What you write about your business changes the way you think about your business. That changes how you act in your business.
At some point on your business journey, you’re going to meet a question inside that won’t go away.
This sort of thing: ‘why do more people not get what we’re trying to do? Why do they pass by & not take us up on it?’
Martin Luther King lived it, Peter Senge wrote about it. They called it ….
…. Creative tension
1 – Take one big elastic band
2 – Stretch it between your left and right hands
3 – Look at your hands. Imagine that your left hand is where you are now and your right hand is where you want to be (your vision).
Do it. Hold your hands out and get some distance.
Now here’s the interesting thing – the energy.
That gap between the left and the right, the now and the future vision, always creates an energy or a tension that wants to bring them together. You can actually feel it in your muscles if you really do it.
Can you feel where this is going?
You can use the energy to drag your vision (right hand) back to where you are now or you can let your vision pull your reality forward.
What happens depends on how committed to the vision you are. How strong does it live in you? Is it a flicker or is it already a forest fire?
What you write about your business changes the way you think about your business. And, most importantly, it changes how you act in your business. Some people call this ‘framing’.
You can change if you do this:
1 – Open your eyes to what you’ve got now. If you think you’re too close to the business get fresh eyes on it.
2 – Ask: – what content needs to stay and what content needs to go? This is so you don’t leave good stuff behind or drag old stuff forward.
3 – Act: – make the changes the business needs.
Temptations to knock you off track
When you start on this journey there are 2 big temptations:
1 – You start to feel uncomfortable and defensive about what you built in the past. This makes it really hard to let go of your old content.
2 – You want to gallop off at the first suggestion of progress. Chances are you’ll leave some real diamonds behind.
It’s hard to do this on your own. It’s easier with a guide.
Know this -when it’s uncomfortable or exciting what you’re actually experiencing is the creative tension.
Somerset Maugham hit the nail on the head when he said, “only mediocre people are always at their best”.
RECAP. Creative tension is real, it’s common and it’s a sign that something needs to change.
So, ask yourself this question: are the words I use for the business mostly focused on where I’ve been or where I’m going? Do they include my vision? Am I happy with that?
This article looks at a pricing strategy for your business. It’ll be of interest to you if you tried cutting your prices and got burnt or are tempted to cut your prices to drum up more business.
There are a zillion pricing strategies and there is 1 big red hole that most businesses have fallen down at some point.
That’s the big red hole of cutting your price to try to keep up with or sell more than your competitor.
Fact: the price cutting strategy to generate extra sales is mostly a race to get to the bottom first. You’re likely competing with other businesses who are unaware of the impact of price cuts on their own margins, unaware of the self-inflicted damage being done.
The common mistake associated with price cutting is a very big one. The mistake is to assume that by cutting prices by 10% you just need to do 10% more business or 10% more volume to make up for the loss.
No, because when you cut your price you unleash this lot:
demand increases to the point where you can’t keep up
delivery and product quality fall
profitability takes a nose dive.
You’ll never be able to beat a price-cutting business which doesn’t understand this because they are going broke themselves. You’re not competing against a worthy competitor – you’ve just joined them in a nose dive.
The key to understanding all of this is the profit you are making.
It’s about the size of that gap between your selling price and the cost to you of making that product or delivering that service.
That gap is really important but more often than not gets forgotten because of:
insecurity about the value of your product (is it really worth this much?) or
pressure of an experienced pushy buyer (I can get it cheaper down the road!).
When we let our own insecurity or somebody else’s pressure allow us to view price as the only game in town we pay dearly. We always pay when we don’t understand pricing psychology.
Misunderstanding pricing psychology and buyer psychology is what causes businesses to fall into the red hole.
Think about this. What if pricing really was the only thing that buyers considered when looking at your product?
If price was the only factor buyers considered there would be only 1 supplier of every product or service you can think of – the cheapest supplier. This would apply to the shirt on your back and the house you live in.
Open your eyes. It’s highly unlikely you’re wearing the cheapest shirt on the market or living in the cheapest bricks and mortar you could find. There were other considerations when you chose what to wear and where to live.
We’ll come to those other considerations but for now let’s understand with cash numbers how cutting your price plays out.
Pricing & Profitability
So what’s the real cost to you of cutting your prices by say 10%?
Selling Price 135
Let’s say you sell your widgetything for 135 shekels based on a cost of supply of 100 shekels. You make 35 shekels on each sale.
Price cut 10%
What happens when you try to stimulate demand or keep up with your competitor by cutting your price by 10%.
You’re now selling your widgetything for 121.5 shekels and your cost of supply is still 100 shekels. That means your profit on each one has now fallen to 21.5 shekels.
But, more importantly, your 10% price cut has had a massive slash at your profits. Here are the numbers:
21.5/35 = 0.6143 = 61.43%
That means a 10% price cut meant you just cut your profits by 38.57% (100 minus 61.43). That’s a much deeper cut than most businesses imagine it to be.
Ouch. That’s self-inflicted misery.
So how do you achieve higher profit margins, avoid price wars and still be in healthy profit?
You have to win or close your sales at full price, full fee or full rate. To do that you have to make some changes.
Let’s repeat that – it’s important:
You have to win or close your sales at full price, full fee or full rate. To do that you have to make some changes.
Change the Frame Around Your Product
To maintain your price in the face of competition or to raise your margins for higher profitability you need to change the frame of reference for your product or service. You need to change how buyers view and appreciate your product.
To do this you make your buyer aware of how you deal with those things that could really keep them up at night if they make the mistake of going with your lower-priced competition….
We’re talking about your competitive advantage:
Delivery – tell them how long it takes to fulfill orders or get the product to them, or what’s special / better about the way you do that.
Quality – if you have a safer crash helmet then say it. If your product is clearly the best fit for where your client is now, then say it. If you have proper quality control in place then explain it.
Service – explain how your level of customer service is leagues ahead of cutprice.com.
Process – explain how easy it is to do business with you. Think convenience, think location, think ….
Everybody remembers these things when it’s time to commit or sign on the dotted line. The key is to communicate them early enough in the buying process so that it’s your dotted line that gets signed on 🙂 Your website content is a good place to start.
You should understand by now how price is rarely the most important deciding factor in buying decisions (look at your own shirt again).
You should also understand the damage to your profitability of even modest price cuts.
Finally, you should understand that there is another way to compete and win better quality business. You need to speak about quality, service, process, delivery and the factors unique to you and your business that are important to your customer.
Because stories work like Trim Tabs (small rudders that move big rudders)
This is the story of the trim tab.
Imagine a giant oil tanker ploughing through the ocean.
To get the tanker to change direction you need to move the enormous rudder on the back of that ship. To move that big rudder, even slightly, you need a lot of force – the push of water is fighting against you all the way.
That’s really hard, energy wasting, work.
Introducing trim tabs
Because rudders and ships got bigger and bigger some clever engineers built into the big rudder something called the trim tab.
It’s like a miniature rudder on the big rudder.
It’s much less effort to move the little one than the big one.
How does a trim tab work?
Something clever happens when you start to move the small trim tab in one direction: the drag in the water causes the big rudder to move in the opposite direction.
This steers the ship in the direction you want to go.
The water does the work, not you.
You use the element (water) so that (little rudder) steers (big rudder) – (big rudder) steers (ship).
Why story telling in your website copy works in the same way
‘Stories’ pull us into streams of thought without us feeling like we’re doing much hard work.
Stories, metaphors and analogies can persuade us to change our direction because they don’t meet resistance from the conscious mind – because they don’t ‘threaten’ us in the same way as somebody giving us a, full on, full frontal, sales pitch threatens us.
(Selling to the conscious mind is like trying to push the big old rudder against the power of the ocean – you meet a lot of resistance).
Stories help us lower our guard
Stories have been used at the bedside and before sleep for as long as we can remember because they help us to lower our guard, to let go.
Stories (like the little trim tab) pull your reader round with less resistance than if you try to push the main decision-making rudder directly.
This is because when you hear a story you fire up the stream of your own imagination, you fill in the cracks and bridge all the gaps that you need to.
As soon as I tell you that the Prince found himself in a sun filled clearing in the middle of the dark dark wood you create a mental picture of that Prince and that clearing that is yours – I can’t see it.
And, stepping in to this stream feels like a free personal choice – you’re making the pictures in your own head (that nobody else can see).
You value what you create in your head
If you’ve ever made something with your own hands you know how much more you value it and love it than something you get off the shelf.
The same happens when you start to complete the story you’re told in your head.
You value the pictures that you create in your head in the same way you feel chuffed looking at your self-assembled Ikea bookshelf. You own it in the full sense of the word.
The desire to change gets internalised
If a story or metaphor is used to help you reconsider something or try something new then there’s a better chance that behaviour change will result.
Because it’s hard not to own and support what’s going on in your own head.
So, the principle is this:
You use the element (imagination) so that (little story) steers (big chain of thoughts) – (big chain of thoughts) steers (behaviour).
Is the auto pilot holding your business on the wrong course?
Summary: When you need change, repetition doesn’t work.
TRUE STORY: It’s a warm dry day, on the way to a Pembrokeshire beach with my partner. I’m in the passenger seat, wedged in pretty tightly from the waist down with baskets, books, bananas, water, towels – prepared for everything – apart from movement of any sort.
My partner has just started making body butter, oils – all sorts of potions, which now come everywhere with us. As the (non-negotiable) test pilot for these concoctions I was handed a jar of moisturiser with the ‘you should know the routine by now’ look.
Now here’s the interesting thing that happened:
After glossing my head with this wonder paste I dipped into the jar, reached down to do my legs but couldn’t get to them because of all the baggage.
So, and I’m clearly on auto pilot now, I smeared another lot on my head.
Still on auto pilot, and with a body memory (fear) telling me this procedure should be taking longer than I’ve allocated to it (and a partner fishing for body butter compliments), I dipped into the pot again.
I reached down for my legs, hit the barrier of baskets and so went for the easy option – I gave my head a third smearing.
Yeh, it was a hot day.
What was going on here?
The Line of Least Resistance Kills Business Development
What was going on here that turned Mr Vaguely Rational into Mr white-headed clown? I’ll tell you (with hindsight and a bit of distance).
This is an automatic passive behaviour response, which we’re all tempted by because they’re easier – they follow the line of least resistance.
It’s Like Jelly
Repeated passive patterns or the line of least resistance are like the experiments of Edward de Bono where warm water gets poured into hard jelly.
The first warm water you pour onto cold jelly creates a channel and often a bit of a hole. The next time you pour on water it heads for the channel that’s already there and makes the same hole a bit deeper.
That effect gets repeated.
So, what you get is a deeper and deeper holein the same place.
Now, sometimes a habit or culture of doing the same things, in the same way, works for you. Sometimes it doesn’t.
When your business model changes you have to be particularly careful….
Has Your Business Changed & Grown in the last 3 Years?
There’s a good chance your business model and product has grown, improved and developed over the last 3 years. That’s good.
If what you’re telling the world about it on your website hasn’t grown too (i.e you’re leaving lukewarm water sitting in the old channels and hole) then there’s a very good chance you’re missing a trick.
At the best, you’re leaving money on the table because your old customers have lost touch with what you really do now and so can never be drawn towards it.
At worst you’re confusing your new customers because what you say you do on your website and where they see your business going are 2 different things. That’s confusion.
Confusion kills conversion.
It’s easily done – if you’ve never updated your content it can seem like a barrier (a bit like the baskets and stuff) and so you do the same old things that you’ve gotten comfortable with instead (the jelly hole getting deeper in the same place).
It is easily done.
It’s slowly toxic for your business.
That sounds a bit hard core but it’s not dry skin at stake, it’s your business and personal life.
If, having read this, you realise you’ve been putting it off & now want to review your copy or talk about a strategic rewrite get in touch