As a father with a young family, I regularly agonise about how much time my kids spend tinkering with their iPads. If they were using their machines to catch up occasionally with the vigorous adventures of Asterix and his boar-loving sidekick Obelix, I’d be more comfortable with “iPad time”. But I find that much of the content my kids tune in to on YouTube, for example, is brain-frying mush.
With that rant out of the way, I also accept that technology and the internet are here to stay, and affect everything we do from entertainment to research and buying decisions. As such, technology has transported business into the age of the informed consumer.
The by-product of this new age is the proliferation of competition. Within this environment, consumers are rigorously seeking a range of competitive options before making a buying decision. In this milieu, usually the first thing that gives way is the price we place on our services.
You can’t discount your way to success
The biggest sales and marketing challenge for any business is price. Finding the right price point – one that suits your clients and makes the margin worthwhile – is a true business skill. However, in a competitive market such as financial planning, getting bogged down in the price conversation can be an easy mistake.
We see businesses in all industries getting caught when they focus solely on price – theirs and those of their competitors. This flawed focus on undercutting the competition is a habit that can be difficult to break. Once you start discounting, where do you stop? I’ve seen it in other industries. The price conversation becomes all consuming. Firms stop looking at what value they bring to the client and worry more about offering the cheapest deal. My business partner at Corpwrite, Luke Maddison, is fond of telling me: “I have never seen a business that discounts its way to success!”
Don’t lose the battle to price
The best way to keep your focus on the client is to concentrate on delivering more value than your competition. The value can then be used to justify your price point. We often tell our clients that it’s entirely acceptable not to be the cheapest. It’s also perfectly fine to opt out of competing for business at a price point that doesn’t make sense. The key is to find those points of difference for your business – what makes your offering better than the competition. It’s when you lose sight of your competitive advantage that you lose the battle to price.
In the absence of value, you leave your client no choice but to find the one commonality to compare you and your competitors, which is price.
Don’t rush to discount
There’s a valuable Hubspot blog detailing strategies on pricing that don’t involve discounting. This blog references a Stanford University study that essentially states consumers don’t react the way you expect if your pitch involves offering a competitive price as its focus. This approach takes the conversation away from your competitive advantages and focuses it on a simple price comparison.
The upshot is that being the cheapest isn’t usually a sensible long-term strategy. Focus on the value you provide a client and make this the centrepiece of your sales and marketing approach.
