How do I beat the cheaper competitor?

How Do I Beat the Smaller, Cheaper Competitor?

If cheaper always won, there would only be one company left standing.

In today’s Question of the Day, I use the cell phone industry as a tongue-in-cheek example to show why the lowest price doesn’t dominate the market—and what that means for your business.

In this episode, we cover:

•  Why competing on price alone is a losing strategy 
•  How customers actually evaluate value vs. cost
•  A practical exercise you can use today to clearly define why you’re worth more
•  How to confidently position your company against smaller, cheaper competitors without discounting 

If you’re tired of feeling undercut, this episode will help you reframe the conversation and compete where it actually matters.

Have a Question? - Submit your questions to chrish@nexstarnetwork.com

Transcript

SPEAKER_00 0:10

Welcome to the question of the day. Today's question is from Adrian in North Carolina, and Adrian asks, I keep losing jobs to smaller companies. They have much cheaper prices because they don't have as many employees. How can I sell against the smaller companies? That's a great question. Oh man, I guess, like, I guess we just give up. They got the cheaper price. There's there's no way we're gonna compete with that. And I mean, there's even examples you can look at, right? Like smartphones. Look at smartphones. Amp, Apple, and and Samsung, they used to dominate the smartphone market. Like you could get a smartphone for over a thousand dollars. And then people realize like you can just buy you can buy $50 smartphones. Like you can go, you can go on Amazon right now. And there's tons, tons of cheaper phones. There's there's phones, brand name phones like Blue or Elcatel, even a Motorola. They're like 50 bucks, like unlocked, new, like you could buy those now. And that's why no one buys Apple and Samsung products anymore, right? Right? Right? Obviously, I'm being funny about this. And I'm using that as an example because trades, the trades is the same way. Small companies that don't have a lot of employees or overhead, they are the cheapest because they don't have a lot of overhead. Well, by that theory that you're offering here, they should dominate the market, right? The smallest companies, a guy operating out of a truck, a one-man show, should be able to dominate the market because he's the cheapest price, right? But they don't. They don't dominate the market. Who does dominate the market? The market is dominated by larger companies with many employees and much bigger overhead, and they have the highest price typically. Why is that? So why do they dominate the market? Why does Apple and Samsung dominate the cell phone market? It's because the larger companies can offer an experience that Chuck and a truck can't. That's what it comes down to. They can offer an experience that the smaller companies can't. Now, I mean, there's studies, there's multiple studies. Now, there's there's there's studies um that have looked at what motivates a customer to make a large purchasing decision. And depending on the study you look at, between 10 to 15% of customers are gonna be focused solely on price. So know that out of all your customers, 10 to 15% of them, yeah, they're just gonna go for the cheapest price. They don't care about the experience, they don't care about the equipment, they don't care about the efficient, they don't care about anything other than the price, 10 to 15% of your customers. But that's still 85 to 90% of your customers that are looking for something else. Something else is influencing that purchasing decision. And that's why these small one-man shows with the cheapest price that don't have any overhead, that's why they don't dominate the market. Because customers aren't just looking for the cheapest price. So I have an exercise. I have an exercise I want you to work through here. So in this exercise, I want you to make a list. You're gonna make a list of what makes your company awesome. Like why, why is your company awesome? Your company, you specifically, the solutions you provide, the packages, the experience. Like what makes you awesome? And it might be a good idea. It might be a good idea to get some other brains on this, right? So if you're if you're a sales team, do this as a sales team. More heads are better than one. What makes us awesome? And then and maybe even pull in the owner of the company because the owner of the company, I guarantee the owner of the company knows why this company's awesome. This is their blood, sweat, and tears that they put into this company. They know why they're awesome. They know why they're better than the competitors. They know what they can do that the competitors can't. But make that list, make a comprehensive list of why are we awesome? Why are we better than our competition? What can we do that the one-man show with a cheaper price can't do? Make a list of all that stuff. Back to my cell phone example, like smartphones. Well, the reason people buy Apple or Samsung is because I don't know. I like having signal, I like my call not dropping. I like being able to use my apps and have some storage and and function, it's gonna work, right? The picture quality, videos, I can store the videos. Like I like all that stuff. That's why I go with these. That's why people go with Apple. Um, most people go with Samsung because it's not Apple, like so. There's that too. But there's a reason people buy those phones. Now, your company, there's a number of things that you can do because you have all those employees, because you're bigger. So make that comprehensive list. What makes you awesome? Because you have all those other people working for your company. You can do things like you can schedule to get out there today. You can call your customers back. They don't have to be left in limbo waiting to see what happened and nobody called them back for three days, right? Like you can go out there and deliver an experience, you can get an install done tomorrow. Like, there's all kinds of things that you can do that the one-man show can't do. I remember there was this guy we were uh remodeling or looking to remodel our basement. Um, actually, it was unfinished. So, would that be model or try trying to finish our basement? And there was this guy that uh that I knew and I heard he did great work. And we and he was great. He was a really nice guy, but he was a one-man show. And I remember just I couldn't get the guy on the phone. Like, I would call, I would leave voicemails, he wouldn't call me back. Finally, after many, many calls, I finally like figured out a time to have him come out. But man, it was just such a pain getting him to come out. And I get it. Like he's he's a one-man show and he does all this work himself, and so he's not always answering his phone, and then he forgets to call you back, or he works until late at night and he's not gonna call you back late. Like, I get it, I get it. But me as the customer, I was like, dude, I'm trying to give you money here. Like my neighbor recommended you, like, I'm willing to just give you money, and I I couldn't even do that, right? Your company, that situation doesn't happen because you have employees. You can offer things. There's things that make your company awesome that the one-man show can't do, even with a cheaper price. Now, once you have this list, you've made this comprehensive list. That's step one. I want you to move to step two. I want you to purge that list a little bit. I want you to refine that list. You're gonna you're gonna go through and you're gonna figure out if all these reasons were awesome, which ones are the tangible ones? And here's what I mean by tangible. Which ones can the customer like actually see or feel or experience? Like you can clearly look at and see the difference between us and them. So I'll give I'll give you a couple examples. Here's a bad example, one that's not tangible. A bad example would be quality work. We do quality work. That's probably true. It's probably absolutely true. But from the customer's perspective, I don't know that until we're done. Like after the work is done. And all your competitors say that. The one-man show with the cheaper price. He says he does quality work too. And so I, as the customer, I don't know the difference between the two until the work's done, and then it's too late, right? So that would be an example that's not tangible. Unless you're in an industry where you can offer samples or or they can talk to custom previous customers or something like that. Then it might be tangible. But but other than that, like, I don't know. Everybody says they do quality work. So that one's maybe not tangible. Here's an example that is tangible: a Google score, right? If I have a 4.9 Google score with like 3,000 reviews, that's very tangible. That's 3,000 people that have taken time to leave a review. And if it's a 4.9, very positive reviews, that that's the truest sense of the experience I'm gonna get as a customer. I'm gonna get a 4.9 experience. Because think about it. Who's who's motivated to fill out a Google review? Either you had such a good experience, and then they ask, and you're like, Yeah, absolutely. I want to do that for you, I want to help you out. Or you had a very bad experience, and you're like, oh, I'm gonna light these guys up. One star, yeah, right? Like there's no in-between. And so if you have like a 4.9 Google score, it's like 3,000 reviews, that's a lot of people that had a good experience. That's very tangible. Because the one man show, he does not have a 4.9 Google score. He might not have a Google score, he does not have 3,000 reviews, he might have seven. And that's family and friends. So that doesn't count. So that's an example of something that's tangible. So I want you to go through that list. The list of why we're awesome, why we're better than our competitors, what can we do that they can't, right? And then I want you to refine that list a little bit to those tangible things, things customers can truly see a difference in, right? So that's step two. Then step three, I want you to think about how do I weave this into my process? How do I proactively weave this into my process? Because I want to be, I want to be proactive. I want to build this up front so I'm building value. I don't want it to be reactive. Reactive would be I'm at the presentation, customer said no, and I'm trying to overcome the objection, going, but but but but we have a 4.9 Google score. Like that's reactive. I want to weave this in up front. I want it to be natural. I want it to be seamless. I want it to build value. Here's how I would do it with the Google score. I would ask this question. I would say early on in the project, like the first five minutes of the call, I would say, Hey, how did you hear about us? And if the customer answers by saying Google, I'm gonna say, Oh, yeah, Google, yeah, we we're a 4.9 with 3,000 reviews. We really stand out on Google. That's where a lot of our customers come from. Now, if they answer anything other than Google, I'm gonna say, Oh, well, actually, most of our customers find us on Google. We we stand out there. We're a we're a 4.9 with 3,000 reviews. So most of our customers find us on Google. No matter how you answered the question, I naturally weaved in, we're a 4.9, 3,000 reviews. We stand out in Google. Customers, they can look that up right now. They can grab their phone, look it up. It's tangible. That's the experience they're gonna get. I'm now proactively building value up front. I'm building value in the things that my company does that the other company doesn't do. That's justifying my price. Because when I know why my company's awesome, when I can what I can do that they can't, and and I focus on those tangible ones and I weave that in, that creates value. Value up front. There's no silver bullet I can give you to answer this question here, but there's lots of golden BBs, golden value BBs that you can weave in up front and build that value. And guess what? Price is only an issue in the absence of value. You're only gonna get these price objections. You're only gonna get these customers asking about the one-man show if you haven't built enough value up front. But if you've built enough value up front, if that value exceeds the price that you're asking, customers are not gonna balk at your price. That's why everybody buys an Apple and a Samsung. Their value is more than the thousand dollar price tag. So they don't even, they don't even look at those other options, those cheaper options. So if you build that value up front, proactively, and it exceeds the price that you're asking, price will not be an issue. Price is only an issue in the absence of value. So in summary, make a list. Why are you awesome? What do you do that the other companies don't? Number two, refine that down to the tangible items. Number three, figure out how I'm gonna weave that in proactively into my process. That's today's question of the day. If you're enjoying questions, follow, share, give a rating question of days on major streaming platforms. If you have a question, reach out to me via email. It'll be listed in the show description. Let's get your question answered. And if you're a next star member, schedule a call with me. Let's get this addressed one-on-one and let's get very specific to your situation. I'm Coach Chris. We will see you tomorrow.