In a limited growth market, competition is stiff and services get commoditized. Whether your business is landscape maintenance or health care, banking or manufacturing, when there is a finite number of potential buyers, the result is pricing pressure.
Everyone feels it: suppliers, vendors, providers. Every player in the value chain gets squeezed. How do you deal with this while protecting your profit margins and providing well-paying jobs to your people? How do you retain the clients you have, even if competitors are sliding in with lower-price offers?
Now more than ever, businesses need to evaluate who they are, what they stand for and the clients they serve. What matters most to your organization, and your customers? If you take price out of the game completely, what do you have to offer? If money were no object, why would clients choose your business to provide service?
Relationships rule when pricing pressure heats up. Rather than focusing resources on business development, redirect assets toward improving customer experience. You can go out and get a new customer tomorrow, but if two of your existing clients leave you because of poor customer experience, you’re back at square one.
It goes back to helping clients understand the service, frequency and value they’re actually getting for a given price. The key is to move the conversation toward other priorities that matter to clients: quality, customer service, responsiveness, experience and value. A limited market with pricing pressure can actually be good for business if you look at this environment as a challenge to redefine your processes and to do a better job serving clients.
You can’t buy one way and sell another
If you emphasize to your clients that quality and relationships matter, you can’t turn around and nickel and dime your vendors. Be consistent in your approach. If your vendors are delivering value to you, it’s your fiscal responsibility to pass that value to clients. Be a true partner.
Be stewards of customers’ finances
Know your customers and know their costs. Are they going through a tough financial time? If so, how can you work with their organization to deliver the services they need? What changes can you both agree on in order to maintain the relationship?
Align expectations with price
There will always be a competitor that can offer a lower price. That doesn’t mean the customer will get the same value. Take the time to understand what clients actually expect from your service. Walk them through how pricing works. Show them the price gap and why some providers’ contracts provide a lower price (and less service).
Know what matters to your clients
What’s most important to the client? How can you meet that need?
Protect the customers you have today by treating them with honesty and integrity. Focus on the partnership — relationships trump price. Practice open communication and gain a real understanding of clients’ businesses. It goes back to the old adage, treat others as you want to be treated. ●
Jerry Schill is president at Schill Grounds Management