July 28th, 2007 03:54 EST
Sell Your Value - Not Your Price
Some sellers choose to use low price as their competitive advantage. I always counsel growing businesses to stay away from price competition if at all possible. Growing businesses, which typically are rather small, can never really compete on price. As soon as they get into a price war, a bigger company with more resources and the ability to leverage economies of scale will plow the small company under. Bigger companies can usually do a better job shaving price than small, entrepreneurial companies can.
My good friend Patrick reminded me recently of a story in which a seller encounters a potential buyer. The seller says to the potential buyer, "I have an elephant for sale." The potential buyer says, "But I don't want an elephant." The seller responds that the elephant is only $100. The potential buyer again says, "But I don't want an elephant." The seller responds, "OK – I’ll sell it for $50." The buyer once again responds, "But I don't want an elephant." This time, the seller says, “Fine. This is my final offer: I’ll sell you the elephant, and I’ll throw in a giraffe for $20."
Sometimes entrepreneurs just don't get it. They don't get what the buyer really wants. And unless entrepreneurs understand what buyers really want, they will never make a sale. If what you are selling and what the buyer is buying are not the same thing, you aren’t going to make the sale. I call the difference between what the buyer buys and what the seller sells a “gap.” As long as the gap exists, there won’t be a sale.
So, as you are working hard every day to build your company, or as you're building your career, you must:
1. Understand what the buyer wants.
2. Get very good at communicating what the buyer wants back to them.
If you want to grow your company, you must differentiate what you do from the competition and learn how to close the “gap.”
About Joel G. Block, President of Growth-Logic, Inc.
Often dubbed a "Growth Architect" by his clients, Joel Block advises companies on explosive growth strategies by driving revenue and sales. Well known in the capital markets, Joel is a successful entrepreneur, speaker and advisor. To bring Joel into your company, please visit www.joelblock.com or www.growth-logic.com.