How to Compete on Content
By Christopher Willis
TacticsImplementation of this information-based differentiation strategy required that the Company rethink solution packaging and pricing. Sales buy-in and training was also critical given increasing price competition in the market, so that there was agreement to focus messages on a powerful differentiator, but one that did not spring from the underlying technology itself.
The Company's traditional sales approach was to offer the IT group a point product, one size fits all package, at an incremental price premium over competition in a per user/per month model. The starter package contained a few "feature war" bells and whistles bundled with a maintenance contract. Then, over time, the Company continued to sell add-on modules to IT, eventually doubling per month fees.
New pricing and packaging options were designed to:
- Meet competition on entry price for the Expected Product
- "Force" a Company sell based on differentiators and end user value
- Open a value dialog with customer Line of Business (LOB) managers, expanding the market by multiplying the number of solution options
The Company designed and a Basic Package, no frills, option that met competitive price but required an adder for maintenance. Even when we were forced to discount and "throw in" maintenance, a value had been established. Four additional, LOB-specific, packages were designed which contained add-on features, training wizards, and support services. Most importantly, only the premium priced LOB options contained the software hooks capable of supporting third party financial analysis and information content.
The initial discomfort about "raising prices" among the Company's sales team was disarmed with a liberal discounting policy. With that, the sales team got on board with the launch, re-orienting messages and the sales process around differentiating value to the customer's end users and the customer's business.
