An article I wrote about Tide detergent reveals a secret that every solution provider should know – the power of a LOSS LEADER!
Below is my reply to one of the many comments the article’s subject matter inspired. It also provides a direct tie-in to how procurement solution providers can stand out from what has become a mind-numbing competitive landscape.
What is a LOSS LEADER? “a product sold at a loss to attract customers.”
Referencing Rob Mitchell‘s comment, the LOSS LEADER strategy appears to be the ideal combination of tapping into brand loyalty (Tide) and loss aversion (significant savings). Lower prices for a trusted brand are like a customer appreciation gesture to maintain your hold on your core customer base. It also allows the brand to capture and retain new customers post-special pricing.
It would be great to see some stats on new customer retention when they return to normal.
Of course, depending on the industry, a LOSS LEADER strategy can be something other than price-centric. For example, relationship-centric and service-centric.
In the early days of my high-tech career, I would “sell” my expertise and service delivery instead of selling my product to a client.
Prospects and clients could call on me to learn about industry changes, including new products. They could also call on me to help them solve a problem – even when it didn’t involve a product I was selling.
I would – for no charge, meticulously do the research and provide them with the information and introductions they would need to solve the problem.
At the end of every month, I would send them a statement listing the problem-solving services I provided – including the resolution and the number of hours I spent to find the solution. Think of it like a bill you get from an accountant or a lawyer.
I would then get a phone call from the prospect or client saying, “Wow, I didn’t realize how much time and energy you spent on solving my problem – how much will this cost me because I didn’t have it in my budget.”
My answer was always the same: my service in this area will cost you nothing. However, please keep this and future statements in mind when one of my competitors tells you they can save you 10% to 20% of the price you are paying me for my systems.
Suffice it to say, I rarely, if ever, lost a deal to a competitor based on pricing.
In short, my time, experience, and expertise were my LOSS LEADER and, ultimately, my competitive advantage.
The Takeaway: Stop selling what everyone else is selling, e.g., product features, functions, and benefits, and start selling the one thing your competitors don’t have – YOU!
Procurement Insights
Why procurement solution providers have to adopt a “LOSS LEADER” mindset to succeed in an overcrowded market
Posted on December 19, 2023
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An article I wrote about Tide detergent reveals a secret that every solution provider should know – the power of a LOSS LEADER!
Below is my reply to one of the many comments the article’s subject matter inspired. It also provides a direct tie-in to how procurement solution providers can stand out from what has become a mind-numbing competitive landscape.
What is a LOSS LEADER? “a product sold at a loss to attract customers.”
Jeremy Bowley, great insight, as always.
Referencing Rob Mitchell‘s comment, the LOSS LEADER strategy appears to be the ideal combination of tapping into brand loyalty (Tide) and loss aversion (significant savings). Lower prices for a trusted brand are like a customer appreciation gesture to maintain your hold on your core customer base. It also allows the brand to capture and retain new customers post-special pricing.
It would be great to see some stats on new customer retention when they return to normal.
Of course, depending on the industry, a LOSS LEADER strategy can be something other than price-centric. For example, relationship-centric and service-centric.
In the early days of my high-tech career, I would “sell” my expertise and service delivery instead of selling my product to a client.
Prospects and clients could call on me to learn about industry changes, including new products. They could also call on me to help them solve a problem – even when it didn’t involve a product I was selling.
I would – for no charge, meticulously do the research and provide them with the information and introductions they would need to solve the problem.
At the end of every month, I would send them a statement listing the problem-solving services I provided – including the resolution and the number of hours I spent to find the solution. Think of it like a bill you get from an accountant or a lawyer.
I would then get a phone call from the prospect or client saying, “Wow, I didn’t realize how much time and energy you spent on solving my problem – how much will this cost me because I didn’t have it in my budget.”
My answer was always the same: my service in this area will cost you nothing. However, please keep this and future statements in mind when one of my competitors tells you they can save you 10% to 20% of the price you are paying me for my systems.
Suffice it to say, I rarely, if ever, lost a deal to a competitor based on pricing.
In short, my time, experience, and expertise were my LOSS LEADER and, ultimately, my competitive advantage.
The Takeaway: Stop selling what everyone else is selling, e.g., product features, functions, and benefits, and start selling the one thing your competitors don’t have – YOU!
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