Raise Your Standards

In the 90s, General Motors faced a dilemma. Stiff competition at the lower end of the pricing spectrum from auto manufacturers like Honda, Toyota and Nissan were causing the swift loss of market share, and they needed to keep up.

Their ultimate answer to the challenge was a bold one: the creation of the Saturn brand. But their execution proved to be disastrous.

Instead of working to make Saturn a best-in-class competitor, it almost seemed like GM wanted a worst-in-class vehicle and would rely on cheaper pricing along to drive sales. They were dead wrong.

It is an unescapable principle of business that cynical standards and “race to the bottom” strategies don’t work for long. Even as businesses in every industry face stiff pricing competition—especially in a globally competitive marketplace—they must understand that the real battlefield is value. Customers are sensitive to this elusive quality, and even when value is not so easily quantified they seem to respond to anything falling into the “value add” category.

No matter what your product, even (and perhaps especially!) when you compete directly on price, it’s critical that your organization have high standards and that you present value, not cheap. Choosing cheap is a short term decision; choosing value is a pragmatic decision. You can build relationships on value; you can build relationships on cheap.

As you’re building your presentations, or reviewing the ones you’ve built, keep an eye out for value-oriented content and slides. Does your presentation couch pricing in the context of value, or are you simply trying to low-ball in hopes that your customers will opt for the lowest cost regardless of what you profess to offer in addition? In the big scheme of things, service and follow-through are not so difficult to offer and they can be relatively easy on your margins—especially when you consider that the cost to acquire new customers is estimated to be as much as 10 times the cost to retain existing customers!

Beat your churn and start focusing on value for your customers. Pore through your presentations and make sure they have strong value propositions and communicate the softer benefits to working with your organization, the things they get beyond a really great price. No one responds long to cheap; start selling value today!

Question: How do you build your value proposition to your customers?





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