Seven Weeks To A Better Business, Part Six

By Beacon Staff

This seven part series is about making real, substantive steps to improving your business in seven weeks. So let’s get started with week six’s strategy: Stop trying to beat Walmart at THEIR game

Everyone knows who has the lowest prices in town, everyday, right? Of course, it’s Wal-Mart.

If you are one of those “Well Mark, my business is different, I’m in a commodity business, yada yada” kinds of people, just get over it for a few minutes, ok? I wont argue whether you are different for now, even though I know you aren’t. We can discuss that later. So….When I refer to Wal-Mart, I could just as easily be referring to the bargain store or service vendor in your niche.

Let’s pretend for a moment that you sell lawn mowers. Even worse, you sell the same brand that Wal-Mart sells, but you might sell different models. Or maybe not.

Do you really think you are ever going to be able to compete on price with a company that buys shiploads of mowers while you are buying them by the pallet? Please.

If you want to make money by competing with Walmart, go buy some KMart stock. Or maybe not.

Here’s the deal. The guys in Bentonville can shake down any manufacturer on the planet and get a wholesale price that no one else can dream of.

Of course, that’s expected when you buy in quantities that could supply a medium sized country. You can’t compete with them on a price basis, so don’t bother trying. In fact, it doesn’t even do you any good to leave your prices “close” to theirs, because the only thing you are doing is trimming your profit. It doesn’t do your customers any good to have low prices if you can’t afford to stay open.

Let’s use a lawn mower as an example product, and assume you own an outdoor power equipment store.

Let’s assume Wal-Mart sells a $199 barebones Ronco mower. The guy who has a limited budget is taken care of, roughly speaking, at Wal-Mart. He may not ever change the oil and when it breaks, it might just sit somewhere in his yard with his last 3 mowers and he’ll go to whatever place as the best price that day and buy another one. Then he’ll use that one up till it breaks. And so on. In 20 years, he’ll have 6 dead cheap mowers in his yard.

Remember that in most cases, the price-at-all-costs shopper is the worst behaved client you will have. Research has shown that they do not listen to your advice, they do not take care of the items you sell to them, they do not buy services after the sale, and most importantly, the price shopper has no loyalty to you for what you have done (and will do) for them. A cheaper price is just around the corner and like a little sunfish after a worm, they’ll go after it as soon as the “cheap store” wiggles that low price in front of them.

So what should you sell?

How about the $499 Honda self-propelled mower with the air conditioner in the handle (yes, that was a joke). Or the $699 self-propelled John Deere with the bag, mulching kit, cover, lifetime warranty, and a card for a free oil change at the end of the season if they get their mower winterized before November 1st.

You can’t beat Wal-Mart at their game playing by their rules. You can, however, co-exist and make a lot of money doing so, playing a different game.

What to do next: Sit down and plan how to add value to your products and services so that you can justify a higher price. Don’t just raise them because I said so, raise them to match the value you deliver. Turn up the heat on everything you do. Better, faster, more convenient. Make it so easy to do business with you that we’d be nuts not to.

Want to learn more about Mark or ask him to write about a business, operations or marketing problem? See Mark’s site or contact him at mriffey@flatheadbeacon.com.v

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