Even in markets where sales growth is notoriously tough, where it seems like price is the only thing that customers are interested in, and where margins are wafer-thin to begin with … there is a methodical way to not just grow sales, but do so while maintaining, or even increasing prices, and making a profit better than you could have believed possible, from those sales.
We HATE the entire idea of competing on price, and refuse to endorse this as a way of winning business. Any price cut can be matched by a competitor at the stroke of a pen and all you have is a race to the bottom. Price is NEVER the way to gain a competitive edge.
This is one of the least-understood areas where Theory of Constraints can transform a company’s business.
This topic demands a face-to-face discussion because it is both so powerful and so unorthodox that the written word can’t do it justice. Your skepticism will understandably be sky-high. But just be aware … I would not make the claims I’m going to make if I couldn’t back them up, because I’m acutely aware of the strength of that skepticism!
Four elements come together here.
First, what you believe are your most profitable and least profitable products probably aren’t. (I can not only prove this, I can show you the support of many of the leading accountants in the world for this claim.)
Second, there is an inherent conflict in product pricing. You want to charge a price that reflects your material, labour, and overhead costs and a “fair” margin. Your customer doesn’t give a dam about your costs or your margin. Their basis for deciding “value” comes from other factors (including what they pay or would pay your competitors).
But, what if there was a methodical way to change THEIR perception of the value of your offering, so that it’s actually HIGHER than your costs + margin would suggest? So that they’ll WILLINGLY pay you more than they pay you today or pay your competitors?
This is what’s known as a “Mafia Offer.” It’s extraordinarily powerful.
Third, there is way of presenting a value proposition that is in an entirely different League than most sales people operate in.
For conventional sales it’s very powerful.
For the “perceived value” sales we’re talking about, for a Mafia Offer, it’s essential.
And Fourth, there is an adaptation of the TOC to the Sales process that can bring in many more leads than any conventional company has ever encountered, routinely.
When you combine these 4 elements, you have something quite remarkable. More leads coming in, a better way of closing a higher percentage of them, and you are acutely aware of which products genuinely make you money and which don’t.