quality, clarity and efficiency. We've already had a meeting with our employees and they're all keen to follow directions that help them to do a good job while ensuring financial strength for the business.
We know what to do, how to do it, the plan is making it easy and I'm very confident that our profits and our resilience will increase.
We're starting this new year with great confidence!