Sales Come First

I’ll be direct here. Your unique selling point should not (repeat not) be price.

And what better way to show you this in action than with this real life example I just read (I’ll give a summary if you don’t want to read it)

http://www.theage.com.au/national/dfo-has-bankers-nervous-20100814-1247s.html

Basically DFO which is Direct Factory Outlet is in serious financial trouble. They’re a chain of centres with top clothing brands at huge discounts. And when you boil it all down, all the problems with debts and structures and so on can be traced back to one thing.

They aren’t making enough money!

Simple as that. And what happens is when they’re full of customers they do fine. But when the customers start drying up they’ve got nothing else to offer. Their whole strategy is to be so cheap that they’ll sell a ton of stuff. But now they’re up against the other stores who run sales, other discount centres and even great deals on the internet. So when they sell a pair of trousers now they might make $10, while they used to make $60 at full price.

The airline Virgin Blue is another example. They came in as the low cost, no frills carrier and caused big problems for the competition. But the price of fuel shot up and in order to keep their prices low they had to cop reduced margins, even losses on the chin. The result? Their share price dropped dramatically. And that was before their major competitor launched a direct low cost opponent to them.

You see, when this happens you’ve only got 2 choices. You can either accept lower profits or you raise your prices and lose market share.

What does the future look like if you compete on price? Hate to tell you but it looks pretty bleak. For a start your profits are as low as they can possibly be so you’re deliberately putting yourself one step away from broke already. And then another competitor comes in and tries to price you out by being even cheaper. So you drop your prices further…and it hurts! So they do the same thing and it hurts them even more! Where does this end? It ends with one of you businesses dead and the other mortally wounded.

That’s why competing on price is something you should never do. Compete on something else. What about a strong guarantee? Perhaps you could be the plumber who gets there on time or its free.

What about superior service by going the extra step? How about using incredible testimonials as proof of why you are worth more? Why not develop an irresistible offer? Or set yourself up as the superstar of your market, and charge people more to get to you. Anoint yourself the leader of the pack and start behaving like it.

Whatever you do, make sure price is not the reason people come to you.

All the best,

Hugh Thyer

www.salescomefirst.com

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