“Customer service trumps price” is the title of Bruce Temkin’s recent post (http://experiencematters.wordpress.com) on his excellent Customer Experience Matters blog. Indeed, Bruce’s research indicates that service is more important to consumers than price across 12 industries. However, Bruce’s work is consumer oriented. This brings a question to mind, “Would we find the same thing in business to business markets?”
We suspect we would find the opposite – that business people are placing price ahead of service considerations in the current economic environment. Increasing pressures for buyers to reduce their expenses, continued strengthening of corporate procurement departments, and hyper competition amongst sellers for reduced work in many sectors all tend to force the conversation towards service being a table stake and cost being the differentiator which wins the bid.
We’ve heard several times from clients across industries that they are seeking “the low cost solution”. And, that is for projects that survive the wide ranging and deep budget cuts which are regularly taking place fairly early in most companies’ fiscal years. Make no mistake, service is still expected and value (versus price) is discussed. But, bottom line price appears to be winning these days in business markets.
Operationally efficient, cost leaders are well positioned for this market. But what if your organization is product or service oriented? How can you stay in the game without simply pricing to win and suffering severe losses? There are a few tricks that are working for smart business to business players, namely:
- Extend current contracts even before they come to renewal. Make a preemptive offer of beneficial terms including pricing to build a longer term stable base of revenue that does not require renewal management:
- Create stripped down versions of solutions which deliver the basics at low prices. There is nothing simpler, yet many B2B companies lack a basic offer.
- Communicate pricing clearly by showing low entry solutions with options that create greater product and service benefit at increased prices. Sometimes, it's as easy as starting the conversation with a very low number.
Whatever the case, be prepared to meet and beat your competitors at the pricing game. While talk about service will continue, we suspect that even leading organizations won't be able to provide any service at all without starting with "a nice price!"
Submitted by John Carroll III, Senior Vice President, Synovate Customer Experience
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