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On Your Competitors and Pricing

We spend an awful lot of time and energy worrying about our competitors. You need to know how they create value, how they compete, and how they win so you can give them a good fight. But beyond that, you aren’t going to beat your competitors by playing their game; you are going to beat them by playing your game.

You can’t win a fight with someone who is willing to die to beat you. So, you don’t fight that fight.

They Will Go Where You Won’t

When I was a young kid, I hung around with the roughest of rough crowds. Some of my friends were gifted fighters. Some were just mean. It never seemed to matter how much skill someone had when it came to fighting, the guy that won the fight was the guy that was willing to go someplace the other guy wasn’t willing to go.

Some guys were willing to dish out more damage; they never felt bad about doing it either. They were just mean guys. Other guys were willing to put themselves in harms way to win. They were willing to bring themselves close to serious physical harm just to win.

This is what you are up against.

Doling Out Punishment

Some of your competitors are willing to destroy their business model faster than you are willing to destroy your business model.

If your business model isn’t built around lowest price and you compete that way, your competitor is doling out the punishment. By trying to follow them and winning on price, you are destroying your profitability—and with it your ability to deliver for your clients.

This isn’t your fight. If you built your value proposition on trust, caring, and delivering for your clients, this is the fastest and surest way to destroy what you’ve built. It might look like you are winning, but I promise you are really losing.

Willing to Die to Win

Some of your competitors are willing to go out of business faster than you are willing to go out of business.

That’s not a race you should try to win.

I know some companies that have sold price for so long, their debt is now approaching their annual revenue. They’ve acquired. Their cost structures have increased over time. Now they are straddled with debt and all they can do is try to feed the beast more revenue. They continually fail their clients, and everyone inside the company is miserable and stretched. These stories never end well—for the company, for their clients, or for their employees. As it turns out, you actually need profits to survive.

Why would you want to fight this fight? You are better off being a smaller, profitable, company than you are a giant, poorly performing, client-disappointing, loss-making machine.

Sometimes it’s best to walk away from a fight. You never lose a fight that you never engage in. Instead, play your game better than anyone else.

Questions

Do you compete against companies that are destroying their model by selling price? How do you avoid following them down this path?

Who do you compete against that is trying to go out of business faster than you? How do you let them win that race?

What game should you be playing? How do you stick to your game and not get goaded into a fight that’s not for you?


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Comments

comments

  • Alan Risener

    I’ve spent my career fighting off the low price munchers. Your observation on when it is best to walk away is refreshing, and true. Chances are the customer will be back when he discovers there is good reason why the other guy had such a low price.

    • http://www.thesalesblog.com S. Anthony Iannarino

      I think you are right, Alan. I recommend you keep selling and stand there waiting in the wings to pick up the prices.

  • Sean Patrick

    Excellent post. You made the distinction between profit and cash very clearly without having to say it. Knowing who your customers are is the most important element of running a sales desk or even a business for that matter and knowing exactly how to service that business. Its plain to see now that companies who’ve built their business model (high cost) in the boom are on life support and will eventually go out of business and its examples like the company you’ve given that have coached certain customers to hunt for the best price at the loss of exquisite service and account management. Well done for calling this one out.

    • http://www.thesalesblog.com S. Anthony Iannarino

      Thanks, Sean.

  • http://twitter.com/RyanSides225 Ryan Sides

    Anthony, I’ve had this experience. I chose to use a service that was ten times the amount of their competition and the service I received blew my mind. It was a technical product so access to having questions answered quickly was key.

    In your opinion, though, how can companies show these differences like good service that are intangible during the sales process?

    • http://www.thesalesblog.com S. Anthony Iannarino

      I’ll write a post to answer that, Ryan!

  • Pingback: What if You Never Had the Lowest Price?



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