Various
offerings, services and products “cycle” with time in your business.
One of my clients suffered a very expensive mistake by not considering
cycle changes with a “ready-to-buy” sale they thought was theirs.
Post
Hurricane Rita, this engineering design and service client was bidding on
repairing damage to a plant in Louisiana they designed and built. They bid
from a design and quality position when what the client cared about was
getting the plant back online—and having people on the ground in
Louisiana (not Houston) to achieve that very quickly.
Unfortunately
the only way to win with their bid as proposed was to compete on
price. How did a market cycle change cause this client to shift from a
value position to a “nowhere to go but price” position—and in a
“hot market” at that?
When
times are tight, prospects become much more cost conscious and concerned
with saving money and offerings that help them do that. There are still
positions you can take within that market that are value or high-end
positions. However, as humans we tend to lock in “what works” and may
overlook changed market situations—especially after a long phase in a
down market like my client has experienced. My client had locked into
design quality and knowledge as a high-end position in a price sensitive
market, a value position in that market.
However,
the market had become opportunistic and shifted to availability. Their
lack of sensitivity to how value has changed to the prospect actually
shifted them into a lower position. Figure 1 depicts this.
Figure 1
Each of the market
positions contains price at the low end and value at the high end.
However, the prospects’ perception of value radically changes based on
the prospects’ position in the market cycle. Even a flat cycle industry
such as food or basic clothing has to change its advertising, product mix
and offerings due to customer’s buying ability and confidence. For
example, during a recession WalMart has more single items such as
underwear or T-Shirts because many shoppers can’t afford a package of
three anymore.
Back to my client’s
positioning dilemma. My client's competitor was on the ground in Louisiana
and capable of getting the plant back running. They were not capable of
re-design much less upgrading old technology of a twenty-five year old
plant—my client's competitive advantage. An alternative might be to
propose a phased approach of getting the plant online. Then, to reap
even stronger long-term benefits, upgrade technology to extract higher-margin
products. By demonstrating that the lost start-up time would be far
outweighed economically longer-term, my client might be able to introduce
alternatives to position them as the best solution. The key is whether the approach made
sense to the prospect—or this alternative started even more creative thinking
for an even better, more collaborative solution.
When we worked through
Figure 1, the missed opportunity became obvious. The key is doing this before
you lose the sale, really working with the prospect by presenting an alternative they hadn’t
considered and listening to their responses.
Are you missing similar
opportunities by not looking at the market context of your prospects and
your capabilities?
Taking time to
periodically look at whether your sales and service tactics are in line
with your market positioning is a necessity today. Turning your position
into sales is truly focusing each sale from the client’s point of view
by including the “landscape” from which he or she is operating.
“Landscape” is more than business cycle because each client has a
particular “landscape” within the business cycle, but it’s a good
place to start.
Next month, how to explain
“landscape” and market change to your employees. If your marketing
and business development people get stuck, imagine where employees who execute
strategy are!
copyright
2005, 2006 Janice Scanlan
This article
was expanded and published in Volume 17.2 of Consulting to Managment
(C2M). If you would like a copy of the article, email Janice at janicescanlan@earthlink.net
Janice Scanlan helps clients gain winning results from
client relationships by ensuring their marketing promises translate into
sales and service that both gets and keeps customers. Contact her at 281
261-2320.
