On Cutting Too Deeply

If you have a choice of adding value or cutting your price, find a way to add value. Adding value improves your performance and cutting your prices reduces the profit you have to create that value.

If you have a choice of differentiating your offering or cutting your price, find a way to differentiate. Being different in a way that makes a difference for your clients makes you worth paying more, cutting your prices indicates that even you believe that you are a commodity.

If you have a choice between delivering a better customer experience or matching the status quo, deliver a better customer experience. People talk about the experience you deliver, and that experience creates loyalty. The status quo is such a poor experience that when people speak of it, it isn’t positive—nor does it generate loyalty (mediocrity never does).

Unless your company is spending money foolishly, if one of your three strategic initiatives is to find a way to squeeze more money out of the cost column, you are focusing on the wrong priorities. Cutting costs is easy.

You can cut too deeply. You can also become addicted to searching for ways to cut costs even after you’ve cut all you reasonably can. You are better served by focusing on selling—and focusing on doing what makes it easier to sell, like creating more value, differentiating your offer from your competitors, and delivering a better customer experience.