It’s always interesting around this time of year that most retailers choose to cut their prices in an attempt to win business. What concerns me more though, is how other businesses in other sectors do the same, thinking that lowering their price is a quick way of winning some new customers. Let’s face it – price cutting is a tactic that is often used to try and win more customers, particularly in the run-up to the Christmas period or in January, when retailers are trying to encourage more customers to enter their stores. But just because retailers use it, that doesn’t mean it’s a good tactic for other industries. For most other businesses, price-cutting is the fastest way to lose profits. The problem is, it can sometimes be done in panic when you’re short on customers, not winning deals or want to have the edge over your competition. But if the only way you’ve got the edge is price, what does that say about you, your product or service and your company? You see, ‘lower price’ is an easy thing to compete on, isn’t it? There are no sales skill required, no work involved, no effort – in fact it’s a very easy option. However, if you’re in a competitive market and you lower your price and start winning business, what are all your competitors going to do? That’s right, drop their prices below yours. Now you’re back where you started, but you’re getting less profit and you still haven’t solved your problem. So what do you do now? Drop your prices again and start the whole chain reaction off for a second time? Then a third? What affect is that going to have on your profits. So instead of cutting prices and losing profit, here are some ideas you can use to get ahead of the competition: Andy’s Option 1 – Creating ‘Packages’ One way to improve profits is to create ‘packages’ – similar items bundled together to encourage customers to spend more. Think of a suit sold with a shirt and a tie? Andy’s Option 2 – Think About Customer Problems If customers are having some major problems or headaches, if you can position your product as solving (or helping to solve) those problems, you’ve got a huge advantage and are far more likely to get those customers to buy from you, and also pay higher prices. Andy’s Option 3 – Re-contact Existing Customers You’ve probably got some customers you haven’t spoken to in a while, and they may only need a phone call to remember you’re there and spur them into a purchasing decision. They may also not be aware of everything you sell – why not give them a call? Good luck with all your future selling efforts.
Andy Preston is a leading sales expert. You can see more about Andy at www.andy-preston.com. You can also see more about Andy’s bite-sized training for small businesses at www.salestrainingbreakfastclub.com