Grow your Business by increasing prices. Business is highly competitive – especially for small businesses. Many businesses find themselves increasing commoditized with regular pressure from customers to cut pricing. Cutting prices usually has the effect of making a businesses weaker and weaker with less margin to invest in growth. It is a downward spiral.
So what is the answer? Here’s the story of one of my clients’ success.
My business The Sales Experts is a sales recruitment, sales training and sales consulting business based in London. Sales consulting is the process of evolving a business’s sales and marketing to improve profitability.
HERE IS A CASE STUDY
Three and a half years ago, in 2012, I had given a speech at The Institute of Directors in London. Afterwards a business owner from the audience approached me. The owner asked for a few minutes of my time and we sat down for a coffee and a conversation.
The businessperson was the owner of a Lifestyle Management company. This is a crowded market of mostly small operators that offer services to families and executives. The owner outlined a long history of struggling to grow the business over the previous ten years. It had been a struggle to get and keep clients and the competition from a few very large players meant that it was almost impossible to make any money. The big companies had call centres, lots of staff, big advertising budgets and, in fact, were offering a better quality of service at a lower price. Economies of scale meant that the large competitors could make money at prices that were impossibly low for a small business.
More struggles were on the near horizon and the owner had little money to invest.
I enjoy working with businesses of all sizes and particularly enjoy when I can make a difference and I agreed to work with the client on a limited budget. I have continued to work with this business over the last three years with significant results.
In the three years we have worked together the company has grown revenue by 1000%. That is a 10 times increase!
THIS IS HOW WE DID IT
The company had positioned the brand in the middle of the crowded marketplace. Me-too branding and me-too service meant they couldn’t stand out. Prospects had lots of choices of almost identical businesses.
We had to take significant action. We repositioned the company at the very highest end of the market. The owner had tremendous experience and so we were able to leverage this to reposition the company as an elite provider of services to only the very wealthy.
We started with a new website, branding and, in time, a new very distinctive company name. Over the three years we twice upgrade the website to present an even more exclusive image and created an exclusive and Trademarked company identity package.
Initially, there was no budget so we made used SEO to drive traffic to the website, social media and some primitive Public Relations. As I was able to personally build the websites and do most of the branding and PR we were better able to keep the first investment low.
Prices increased significantly inline with providing personal services to the very wealthy. The very wealthy can have limitless funds to spend on lifestyle and, although demanding, are much less trouble than suburban families and business executives. If an executive needs a business class ticket booked there is a small fee earned for that service. When a multi-millionaire needs a private jet, Rolls Royce transport and extra special management the price is astronomical. Of course the margins improve.
In fact, the higher the price the happier the client!
Higher prices and fewer, but better, customers meant a much more manageable business. The owner is able to keep costs down, have fewer employees and make more money in addition to the higher profit margins.
As we moved the positioning from the mass market that requires expensive advertising and marketing to a niche market that depends mostly on word-of-mouth and referrals we have kept the advertising costs to almost zero. Instead of spending money on advertising we invested in service and branding resulting in an even more exclusive profile.
Almost immediately we were able to improve revenue and completely cut price negotiations. With the move to a niche market the focus shifted entirely away from price to service. In time, the business has grown, thrived and become much more profitable. The owner has a new life without fear or stress.
The lesson? Be the needle not the haystack!
Getting higher prices for your services and products is not just about selling to the wealthy it is about positioning your business as special and unique. It is about niche!