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.
www.sales-i.com
02
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.
www.sales-i.com
04
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.
www.sales-i.com
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.
www.sales-i.com
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.
www.sales-i.com
10
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.
www.sales-i.com
12
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.
www.sales-i.com
14
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