Sam Bowers spoke to a recent meeting of my CEO private advisory board. His topic, “Marketing, Sales And Pricing Strategies For The New Economy”, addressed how he perceives the selling process changing. Sam really challenged our thinking around the ways we are currently offering our products and services.
First, he said “We have moved from a world where things are sold to a world to where things are bought”. His point being that most of the products and/or services we offer, with few industry exceptions, are a commodity. This resulted in a lot of pushback from the CEOs in the room, claiming that their product or service was unique in some way that did not make it a commodity. Sam argued back that if you have to bid against similar products or services that are the same or similar to yours then you are offering a commodity.
Because of the Internet every consumer (business or personal) can use it to compare your product or service with one from your competitors. Yes, yours may be slightly different but is it different enough that your customer will pay more for yours than someone else’s? He emphasized that we must respect the power of the buyer because they control the deal.
Rent as much of your human talent as possible. Change is happening so quickly that the job you hire someone for today may be obsolete in a short time.
You as CEO must focus on what your industry could be doing in the future. Knowing what is going to happen will tell you where you need to be in developing new products or services.
Because we are moving to a world where things are bought and not sold you need to rethink your sales process and sales team. He said many major corporations are disbanding their sales team. IBM, he cited, now has IBM consulting. Your sales people will become consultants to your customers.
In the past in order to get a sale we might add a feature or service free to close the deal. Sam says we need to offer a basic product or service. If the customer wants more then you have another price for that and so on. An example is Dell Computer. You go online and select a basic model. For each additional upgrade you pay a higher price for your computer. Sam’s message…separate your knowledge from your execution. Charge for your knowledge (i.e. providing design services). It may actually be more profitable than your execution!
In summary, the movement is toward pushing down prices. In order to be competitive you will need to lower your costs. Your world as CEO is to manage this process and have the people on board to help you manage it efficiently.
Consider Reading This
Blue Ocean Strategy: How to Create Uncontested Market Space and Make Competition Irrelevant by W. Chan Kim and Renee Mauborgne. The authors put forth the argument that lasting success comes from creating “blue oceans”, untapped markets ready for growth, rather than “red oceans”, markets where everyone is ripping each other apart through competition.