Improving Margins with Market Differentiation
Very few things in professional life can be as demoralizing as competing fiercely for business only to find winning it required so much discounting at the end it was hardly worth it.
How does this happen? You have become column fodder along the way.
Your technical buying influencers decide where they want to put you in their spreadsheet… and so there you are next to ten other competitors that you are told do exactly what you do. So, they say, it is coming down to price.. and currently you are high… so if you want the business you will need to take your price down… substantially.
The price squeeze play.. professionally engineered to drive down price.
You have experienced it so many times you can see it coming… but feel at a loss to prevent it.
I hope this scenario is not familiar to you. But if it is, you have a serious margin problem caused in part by inadequate value based market differentiation. You probably do not have a clear, defensible market position very visible on your web site and central in every sales presentation.
The reasons you are vulnerable to this evil plot to undermine your margin are normally centered around both being measured only on the cost of the product or service you are providing, not the bottom line business value benefit of what your company is really delivering and you have allowed yourself to be successfully blocked from communicating directly with the economic buyer, who is the person most interested in business value.
Many of Frantz Groups customers are providing technology leveraged consulting, which means there is technology provided but how it is implemented changes the bottom line business benefit widely. As we discussed in a post on aligning your marketing tactics with your value discipline position, it is absolutely critical that your messaging align as well to drive differentiation in the market.
This bottom line business benefit, when well-articulated, contains the heart of business differentiation. This provides a lift beyond simply being another choice in a broad solution category.
The trick is, the development of this differentiated message… getting it right. Looking at the home runs you regularly hit for your customers and finding the words to describe it in a compelling, value based way.
Our methodology for building this value based differentiation is called the Right Offer Workshop. Within one to two months of elapsed time and two to three half days of our customer’s leadership time, we can get two to three offers built for your primary target markets.
Armed with these “Right Offer” statements you now have the story to share with the economic buyer that he/she wants to hear. Get your value story understood by the economic buyer and you are column fodder no more.
A “Right Offer” can also enable a top down sales approach which regularly leads to a faster sell cycle and less margin pressure. Frantz Group can provide real examples of this phenomenon in action.
Want more margin on sales this quarter? Invest in the articulation of your value… I promise it is a lot more fun than wrestling through the price squeeze hold. And leads to enough profit to fund business growth.
John