During these odd times, businesses are innovating in some truly creative ways. Bars are selling premixed cocktails in little bottles you can take home and drink. Farmer’s markets are letting customers order ahead with drive-thru pick-up. Toilet paper manufacturers are selling directly to consumers. Restaurants are offering to sell their extra toilet paper, soap, and bleach to diners. Farmers are selling beef and pork originally slated for the foodservice market directly to consumers.
In just about every business, the crisis has caused massive demand, product-mix, and volume shifts. And in the midst of all of these shifts, it’s very likely you are seeing more requests for discounts.
In some cases, you may have no option but to lower your prices or offer these discounts. But remember that price is not the only lever you have at your disposal to drive customer demand.
Instead of giving in to the knee-jerk reaction and lowering prices, take some time to consider why the market changes are occurring. What has changed from the customer’s point of view that is leading to falling demand and/or requests for discounts? What problems are they having? And more importantly, how can you adapt to help them solve those problems without changing your prices.
As explained in Identifying Your Value Along Five Dimensions, you have five different levers at your disposal that you may be able to shift to increase demand:
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- Your Product — What changes can you make to packaging, quality, configurations, etc.? If you’re seeing demand shift for certain product lines, maybe this is a time to try bundling together different options or even renaming products to better accentuate their current value.
- Your Service — Can additional support, training, fulfillment options, return policies, etc. help facilitate customers’ decisions? For example, if your customers are now working from home, perhaps you can market the fact that you will provide technical support for remote workers.
- Your Company — Does your company have other knowledge, partnerships, relationships, or resources that can be brought to bear? If you’ve stood by your customers during hard times in the past, it doesn’t hurt to remind them of that fact (gently) now.
- Your Terms — Can different payment terms, credit policies, contracts, warranties help? Many different companies are experiencing a cash crunch right now. If you can let them extend payment times, they might be willing to pay a little more overall.
- Your Operations — Do your response times, scalability, integrations, etc. make you stand out against the competition? If customers know that you can meet their needs, they may be less price-sensitive.
We have a trio of other resources that can give you more food for thought on this issue:
This is a weird time for a lot of people, but don’t let worry and fear drive you to lower prices unnecessarily. Thinking strategically about your value levers can help position your company for success in the long term.
Identifying Your Value Along Five Dimensions
It's best to present a well-rounded set of criteria upon which customers can base a buying decision. In this guide, you'll learn about five dimensions of value with over 50 potential value-drivers that can influence buying decisions.
The Fundamentals of Value-Based Pricing
Value-based pricing is like any other business practice in that most of the power comes from mastering the fundamentals. In this on-demand webinar, learn the core concepts and essential processes that generate the most bang for the buck.
The Multiple Dimensions of Value Chart
Use this chart of potential value-drivers along multiple dimensions to aid your initial brainstorming around how your offerings deliver value to your customers.
Combating Competitive Pricing Pressure
Pricing pressure is just a fact of life. But how well you handle that pressure can determine whether your business ultimately succeeds or fails. This guide exposes 15 ways to address (and prepare for) competitive pricing pressure.
MindBrew's experienced analysts and researchers gather proven practices and practical know-how from practitioners and industry experts all over the world—people who are working in the trenches on a daily basis and being held accountable for the success or failure of their decisions.
