Tag Archive: competitors

Why Southwest Customers Wouldn’t Buy a Bentley

July 24th, 2019

After giving 10 speeches on pricing and profits to groups of CEOs, it is certainly top of mind. Yet, it should always be top of mind for executive teams. One unanimous finding from the informal research of executives is that pricing is a strategic topic.  So, we must find time! When is the last time you focused on pricing?

Whether you consider pricing a strategic topic or not, it will directly impact your business. Let’s start with three typical options from a branding point-of-view.

  1. Low price leader – Southwest and Walmart are great examples of this. No one flies Southwest to have a first class experience. Instead, they are accessible to the general public and fun to fly. Their prices have to match their brand, and low prices do NOT equate to lower profits. Southwest has been consistently profitable when the higher priced airlines weren’t!
  2. Luxury brands – Similar to the low price leader, a Bentley or Gucci denotes the luxury image. If you found a low price on a Bentley, you would definitely think it was a lemon. In the B2B world, the same holds true. We work with a high quality lawn and garden equipment and tools supplier.  Their prices have to remain higher than the low cost brands to maintain their image and customer base. Of course, they need to provide more education and value for their customers as it is what they expect.
  3. Customer focused – In this case, the brand is all about the customer.  These companies are known for going the extra mile and providing superior value for their target customers. If it is all about value in the eyes of your customer, don’t you think your price better align to this value? Of course! If not, it is the epitome of the opposite of the brand.

Have you thought about your strategy and whether it relates to your pricing? It is easy to get caught up in competitive pricing situations and start to lower your price.  However, it might be the time to take a step back and see whether what you are doing matches your branding and strategy.

For example, one CEO provided an example of when she was a VP of Sales at a significant company. They had a niche product with unique value and higher prices. The sales teams were starting to see competition and thought they had to reduce pricing slightly to maintain their position.  The CEO said ‘no’. They were the leader and had value their competitors didn’t. It was a really hard process for the sales team to go back and talk value instead of giving in on price but they managed it. Fast forward to the next year. They were successful in maintaining their prices and didn’t lose business. Instead of falling into price war thinking, they talked about value.

What Do We Need to Think About Related to Strategic Pricing?

From an 80/20 perspective:

  • Who is your target customer? Think about your answer. Hopefully, it isn’t anyone willing to pay for your product or service! Yet that is an easy trap to fall into. Instead, take a step back and think about your target customer. What is their profile? How many current customers are target customers?
  • What do your target customers value? Although we tend to spend 80% of our time on 20% of our customers, the key question is whether these are the target customers. Do we know what our target customers value? Don’t think about your customer base and your daily interactions to answer this question. Instead, think only about your target customers. If you don’t know, find out! Being clear on this alone will yield dramatic results.
  • Is your pricing aligned with your target customers and their expectations of value? This is a tricky one. In our experience, 80%+ of our clients have room for improvement when we get to this point. It also changes over time.  If you last put thought into this even a year or two ago, you are acting on old information!

There is vast opportunity to keep pricing top of mind as it relates to your strategy. Why do this? It is a top strategy to ensure customer value (to grow your business) and increase bottom line profits simultaneously. If you are interested in a pricing & profits assessment, contact us.

Did you like this article?  Continue reading on this topic:
Pricing & Profits: It’s Not All About Revenue
Gaining New Ideas to Increase Business Value

Our Competition is Complacency

May 5th, 2016

supply chainI attended a conference for ProVisors (premier organization of senior-level trusted advisers) group leaders earlier today. It was energizing to spend the day with top notch trusted advisers and leaders. One of the speakers was talking about the power of collaboration vs. competition. I’ve found this to be true in my group as well. If two people who seem like competitors (perhaps two CPA’s) look for ways to work together, their business increases exponentially. For example, 1+1=16. If they see each other as competition, business declines. In this case 1+1=.5. In essence a scarcity thought process!

The bottom line is that “our competition isn’t the trusted adviser sitting next to us; it is complacency”. I loved this quote! It is quite easy to become complacent! However, why bother getting out of bed to go through the day being complacent? There is NO point as NO results will follow. Worse — results will deteriorate.

One tip to implement this week:

So, what can we do to avoid complacency this week? The great news is that no rocket science is required. It can be as simple as stepping out of your comfort zone. I received a message from an employee of one of my former clients early this morning. She stepped out of her comfort zone to give the leader of her facility her ideas. It was a risk as he could have thrown her out of his office; however, complacency was no longer enough. Instead, she was excited with his positive reaction. Push yourself to take a step forward.

It also can be as simple as mixing things up. If you usually walk the facility every morning and it has become just part of your routine and you don’t feel energized, STOP doing it. Instead, go to one of your employees, peers or leaders and ask him/her to walk the facility with you. Ask questions and listen. You’ll likely see entirely new things. If you always run a particular report or email a particular customer, call the appropriate people instead. Mix things up, and you’ll learn something new.

For example, yesterday I spent the day with Harvey Mudd students at projects day. These students are impressive — no complacency allowed! I left feeling energized and interested in new ideas and thinking about how to raise the bar.

Looking for more ideas to keep your supply chain connected? Access more tips and resources on my blog. And keep connected by subscribing to my newsletter and email feed of “I’ve Been Thinking…”