Years ago, if you were to be a foreign brand in China, you will find that you can command a real brand premium over other “Made-In-China” products. The reasons are very simple. You probably have
• Better quality,
• Better performance,
• Better safety,
• Better reputation and trustworthiness etc.
Since most of the products (or hardware) in China cannot match with the above quality, it’s a no-brainer that the foreign brand can command higher prices, AND still sell like hot cakes.
However, things have changed drastically over these few years. Nowadays, wherever you are in the world, you can find “Made-in-China” products that have met:
• International quality standards,
• International performance standards,
• International safety standards, and
• Reasonable levels of reputation and trustworthiness
While some customers are still reeling from product safety such as the 2008 Chinese Milk Scandal, but even world-class manufacturers like Toyota have problems with their Foot Pedals. No matter how you look at it, Chinese products are indeed catching up fast.
Yet, despite rising costs in China, Chinese products are still priced very low. This low pricing has caused many international brands to lose a lot of businesses due to their higher prices. The impact on the Chinese companies isn’t that good either: many Chinese companies are suffering from negative profits, shortage of funds or cash flow issues because of the low prices they quote. As a result, it’s a lose-lose situation for all.
Why Selling the Hardware Will Drive Down Prices
Besides the fact that there are a lot more competing products that are almost as good but selling at half your prices, here are some trends in the market that are driving prices down:
• Ease of getting information. These days if you want to search for just about any product, you can go online and just find it. Even if you cannot download price lists readily, it can be found in ways that are easier than before. Hence, prices are transparent if you are looking at the hardware specs alone.
• The hardware is getting a lot more homogeneous. Whatever product specifications that you offer, chances are the differences between you and your competitor are marginal at best. Since there are not much differences between the hardware, customers make more of their decisions based on price.
• Customers are getting more knowledgeable. Customers are better educated these days to find out what kind of hardware they want, AND what kinds of prices they can get. Sometimes, they even know more than the sales person when it comes to product (or hardware) knowledge.
In a nutshell, if a sales person were to sell the hardware, all it takes is the customer to say “I was quoted a lower price from your competitor” and voila! The price just miraculously dropped to match the competitor’s.
Even then, the astute customer may not just buy from sales people who sell the hardware, and then quote the lowest price for it. Instead, they need better advice before making a buying decision.
The Buyers’ Dilemma
If you were to put yourself in the customers’ shoes, here are some of the customer’s concerns when making a purchase:
• “Since everybody quoted the same specs at similar prices, from whom should I buy from?”;
• “Since everybody quoted the same specs, how do I know who will live up to their promises, and who won’t?”;
• “If I am going to make the purchase, how do I know that it will solve my problems, and work well as planned?”
• “If I am gong to make the purchase, how do I know that I will get assistance and support if things don’t work out as planned?”
While customers may be a lot better informed and educated, the business environment they work in are also getting a lot more complicated. Hence, here are some other factors that they would consider before making the buying decisions:
• “Are there any better ways that I can get a better result?”;
• “Are there ways that I can do more with less?”;
• “Are there any other factors that I’m not aware of?”
Thus, the customer’s experience is not just some fluffy concept that applies exclusively to the service industry. While the customer already knows a fair bit about the hardware specifications, but what they need now is to have a better experience buying the products they need.
Such “experience” actually add value by helping customers get better business results. Astute customers appreciate that. For customers that are still shopping on price for critical purchases, it will be the job of the sales person to educate them on how to get better results through a better customer experience.
Customising the Customer’s Experience
Suppose you are a sales person for Bayer MaterialScience’s Coatings, Adhesives and Specialties Business Unit, and you sell coatings to the buildings industry. The stain-resistant coatings used for homes, offices, restaurants and hospitals may be of similar chemical properties, BUT the customer expectations are different:
• The home owner may want to make sure that the coatings will save their parquet floors from their dog’s poo or their child’s vomit, so that if they have a visitor, the floor can be cleaned easily and be presentable;
• The office manager may want the carpets be coffee stain resistant, so that their offices look presentable to customers who may visit them;
• The restaurant owner would like the extra-strength stain-resistant coatings since their diners may spill wine, food and other contaminants onto the floor every day. The flooring also needs to be slip-proof to prevent the waiters from slipping;
• Hospitals would want to have their floors to be protected from abrasive chemicals and *gasp* blood! They wouldn’t want to frighten patients with blood stains that could not be cleaned.
Sounds easy? Unfortunately, the coatings sales person is unlikely to sell to the home owner, office manager restaurant owner or hospitals. Instead, he or she is very much likely to be selling to parquet, carpets and other flooring manufacturers, who will then sell to the end users.
Chances are, the flooring coatings sales person is not going to ask to whom those parquet, carpets and other flooring manufacturers are selling to. He or she is unlikely to advise which selling points of the coated floorings will appeal to which customer groups.
On the other hand, the coatings sales person who is able to provide better business advice (as opposed to technical advice) for the customer is going to create a much better customer experience. When the customer gets a more productive (and sometimes enjoyable) buying experience, they are likely to buy more from you.
And since you are able to justify the business reason why it makes more sense to buy from you, you are much likelier to get a better price from your customer.
Here are some other examples of some “experiences” that customers want, but find lacking in sales people:
• If you are selling meeting facilities in a hotel, can you find out from the customer what is so important about the meeting, and what will be the service that matters most?;
• If you are selling IT software solutions, can you find out about the end-user’s work habits so that they find the software easy to use and really boost their productivity?;
• If you provide furniture hardware to office furniture manufacturers, can you give suggestions on how they can use your hardware to save space and allocate more seats in office spaces with high rental costs?
Ultimately, the experience customers have with your company starts the moment you make the initial contact with them. If you would like to keep their business, then you would have to keep on selling the “experience” for as long as you can!
by c.j. Ng
c.j. is the trusted sales advisor who have helped international companies achieve quantum improvements in sales profits in China and beyond. He is also the 1st-ever sales trainer and consltant to speak at the American Society for Training & Development (ASTD) International Convention. So far, c.j. has helped:
* A leading international hotel to produce the equivalent of an additional 5,000 room nights in China in the lull summer months of 2007 * A global leading architectural hardware company to increase the sales revenue of a key account in Shanghai by 10 times within 3 weeks * The world leader in PC sales to transform their sales force to be more collaborative and solution-focused, and helping them to regain worldwide pole position from their nearest competitor.