If there’s one thing to know about your business model, it’s how to recognise whether or not your business strategy has you caught in the price trap. This is the key to your long-term future and sustainability.
Being caught in the price trap is a tricky, unforgiving and often lethal environment. Most are not aware this is the reality in which they exist.
The price trap is a damaging cycle of discounts and sales that keeps businesses stuck with slim margins. It’s the habit of too many companies to get caught up in conducting a war with their competition, gouging prices and marketing their cheap products in opposition to all others in the market. It demonstrates a lack of value — of both the company and the way it views its clients.
If you answer ‘yes’ to the following questions; it’s likely you are stuck in the price trap:
- Are your margins being squeezed by the competition?
- Do clients view your offering as a generic commodity?
- Can your clients get what you’re offering elsewhere in a similar fashion?
- Are your sales conversion rates slipping?
- Are your average dollar sale values dropping?
- Is online competition impacting your ability to sell?
Many companies in the price trap do not recognise the vast difference between making your customer experience better or your prices better. When you simply aim to change your prices to earn clients, you fail to earn their true loyalty. Further, you teach them to purchase from you only when there’s a discount. When you optimise the entire structure of your customer experience to be better, the change is visible and rewarding.
When you think about most companies’ marketing efforts, it’s often about what they have to offer, and this is where they first get caught in the trap. It’s all about their product or service as it compares in a similar nature to the competition and it’s most often linked to price. The key to getting out of the price trap is to be and stay unique. The best clients want experiences with you and your company where you do more than just fulfilling their immediate needs or expectations for supply or information. Transforming what and how you do what you do from focusing on providing products or services to offerings is the beginning. However, it still won’t get you there. You need to consistently deliver a unique client experience in an optimal fashion.
Today’s consumers are more fully informed than ever before. As a result, their standards are also higher. They will (if they haven’t already) demand to experience something unique from you so that you stand out and deliver a client experience that meets their values and exceeds their expectations (that they can’t get with your competitors).
You must deliver an experience that provides a point of difference such that your client receives a personal benefit — otherwise, the experience will soon wear off. When you deliver this experience consistently, it will soon become the new standard of what they think is normal.
Normal is not transformational. Transformational is when you’re committed to optimising and consistently delivering the wow experience! Once you’ve achieved this level, you’re now at the point where you provide clients with predictable transformational experiences that are uniquely adding optimal value to them on a consistent basis. Research shows clients are happy to pay a premium for such a remarkable experience.
To achieve the level of predictable transformational experiences means your source of supply is unique, and if your client’s value it, they’ll choose to deal with you above everyone else. The key distinction here is predictability, not because clients know what they’ll get (other than of course what they expect as a minimum) but, rather, your advanced knowledge and optimal value-added benefits are what’s predictable. To create client intimacy where your clients rely upon and appreciate you to provide predictable transformational experiences that are of optimal value makes you more relevant than anyone else out there! This level of customer appreciation will keep you out of the commonality of other suppliers that are “me too” in the price trap.
Different isn’t always better, but, better is always different. Being better will keep you relevant and transformational and this will make you different to your competition and reduce the need for discounting.