How many organizations shoot themselves in the foot with this one?
Here’s a fancy statistic for you on that: A LOT! And this isn’t limited to #startups. Haven’t we all witnessed this? It sounds like, “but, we’ll lose to ‘competitor X’ if we don’t settle on this price” OR “it’s end of quarter, offer an ‘X discount’ to anyone that signs by (insert date)” OR my favorite, “Customers are only willing to pay ‘X amount’ for this because (fill in the blank).”
These and many others all have one thing in common, (other than being excuses): THE SALES TEAM IS NOT SOLD. So, what do I mean by that? You might be surprised, please read on…
What if I told you, IT ISN’T A SALES PROBLEM?
Well it is but, it isn’t. When margins get below the line, no one wants to cut their way to prosperity or put #CustomerExperience at risk. That being said, rarely have I heard the call to raise prices without suffering the ensuing cries of “blasphemy!” from account management teams and frontline sales associates.
It stands to reason that IF the number one thing that keeps customers happy is a low price, then you are probably what is called a budget brand. Not that there’s anything wrong with that. Some of the largest companies in the world are budget brands (e.g. Walmart, Amazon). Competing on price is in their DNA and therefore it is not a detractor in the way we are talking about here. However, if you already know you are not a budget brand, why enable or ignore budget brand behaviors in your company #culture?
You can probably think of others that are clearly premium (NOT budget) brands. Ever heard of companies like Apple or Mercedes? Speaking of cars, are you aware of the small difference between the actual products that Lexus vs. Toyota produce? And personally, I’ve never heard of a Lexus being sold at a Toyota price point.
Company executives are usually fully aware of their brand. However, many organizations unwittingly create a culture where they try to be both without acknowledging the intrinsic harm it causes to the perceptions and behaviors of both their clients and associates. If my sales team is compelled to treat my products like a budget brand, well guess what?… (say it with me) I AM a budget brand.
What is blocking the way of your company getting paid what it’s worth?
Would you be willing to consider that culture is a significant driver of price and profitability? I referenced an #HBR article about this last month in a post about culture and brand misalignment influencing sales. Surely, this is not the only thing that causes companies to compete on price at the expense of profitability. Consider these others:
- Pricing Strategy
- Negotiation Tactics
- Product Packaging
- Sales Proficiency
What this demonstrates is the need for “root cause” problem-solving. In our brand theme, we call this good quality “reconnaissance”. Would you spot a ‘why’ your revenue per product sold has trended down over time by looking at reports or KPIs? Not anymore than you could diagnose a broken toe by checking my blood pressure. We live in such a data-driven world now that it is easy to miss where and why human behavior goes off the tracks. How to correct it can often be very easy, if properly diagnosed.
I have been a witness to this corporate incongruence and how it drives behaviors on the FRONT LINE that come back to roost in the BOTTOM LINE. More importantly, I’ve been able to correct it enough times that it is fairly easy for me to spot and fix. Each situation tends to be different – as I’m sure is yours.
If this topic resonates with you, leave a comment. If you know your organization is not getting paid what it’s worth, let’s take a look at that. Start with scheduling a 15-minute “Lightning Round Call” here: or message me directly.
Written by: Bryan Howard, CEO/Founder of ULAN Consulting Group