How to avoid competing on price

Two solid strategies for distinguishing yourself in the marketplace and protecting your margins

“Cheap is the last refuge for the marketer who can't figure out how to be better.”  - Seth Godin

In the competitive business telecommunications space, it can be tempting to compete solely on price, since buyers normally solicit more than one bid for a given project and there is a widely held belief that the purchaser will choose the supplier based on cost alone.

But choosing price as your key differentiator is a losing proposition for both you and your customers. As Seth Godin remarked in a recent blog post titled, “In Pursuit of Cheap,” cutting prices often comes with cutting corners to the ultimate detriment of the customer, since the only way to pay for price cuts is to lower costs elsewhere.

Instead, there are ways to stand out among the competition in a way that is more beneficial to your customers, and will lead them to buy from you for reasons other than merely price. This is not only more profitable for you, but it ensures a better experience for the customer, as well. Here we look two strategies you can begin implementing immediately to protect your profit margins.

Strategy 1 - Align these three crucial elements

Three things must align in the mind of the buyer in order for them to proceed with any purchase:

1. They love the product: You have made an effective logical and emotional case for the product. The customer is convinced that the product will meet their needs and help them reach their goals.

2. They trust you and want to work with you: They see you as a professional who has the expertise and experience necessary to advise them in their purchase. You are honest and ethical, and you demonstrate this with your words and actions.

3. They like and trust your company: Your company has a reputation for being professional and reliable. The customer trusts that your company will do the right thing and act in their best interest.

Notice that only one of these elements has to do with the price of the product. If a buyer loves the product, sees you as the type of person he wants to do business with, and trusts your company, then he will buy from you, even if a competitor (whom he trusts or likes less) is offering the same product at a lower price.

Keep in mind, too, that in order for you to show how a solution will meet a customer’s goals in element 1 above, it's important to ask questions and gather information so you understand what those goals are. In so doing, you will also show the customer that you are an expert and care about him, which will help align element number 2.

Strategy 2 - Bundle services with the product

Include line items in your proposals that add appreciable value to your offer. Following are six services that you can easily offer through TeleDynamics.

1. Auto-provisioning: For products that need provisioning like SIP phones, TeleDynamics can perform this in-house before the equipment is shipped, enabling the customer to simply plug and play. This also allows us to test the equipment to ensure that everything sent to your customer is functional. For more information on how auto-provisioning works, see our previous blog post on the subject.

2. Financing: Proposing a leasing option through one of our financing partners can allow your customers to pay for their purchase over time in monthly installments, rather than all at once. Leasing also converts the purchase from a capital investment to an operational expense. See our previous blog post on leasing for more information.

3. Technical support and troubleshooting: TeleDynamics supports many of the products it sells at no additional cost to the dealer. Additionally, some manufacturers sell maintenance contracts that your TeleDynamics rep can suggest and explain.

4. Secure, trackable shipping: If you use TeleDynamics for drop shipping, products are carefully packaged and shipped to the customer using a secure, trackable service like UPS. Same-day shipping is available on orders placed by 5:00 p.m. CST on workdays.

5. Ease of returns and exchanges: In the unlikely event the customer receives a defective product, TeleDynamics makes it easy to return or exchange it. Generally, if it is defective on arrival (DOA) or fails in the first 30 days, TeleDynamics will send an advanced replacement and Return Merchandise Authorization (RMA) for the defective product. The cost of the invoiced advanced replacement is credited by the return of the original defective item. Contact your TeleDynamics rep for more details.

6. Enforcement of the manufacturer’s guarantee: After the first 30 days, TeleDynamics will help the dealer get in contact with the manufacturer and (if needed) provide any point-of-sale records to the manufacturer on the dealer’s behalf to assist in getting the products repaired or replaced under the manufacturer’s warranty.

CONCLUSION

If you work on building your company’s reputation, understanding your customers’ needs, and bundling value-added services with your product offering, you can avoid the pitfalls of competing on price alone. While in the short term distinguishing yourself from the competition may be more difficult or time-consuming than simply sacrificing your margin, in the long run both you and your customers win.