You’ve been plugging along, doing fairly well. Your company offers a variety of products or services and you have a solid group of employees who are genuinely liked by your customers. Your pricing is reasonable, and your staff does not experience too much push-back from their prospects when trying to grow your customer base. Suddenly, you find yourself faced with a new competitor; one of those high volume low cost models has set up shop in your market, generating a buzz with their cut-rate, loss leader pricing.
Suddenly your sales personnel are asking questions. How can we compete with them? Our customers are going to go there to save money, or ask us to lower our fees, etc. You start to worry about the competition and what they are doing, completely forgetting what you do best. The first couple of cancels come through, and you hit the panic button – we have to match them with price.
In most every instance, this is the worst thing you can do. Unless you have been running roughshod over your current and potential customers, delivering shoddy service, questionable sales tactics, and alienating your market, you do not need to lower your price or standards. (If you have been doing these things, you’re already dead in the water). Think of the things you provide that the discount model does not, and emphasize these. Create some new programming or add an amenity, etc. It’s going to take leadership to distinguish your product now, not just advertising. Employees must value your product and pass this feeling on to your members.
I have seen too many operations panic and discount their pricing, only to destroy their brand, antagonize their current customers, and ultimately end their operations. Stay strong and have a plan – don’t lose your dream to a model that promises nothing, and delivers less.
