Why We Must Fight This Price War
April 20st, 2010
By Tom Reilly, author of “Value-Added Selling”
As a salesperson, you are in a price war, but it’s not just a battle over getting your price—you are defending your right to compete as a for-profit organization. This means you are supposed to make money. One need not look far to see what happens when price shoppers take over an industry. Witness the airline industry, which has deteriorated into a pathetic example of follow-the-leader pricing.
It began with passengers demanding the lowest fares, and the airlines responded. They trimmed staff and amenities. And travelers demanded even lower fares. Now, to justify lowering the fares, they began value stripping. They eliminated food on flights, including pretzels. Then, they began charging for pillows and blankets. As most of us deal with fluctuations in fuel prices, we adjust our budgets. The airline industry charges you a surcharge for fuel fluctuations. Because of lower fares, they tightened up the seats so they could add another few rows, eliminating legroom. If you want the isle or window seat, you will pay more than if you choose the middle seat. Don't try to figure out if the person next to you paid close to what you paid—he didn’t. There is no integrity in their pricing. So, they released even more employees, so that if you order a ticket on their 800 phone line, you will pay more than purchasing the same ticket online. The next step is charging for checked bags, and this is ironic considering their record for losing bags. Now, the airline industry will charge for carry-on bags. Who travels without checked or carry-on bags? The latest news came this week when Ryannair announced they will be charging for using the restrooms onboard. This is no joke. Imagine, they have kept you waiting for two hours on the ground and then will charge you for using the restroom. The next move the airline industry is considering is to weigh passengers and begin charging by the pound.
This Sales Bytes may sound more like ranting than instructing. It is both. I am ranting and instructing. There is an incredible learning point here. When industries allow their price-shopping customers to dictate the future of their industries, these industries will devolve into something akin to the airline industry. This industry did not reach its current low-point through operational inefficiency alone. They responded to price-shopping consumers who value nothing other than a cheap price. Guard your profit. Hold the line on pricing. Protect your industry. Fight for the future of your business, lest your industry suffer the fate of the airline industry.
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