Don’t lower your price…Raise your value: The Intangibles
Anyone can lower their prices, that’s a loser’s game that we in the printed circuit board industry have been playing for years…and look where it has gotten us? There are only 250 shops left in North American because we have all played the lowering the price game for years. First we did it with each other; and then when our customers got wind of Asian prices we stood by while those shops ate our lunch form nine thousand miles away. That worked out well didn’t it? And now that a bit of on-shoring has begun we are back to beating that pricing drum again. How long will this go on? Are we going to stick to this economic theory of de-evolution until none of us are left? Or are we going to do something about it?
I was inspired by something I read in Seth Godin’s book called in the usual Seth Godin fashion Watcha Gonna Do with That Duck? The book is actually a collection of Seth’s blogs and articles and it is simply great. I’d strongly recommend that you go find it on Amazon and buy it.
From the book here is a section he calls The Intangibles that really applies to those of us in the printed circuit board industry, I love it because it advises us on how to get away from selling price and to selling value. Here is an excerpt from that section
“Let’s say your service costs more than the commodity-oriented competition (I hope it does!).
Where do you find repeat business or even new business? How do you make a sale (to another business or to a consumer) when you cost more?
The answer of course is in the intangible. The things that have no price. The things that customers value more than it costs you to provide them.
If you don’t have that, all you can do is beg. And begging is not a scalable strategy.
If you find yourself saying, “the boss won’t let me lower the price,” or “we’re more expensive, but that’s because our cost structure is higher.” then you’re selling the intangibles too short. The stuff that people can’t buy at any price from anyone else, but that they really value.
Here are some random ways you can embrace some intangibles:
Call the person before you get the RFP before they know they need you. Brainstorm with them about how you can work together to create what they need. Participation is priceless. …
You’d be amazed by how much people value enthusiasm. Genuine transparent enthusiasm about the project they’re working on…
Don’t forget speed. If you are overwhelmingly faster than the alternatives, what’s that worth? For some people more than you can imagine.
Focus and personal service are obvious (but priceless) intangibles.
Generosity is remembered for a long time. People remember what you did for them when you didn’t have to do a thing, when you weren’t looking for new business, when it was expensive or costly for you to do it….
How do you respond when you make an error? This is actually a huge opportunity to deliver an intangible, especially in a business-to business setting…
Peer pressure is another silent intangible. What will be friends and colleagues say if I choose you? What if I don’t choose you? Is it fashionable to pay a lot? How hard are you working at establishing a connection across your market so that choosing you is the right thing to do regardless of price?
The last one is probably the biggest. Hope. Do you offer hope for something really big in the future?…What does it look like? Are you drawing a vivid picture?
Pretty sound advice for old Seth isn’t it? What I found amazing in this blog is that it could have been written with our industry in mind, especially the part about speed. Do you have some things you can do that others cannot that will bring value to your customers? Do you have your own intangibles? No? Well here are a couple for you to consider:
Make sure your gets there faster than anyone else’s? That is extremely valuable especially to those buying your time. Getting the quote to them faster than anyone else is the first time sensitive service you can offer. It exemplifies that fact that yes you are in the speed business.
Here’s another one, contact your customer after you ship that first order, just to let her know that you care enough to follow up and that everything was okay. The higher up you are in the company the more effective this is. And talk about a great lead in to that next order…that customers-making order (first orders do not customers make, it takes two or three orders before you can claim that company as a customer).
And let’s finish up with one more, do something that no one else does, something that will make you stand out. Put a wise quote in the side of your boxes, send your board in bright red or bright green boxes. Give your customers something special each year during the holidays something that pertains to your business and that they will find useful enough to use every single day and no I don’t mean a coffer cup. Give it some thought and you’ll think of something…it’s good for you to think like this anyway.
And finally I’ll leave you with one last thought from Seth, You’re product becomes a commodity when you make it a commodity. It’s only common sense.