Price Focus Distracts From Product Value, Experts Warn

In a time where service providers are arguably more price-sensitive than ever, why wouldn’t any company lead with a low price in a sales pitch?

The answer, warns one industry expert, is touching off a price war, which industry history has repeatedly shown us, results in commoditization of products and a downward plunge that takes many companies with it.

“Selling solely on price has historically resulted in death spirals for companies and industry segments,” warns Bill Taylor, president of Corporate Ladders and a featured speaker at “Selling on Price.” “This results in companies setting new price ceilings that can never be raised. It’s a lazy person’s way out.”

Taylor will be joined by Bill Leutzinger, president of TelecomMedic. His firm helps consumers understand the ever-changing and often complex telecommunications industry. The company says it knows that most companies don’t have full-time employees dedicated to voice, data and Internet challenges, and strives to fill that role.

Focusing first and foremost on low price largely negates product value, be it features, functionality or flexibility, emphasizes Taylor. “The telecom industry has a propensity toward selling product to make numbers. You can always set price low enough to do that.”

But the damage of such a long and continuing practice is more than collateral, according to Taylor. “Yes, these are very challenging times. That makes it more important to sell products with value baked in. Otherwise, buyers will be looking for newer and lower price ceilings. And sooner or later, someone is going to have to drop out.”

Taylor believes selling purely on pricing can only succeed where that practice is part of a large strategy.

“My argument is that there may be a place for a loss leader to become a market entrant, but the company would need a sizable complement of other things to sell in other ways,” contends the sales veteran, who has advised companies in industries outside telecom.

So what’s a sales team to do?

Taylor advises companies to make a multi-product pitch which focuses on much more — such as value — than low prices. He suggests telecom companies take a page from another industry, and sooner rather than later.

“Supermarkets never bring you in just to sell you the sales items on the end caps,” he noted. “They want you to walk down the aisles and pick up other items as well.”

Vendors should also focus on what happens, or what is needed, post-sale. This area includes service and support, he noted.

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