The long road to freedom from price competition

October 9, 2012

By Bob Johnson, NAID CEO

I’ve been thinking a lot about how to follow up last Tuesday’s blog. To refresh your memory, I discussed how those who use low-ball pricing techniques to compete fail to consider how it comes back to haunt them eventually.

In reality, the downward price cycle is a complicated issue and not one with an easy remedy. First of all, the vast majority of secure destruction providers do actually understand that low-ball pricing is a bad thing. I also think they probably do not see themselves as the primary culprit. They would say that any price cutting they have done was in response to pressure from their competitors. They were dragged into the fray as a last resort. In other words, they are not the ones driving the price down; they are just reacting. In the convoluted overlap that inevitably exists in such markets, it is actually possible, maybe even probable, that no one sees themselves as the cause, yet due to competitive pressure, they are forced to participate.

Rising above the price trap is a process; a process of decreasing reliance on customers who are just shopping a price. I am not saying ignore those calls. You should definitely make a valiant effort to get that business for a reasonable price. But long term, the emphasis needs to be on attracting sales from people interested in working with you. There is a big difference between a phone call from someone who wants your service and someone who just looks for a cheap price. I am only preaching what Ray Barry, Tom Adams, Jeffrey Gitomer, and many others have been saying for years.

It is not easy to do. In fact, it is really difficult. By comparison, competing on price is significantly easier and that’s why it’s so prevalent. But, ask yourself, when something was easy, did it ever yield a truly valuable result? Someone has to make a conscious, disciplined decision to exert more effort than they are used to if they want to create this type of a business.

And, even then, business will slow and you will not win every battle. In fact, you may still lose most battles. However, you will have a strategy that builds business based on good customers who want to work with you, which means you may not have predominant market share. But you will make money. You will watch your “following” grow and you will have a good business you can sell or pass down to your kids.

The decision is yours. You didn’t start the pricing spiral but you will be trapped if you don’t put effort and discipline into building a stronger customer base. It will take time but there is no better time to start than now.