It’s human nature and business nature to want to over-deliver and exceed your customers’ 
expectations in terms of product value and service value. In many instances, it’s the survival instinct kicking in where you are fearful that if you don’t over-deliver you could lose the customer to a competitor and then you’ll go out of business, go on unemployment, become homeless, and wither away into obscurity. Obviously, that’s a little drastic and as radical as that sounds, I’ve seen many sales professionals and many businesses behave this way.
And of course, we behave this way because “smart” customers know which buttons to push to increase our anxiety and make us do whatever it takes to “make them happy.” And then there are the customers who aren’t really trying to manipulate the system or take advantage of vendors, but simply wake up every day with filet mignon tastes but only have Filet O’Fish budgets (nothing against delicious Filet O’Fish sandwiches or our dear clients at #McDonalds)!
The Business Acumen challenges of trying to deliver filet mignon to customers who have Filet O’Fish budgets include:
- This strategy is not profitable – you may be generating revenues and growing share, but because the costs are so much higher, the margins will be lower and, in some cases, could be negative which means you may be losing money on every unit you sell.
- Not strategic – there is no successful business strategy where you provide top quality services and products at the lowest possible price. It doesn’t add up and there is no strategy that works with those combinations.
- Hoping to increase price (someday) – the business graveyard is filled with companies who had great products and sold them at low prices for a loss hoping to someday raise their prices to generate a profit. A great example of this is Pets.com. They were once the darlings of Wall Street, willing to sell leading products as discounted rates in hopes of building loyalty so they could increase prices. The problem was that other costs went up as well and they never could increase to premium pricing.
Hard Choices and Tips
Hopefully you never find yourself in a position like this because you have developed, and are executing, a clear strategy and not over-delivering without capturing the value that you deserve. If you do, here are three tips that you can leverage to try to solve this critical challenge:
Proactively Identify and Target Key Customers that Match Your Value Proposition
If your strategy is selling innovative, leading products, then aggressively find prospects and customers who both appreciate the value you provide and are willing to pay for that value. There is a discipline that must transcend the entire organization and cut across all the functions in alignment. Structures, measurement, and compensation must also match so you are avoiding situations such as just paying sales professionals on top line revenue without any consideration of margin.
Aggressively Take Wasted Cost (not Good Cost) Out of Your System
Wasted costs go right against margin and profit. You need to aggressively look for ways to continually improve and continually find methods of more operational efficiencies. Every penny saved is a penny that drops down to the bottom line.
Learn to fire your Bad Customers
Customers who will always have filet of mignon taste and demand premium service, but don’t have the ability to pay anything more than Filet O’Fish prices may be a customer that you want to part ways with. Sometimes that will hurt up front but may be the best thing you can do for your sales territory or business over the long term.
