Before 2021, I never spent more than three weeks out of this fair isle of ours. This year, I spent the first five months with my daughter and family in Dubai. In that time, I immersed myself even more in the Dubai business community. I’ve been dipping my toe in and out of it for the last 15 years and had formed a view about the amazing can-do culture and entrepreneurial spirit that dominates its business landscape. But I was also familiar with the tiresome focus on price, price and price again. Every business discussion seems to start with price, as if it was the only or, at least, the most important buying criteria. You tend to get sucked into it whether you are a buyer or seller. For example, there is a local business that imports and distributes packaging materials within the Gulf Co-operation Council (GCC). The owner described to me the history of the company and the sector’s dynamics. As far as he was concerned, the only important issue was price. Yet when we discussed the dynamics in his sector, I identified other issues that were important to his customers, such as continuity of supply, quality, 24/7 access, technical support, and, of course, payment terms. This organisation was missing a trick within its own abilities to achieve higher prices and therefore more margin. And it showed in its financials. Example two: as a result of strong SEO online activity in the region, my business receives regular enquiries through a localised website. Generally, prospective buyers send an email or call with a specific enquiry. It might be for consulting on culture or strategy, or for help with customer experience programmes. I’m mentioning this to illustrate that these services are obviously not straightforward, being tailored to each client. Yet, in every single case, the first question asked by buyers before any conversation is, “what will it cost?” This is not just a phenomenon specific to the UAE. We have it here too, perhaps to a lesser degree. But the pandemic seems to have exaggerated it. Some sellers and buyers seem to think that discounting is the way to retrieve cash because of the hiatus caused by the lockdown. On that basis, I’d like to challenge you to broaden your thinking on what your proposition is made up of. For many of us, the products or services that we sell are commodities. In other words, we have many competitors that can offer the same thing. Now unless you are the Ryanair of your industry that has the lowest cost-base in your sector and can therefore beat anyone on price, you need to avoid the race to the bottom. It is already paved with the corpses of others that sacrificed margin to get a deal. This over-emphasis on price is an obstacle to honest and transparent business deals. Of course price is important as nobody wants to be ripped off. But whether you are a seller or a buyer, there is another way.
To be relevant and to add value, we have to think of the whole experience we give to our customers.
The three-legged stool of product, people and place, will prompt you to consider other value-add features and benefits. What is your USP? Can you identify unique advantages for your offering under each P?
Before you present your offer, take time to understand the triggers or ‘pain points’ in your customer’s world.
Using the extra information from your broader perspective (in step one), ask the right questions to ascertain the priority criteria essential for the customer to make a decision.
Present your offer, majoring on the priorities that the customer already told you about.
If your customer raises a price objection, see that not as a rejection, but as an indication that your offer is not there yet. Take time to identify the gap between your offer price and your competitors’.
Ask your customer what budget they are working to or what they are comparing you to. This information is gold-dust for you.
Sell the gap. Once you know specifically what you’re up against, point out the added benefits of your offering to justify the gap, ie your higher price.
Differentiating on price alone is really tough. Customer experience is the new battleground for doing business and therefore the 3Ps above is a key framework for shaping your offer. Even if your competitor can do the same thing, put a value on every benefit in your solution. It takes the same number of beans to make a cup of coffee at home, in a coffee shop or in a five-star hotel.
Why does the customer in the hotel not even bat an eyelid at the price? It’s because the difference in overall experience between a fast-food coffee shop and a five-star hotel is palpable.
You too can do this by knowing your added value and then ‘selling the gap’. And buyers, this applies to you too, in reverse.
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