How to avoid price discounting: the 2 keys to success.

Is your company facing increasing pressure to compete on price? Are your competitors cutting prices to secure volume, and are you being forced to respond? Are revenues and profits in steady decline? Do you feel helpless to stem the flow?

The long-term implications of price discounting are catastrophic; it creates a discounting mindset, it hurts your brand and credibility and reduces your capacity to reinvest and stay competitive.

There is no silver bullet; however there are two proven strategies you can employ to better manage a competitive pricing environment.

1. Manage your accounts strategically

Managing accounts strategically enables you to create a relationship where your full value is understood and regularly demonstrated. Customers understand where increased cost comes from, and the value it delivers. They see value beyond your products and services, because they value the relationship they have with your company. Relationships between executives, operational and technical teams create a strong connection that rises above product and price. Customers understand the value you have created for them in the past, and trust that you will deliver more value in the future.

If you have not created a strategic relationship with your major accounts you are not in a position to negotiate. Your account will not understand the value you offer. If you have not helped them understand your value prior to the negotiation process they will fall back on price.

2. Have a strong negotiation plan

Before entering into a negotiation, you should know you are the account’s preferred choice. You should be able to articulate the additional value your company has created for them so far, and understand what is important to your customer. Both the explicit things they state also the “below the waterline” considerations that you have uncovered.  Your demonstrated value and deep understanding of their business puts you in a strong negotiating position and a long way ahead of your competitors.

If you aren’t managing your accounts strategically and demonstrating your value, you are not in a position to negotiate. And there is no point having a great negotiating plan, when you have no value to leverage. One out of two won’t do; you need both.

We welcome your comments; or for help building your value with your clients, contact us on +61 2 9450 1040 or at mail@gordianbusiness.com.au