A Lower Priced Competitor
Company: Early stage start-up
Industry: Application software
Client Name: Available upon request
This company was charging more for their products when a new competitor arrived on the scene. In an effort to gain market share, the competition offered a lower priced alternative. Switching vendors of this type after the initial purchase is a rare occurrence. Loss of sales to a low priced competitor was significant and had long term implications. The company wanted to avoid a price war. Despite its efforts to highlight product differences, buyers viewed both offerings as ‘equal’. Efforts to diminish the decision based solely on price were ineffective.
Based on the ethos of Sy Syms (circa 1974) that “An educated consumer is our best customer,” the company began conducting courses on what the software did and how to comply with a body of rules, regulations and requirements that the product had built into it. To establish credibility, the company offered continuing education credits to course attendees. Education was conducted in a non-threatening, non-selling environment.
- Sales were no longer based on price
- Attendees were taught the difference between product offerings.
- Understanding the differences, educated buyers were willing to pay a premium.
- Additional revenue from course tuition
- Because of high demand, the company was able to charge a fee for course enrollment.
- Increased industry profile
- Developing the course required the client to deepen its relationships with other industry thought leaders.
- By offering the course, the company was perceived as a subject matter expert.
- Increased sales
- Being an educational resource built trust with prospective buyers.
- Course attendees were more likely to purchase from the company based on their educational experience.