Price Wars - The 1 Penny Difference

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PRICE WARS: THE 1 PENNY DIFFERENCE

6 reasons you’re fighting a losing battle (and 6 ways to win it). A G U I D E FO R PAC K AG I N G C O M PA N I ES .


STATE OF THE PACKAGING MARKET

Research by the Smithers Group estimates that the value

From tin cans and vacuum packaging to glass bottles and

of global packaging market will reach $975bn by 2018. It’s a

bubble wrap – the packaging industry is one of the most

bustling industry, a truly global one and it has its fair share of

competitive around and can often make you feel like you’re

fierce rivalry. Dominated by some of the biggest companies

fighting a losing battle with the big boys. This eBook will take

in the world, the difference between winning a deal and

a look at the 6 biggest reasons why the battles can be so

losing one in the packaging world can often come down

challenging and how you, as a local packaging supplier, can

to a penny or two; that’s just how cutthroat an industry it is.

overcome them and take the market share you deserve.

Furthermore, the loss of a single SKU can lead to losing an entire customer account.

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PRICE WAR 101


In a price sensitive industry, a one or two penny price

Despite the packaging industry being incredibly forward

difference can often be all it takes for your customers to

thinking, businesses are still having to manually trawl through

switch their allegiances to one of your competitors. Bigger

dozens of spreadsheets to get even an inkling of a slipping

players are often better poised to take a hit on price just to

customer. Software tools can be one of very few easy ways

get a deal over the line, but as a smaller supplier, shaving a

to stay on top of thousands of the kaleidoscopic account

penny or two off your unit price can be devastating.

activity within your customer base.

For many packaging suppliers, competing on price can be

A slight change in price can inform a customer’s buying

one of very few ways to increase their market share. In a cost

behavior overnight, but with a little insight into your accounts,

driven market, your customers have all the power; they can

you can act fast and treat your customers like individuals, not

inform price (“I can get this cheaper elsewhere”), slate your

just another name on an order sheet.

offering (“Company X’s product does A, B and C”) and word of mouth can spread like wildfire, good or bad.

Sales intelligence and CRM software can be a total game changer and a springboard into the digital side of sales.

The cost of raw materials continues to fluctuate and a steep

Armed with the information gleaned from these sales tools,

rise in plastic prices across Europe has had a detrimental

your customer facing team will be able to call a customer

impact on many packaging suppliers across the world. As

whose spend has changed, ask why and make them an offer

margins continue to be cut, international price wars are

to win the business back. Who bought cardboard boxes last

breaking out. Add poor brand loyalty to boot and customers

year but not filler? Who’s been buying bubble wrap from

are in a very powerful position to dictate the ebb and flow of

you for the last 11 months but is yet to buy this month? Who

sales for many packaging suppliers.

stopped buying from us altogether in the last month?

What can you do?

The answers to these kind of questions will not only put

Many packaging suppliers are stuck between a rock and a

smaller competitors, too, but will hand them the ability to

hard place. With thousands of customers to look after, it’s

craft bespoke offers that will keep your customers hungry

common to only notice a customer has gone AWOL when

for more.

your sales team on the front foot against the big boys and

it’s already too late.

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the same old


Margins are being squeezed tightly due to the simple fact that there’s largely very little differentiation between suppliers. Shrink wrap from company X is likely to be the same as shrink wrap from company Y. What’s more, the advent of a global, online marketplace means it’s easier and faster than ever for your customers to source cut-price alternatives to

What can you do? Doing your bit - no matter how big or small your company - to stand out from the crowd can be a huge step in conquering this battle. Whether taking a new approach or simply backing a bid to be more green, making noise in your market and not

your local ones.

following the crowd can get a real buzz started about your

With so few differentiating packaging products available, but

that they share your values will create very strong loyalty in

a whole host of suppliers vying for the same business, cost is often the only dictator when choosing between suppliers. Yet as consumers become more conscious of the impact packaging can have on both their health and the environment, packaging suppliers have a huge opportunity facing them now and for the foreseeable future. 55% of global customers have said that they are “willing to pay more for products provided by companies committed to positive social and environmental impact” (Nielsen, 2014). These figures pose a huge chance for packaging

company, even if just for a small number of buyers, the fact an industry. Take a look at your current offerings, how can you branch out or enhance them? Don’t be afraid to get your team together, particularly those that get up close and personal with your customers, and pick their brains for ideas and suggestions. And don’t forget to tell the world about your innovative streak. If your product is sustainable, shout about it. If you’re doing something differently from the rest, tell the world. Even if you’re encouraging interaction on social media, tweet, share and like to your heart’s content.

manufacturers to branch out and take a different approach in order to stand out from the crowd. Whether that’s recyclable qualities, smart innovations or even

55%

packaging for the health-conscious buyer, the emergence

T O PAY M O R E F O R P R O D U C T S P R O V I D E D B Y

of new technologies and processes is one of the best ways packaging suppliers can differentiate themselves in what has become a bustling market.

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O F G LO B A L C U S T O M E R S A R E W I L L I N G

C O M PA N I E S C O M M I T T E D T O P O S I T I V E S O C I A L A N D E N V I R O N M E N TA L I M PA C T.

06


NO VISIBILITY INTO ACCOUNTS


A lack of visibility into your accounts can be a killer for even

If you don’t already have one, a CRM tool can really transform

the most seasoned of companies. Not being able to spot the

your approach to sales and can make your conversations

movers and shakers within your customer base can have the

that little bit more personal. How was their holiday to Costa

most detrimental of impacts on your bottom line. A lack of

del Kent? How was that round of golf last month? Opening a

visibility will make the lives of your salespeople much, much

sales conversation with a bit of friendly chat will make for a

harder too.

much warmer conversation with your customer.

Losing one single product line to your competition can

Forget the “umm’ing” and “err’ing” and the “I’ll have to check

be all it takes for it to become a problem, giving them the

with XYZ and get back to you on that one” when you next

opportunity to build relationships with your customers and

talk to your prospect – you’ll be able to make sure you have

start eroding away at your revenue.

everything you could possibly need at hand.

With little-to-no insight into shifting customer accounts, sales

Not only will this insight allow you to develop lasting

can become a haphazard job carried out on a wing and a

professional relationships with your customers, but you’ll also

prayer. Visibility’s not only beneficial to your salespeople, but

be able to consult them on things such as the practicality,

is valuable for every corner of your business. Management

technical issues, quality and functionality of your products.

can monitor the sales pipeline, finance can forecast with

Any customer feedback is helpful and can help to both

accuracy and marketing can plan ahead for any peaks or

inform and inspire your next lightbulb moment.

troughs in demand.

What can you do? Spend some time doing your homework ahead of your next sales call. Check your company’s CRM (if you have one) and get yourself up to date. If you don’t, spend some time

LO S I N G O N E S I N G L E P R O D U C T L I N E T O Y O U R C O M P E T I T I O N C A N B E A L L I T TA K E S F O R I T T O BECOME A PROBLEM.

looking at their past order history, call notes and make sure you have all of the information you might need to hand. This will only stand to put you in good stead for your next call and it will also boost your confidence no end.

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08


LACK OF CROSS-SELLING


Cross-selling is one of the simpler ways to win a price war. If you produce cardboard boxes, chances are you also sell the tape and filler to go with them. The current lack of crossselling in the packaging industry is an opportunity to win back some customers from your competition with irresistible

What can you do? Amazon are the kings of the cross-sell. Buy a new coffee machine, they’ll no doubt offer you the coffee, filters and mugs to go with it. It’s the automated, modern-day version of

deals that really pack a punch.

a well-oiled machine. Attributing over 35% (predictableprofits.

The packaging industry is a dream for cross-sells, bundle

get more share of your customer.

com) of their sales to cross-selling, it’s a proven technique to

deals and bulk discounts: boxes and tape; bottles and shrink wrap; bubble wrap and filler. With so many matches made in heaven, it begs the question, if your customers are buying their cardboard boxes from you, but not the filler to go with

If your customers can get everything they need from you, they’ll have no need to go to your competitors. While you might not have pockets as deep as Amazon to implement

them, where are they getting it from?

the kind of software that can keep an eye on your product

Cross-selling makes for a more personalized experience for

look back through your customers’ buying patterns can be a

range and match up complementary products, a simple

your customers, incentivizing them to spend that little bit extra with you and also showing them that you care and think about them in depth.

game-changer in itself. There are tools available that can make every single one of your salespeople cross-selling superstars. Business Intelligence tools will mine your data and reel off the easy cross-sells your sales team should be discussing with your customers. Then all it takes is a bit of sales charm and you’ll

T H E PA C K A G I N G I N D U S T R Y I S A D R E A M F O R CROSS-SELLS,

BUNDLE

DEALS

AND

be making smart sales left, right and centre.

BULK

DISCOUNTS.

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ZERO ADDED VALUE


Competing on cost alone won’t get you anywhere in today’s

The added extras and value are often what keep us, as

bustling packaging market. The sheer amount of competition

consumers, going back to a particular supplier for more.

within the packaging industry means it’s easy as pie for your

Every call doesn’t have to be a sales call, but instead a way

customers to switch supplier.

to check in with your customers, share interesting news, spill all about a new product release and see if they have any new

Even if you win a battle on cost and gain a new customer,

problems that need solving.

soon enough your competitors will be ready to undercut you at every corner. One of very few ways to remain front of mind

When it comes to the packaging industry, offering a range

is to emphasize value at every opportunity you get.

of freight options, holding a reasonable amount of stock for those last minute rush deliveries and even managing your

As customer expectations in every industry continue to get

lead-times so orders can be churned out sharpish can all

higher and their demands of you get more complex, bringing

help to add that little extra value to a sale.

your ‘A game’ will be the only way to stay at the forefront of the market.

What can you do? Working in sales means making money. Right? Wrong. To

YO U R C O M P E T I TO R S A R E R E A DY TO U N D E R C U T Y O U AT E V E R Y C O R N E R .

make sure you’re fostering lasting, fruitful relationships with your customers, you need to become someone that they can rely on. Not another cog in your money-making machine.

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REACTIVE-SELLING


Packaging suppliers can no longer sit back and twiddle

Supplying your team of salespeople and those in customer

their thumbs waiting for customers to come knocking. Being

facing positions with the information they need to be more

proactive in your approach to scoring a new customer or

proactive in their selling approach will stand them in better

even keeping existing ones is a must.

stead to secure repeat orders on the spot rather than waiting for customers to fall at your feet. Simply looking

In a reactive business world, your customer can dictate the

back through your customers’ order history can be insight

entire relationship. In the packaging industry in particular,

enough. If they’ve bought shrink wrap from you for the

salespeople are relying wholly on customers reaching out

last 11 consecutive months, but haven’t yet bought on the

to place an order.

30th of this month – chances are, they’ve sloped off to your competition.

By getting in touch first, it’s more than likely that they are ready to buy, regardless of your sales patter. They’ve

Or, get a business intelligence tool that can do all of this

probably already made their mind up, they know what they

legwork for you!

want and they don’t want to be sold any added extras. This in itself limits the ability of your salespeople to cross, switch

With this know-how under their belt, your salespeople will

or up-sell them.

be fully primed ahead of their next interaction with their customers and can proactively get in touch before it is too

What can you do?

late and your competitors move in on your patch.

Given your customers’ and potential customers’ wealth of

Don’t forget about your delivery drivers too – they can be

options when it comes to packaging choices, being proactive

order takers in their own right, so empower them to make

is the only way you’re going to stay afloat. Being proactive

proactive sales and provide outstanding service. Delivered

however, demands a certain level of product knowledge, an

a few pallets of cardboard? Offer a free sample of filler or

insight into the market and customer challenges.

bubble wrap to go with it. It’s often the little touches that will

keep your company front of mind and the first they go to when they next need to make an order.

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ABOUT SALES-I

We are the leader in sales performance for packaging distributors and wholesalers. sales-i is sales performance software designed to make every sales call more personal and profitable. sales-i enables sales professionals to clearly identify and target high quality sales opportunities within their current customer base. Equipped with customer buying behavior alerts, salespeople can make insightful, personalized, quick business decisions, realizing repeat sales, reduced customer attrition and maximized profit margins as a result. sales-i will change the way you sell. Get in touch for a free, online demonstration and judge our software for yourself. tellmemore@sales-i.com www.sales-i.com


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