Q & A Table of Contents
My Competition Undercut My Price
From: Alexandra, Bucharest, Romania
Question: At the moment one of my contracts with a client is ending. My competition went to him with a lower price then mine offering the same type of services. I already put on paper the arguments why the client should choose my company. What else should I do in this case?
Response: Take a look at your list of why your client has been doing business with your company. Think of any constituents your client needs to please: his customers, the owners of his company, his employees. Also give thought to your client's situation in the marketplace: what does he face in terms of competition? Then take another look at how the products or services you offer respond to the needs or priorities of that client, his constituencies, and others in the market he serves.
Part of the job of working with clients is to make sure you always offer them more value than the price they pay. Looking at their needs, paying attention to how those needs change during your performance of the contract can help you be aware of potential risks -- such as the competitor who offered a lower price.
You need to find out whether the quality of the competitor's lower-priced goods or services is as high as the quality of the services you are offering. Your own measurement of quality is not as important as the conclusions reached by your client. What he perceives will help make his decision.
If the client has already said good-bye to you and has agreed to go to your competition, you need to do two things: the first is to accept reality and determine out what kinds of lessons you can learn from the experience. Your second step should be to keep in touch with your 'former' client to see if his new supplier is, indeed, satisfying his business's needs. Perhaps the client will miss the services you provided and you will have a chance to regain the business.
When a price war threatens your business, you should see whether issues other than price can make a difference. In addition to the value of the relationship, try to figure out whether there is a way to do something for your client's ego to make him want to stick with you. Figure out whether there is someone else to whom the client goes for advice who could recommend you instead of the competitor.
Price may be crucial to a business. But it is not the only thing likely to influence the decisions of human beings.
Good luck,
Steve
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