How Low Can You Go?Written By Bill Gager
Article Date: 11-01-2005
Copyright (C) 2005 Associated Equipment Distributors. All Rights Reserved.
Five ways to achieve a competitive advantage without lowering your price.
In today’s marketplace, developing and maintaining an objective advantage over the competition can seem next to impossible. Why? Because from a customer’s perspective, similar product and service offerings are basically the same. For example, consider life insurance policies. To the buyer, all $250,000; 20-year term life insurance policies offer identical coverage. So how do they decide between Company A, Company B, and Company C? Well, if they view product A, product B, and product C as all having the same value, the only thing they look at to differentiate the three is the price.
Unless you have a distinct advantage customers care about, you must create a competitive advantage by creating a value perception that goes beyond your product or service – a value-added proposition.
Demonstrating your value-added competitive advantage during the sales process is difficult, because traditionally, the emphasis of competitive advantage has been service and the only way for a prospect to experience your service is to actually become a customer. And to get a prospect to become a customer, you have to be able to positively differentiate your company’s product or service from the competition during the sales process.
Therefore, to maximize your sales, revenue, and profit potential, you need to create a value-added proposition and perception. In other words, your entire offering, including the way you sell, has to be set up in a way that the customer sees you as being positively different from the competition.
To position your products and services as positively different, you need to leverage your sales approach to maximize your point-of-contact opportunities with prospects and customers.
Point-of-contact opportunities are any time a representative of your dealership comes in contact with a prospect or customer. The way that representative interacts with the prospect or customer is going to form his or her strongest opinion of the organization.
Essentially, it all comes down to what your representatives do and how they do it. Focusing on the products your organization has to offer or the “needs” of the customer is not enough, your staff needs to focus on the critical issues facing your customers and the value your organization can provide in solving those issues. You need your customers to know that you offer more than any other organization, and therefore your products and services are worth the higher price.
To help your organization make the most of every point of contact, consider the following:
Your staff needs to go beyond the usual active-listening techniques to effectively rise above the competition. Rather than parroting back answers, you can uncover your customer's critical issues, help them think about these issues differently, and perceive you as providing a solution. When your customers and prospects feel like you truly understand their issues and challenges, they'll see more value in your dealership.
- At every point of contact, you must make the prospect or customer feel listened to and understood. Because all organizations strive for that, the usual techniques have lost impact. For example, almost every organization uses active-listening techniques, such as summarizing the customer’s question. But when everyone is doing it, the competitive advantage disappears.
If you maintain consistent, value-added contact, that in itself creates a competitive advantage, because you're doing something no one else does.
- Demonstrate added value. Strive to go beyond the normal day-to-day answers and demonstrate value-added by helping the prospect or customer gain new insights into the issues that challenge them.
- Be consistent in your customer contact. When you don't establish consistent positive contact with your customers and prospects, you lose opportunities to create and maintain your competitive advantage. For example, many sales professionals say and do everything right to sign a new customer, such as following-up regularly, explaining details, and answering all the questions. But once the prospect places an order, the sales rep doesn't maintain contact and virtually drops off the planet. This inconsistency is common, both on the prospecting and customer service sides of sales.
Most organizations approach prospects and customers with a fly-by assessment of their needs, and they miss the underlying problems the prospect doesn't know how to solve.
- Identify their unseen problems. Beyond dealing with the obvious needs, if you can help customers or prospects identify potential and existing problems they didn't realize they had, you can put yourself light-years ahead of the competition.
Realize that only about one in 10 prospects at any given time has an active need for your services. The key to maximizing your results is to leverage the other 90 percent!
The key to identifying your customers' and prospects' unforeseen issues is to do more development work. Take your point-of-contact opportunities to the next level and look for symptoms your prospects and customers experience, but can't find the cause for.
If you can engage your prospects and customers at that level, you jump ahead of the competition. The key is to ask the right questions to gain deeper insights into the hidden issues and get the customers to realize how those issues impact their businesses.
Many times organizations focus solely on the prospecting phase, and lose opportunities to grow their current customers as a result. But after the initial sale is made, the more you can present the full resources of your organization to the customer as a solution to their critical issues, the more valuable you are to the customer.
- Provide all your resources to the customer. Once you've done all the development work and brought someone in as a customer, continue to offer them added value.
Introduce them to your full line of "solutions" and make additional information readily available. Don't focus only on your products and services, rather focus on how they solve your customers critical issues. Do this and they'll continue to see the added value in your dealership.
Add Value In The Future
To maintain a pricing advantage and avoid lowering your price, create a value-added perception by leveraging your points of contact. Remember, you have to do what your competition doesn't. People will only see you as valuably different and be willing to pay more for your product or service, if they believe they get something of value that they can't get anywhere else.
Make your customers and prospects feel understood by going beyond active listening techniques and asking questions that help them see their critical issues differently. Demonstrate your competitive advantage by connecting your products and services to the customer's issues.
Establish consistent contact with your prospects, and maintain this contact when they become customers. Go beyond your prospects' and customers' obvious needs and develop solutions to problems they haven't identified.
Then once you've brought in a new customer, present the full resources of your organization so they continue to see the value you offer.
These steps are important in selling to prospects, and even more important when you're expanding an existing customer relationship. When you use these techniques, you won't have to play the price game to maintain your competitive advantage.
Customers and prospects will be willing to pay more for your products and services because they'll know you're more valuable than everyone else in the market.
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