We’ve written on the subject of packaging before but we wanted to bring the issue of pricing and packaging to the forefront for companies.  The tendency to think of packaging as a way of offering discounts without cutting your prices reflects the narrow thinking we find in many companies.

Packaging has power far beyond discounting.

One of the things that pricing experts will tell you is that the first goal of pricing and packaging is to shift the customers perception from a cost mindset to a value mindset.

So what’s the trick?

We’ve successfully used a combination of segment targeting and packaging to create a higher pricing opportunity.

The game here is to get as close as possible to the centre of a prospects value “nexus” … the needs or pain areas which they are most focused on and are willing to spend the most money to fix.

In a training context, often a single course or program will only represent a partial solution to an overall challenge faced by a prospect.

The right approach: multi course packages targeted to specific market segments and their specific “pain” areas.

The question is how should you segment and how should you package.  We’ll touch on the packaging part here and get into segmenting in another future article soon.   Here are few steps that will help in your packaging process:

1. Start with your segments (industries, job roles, other)
2. Identify their critical pain areas
3. Create packages of courses which will more completely address those pain areas
4. Price with value to customer in mind rather than cost + or a discounting mindset

The central power of this approach to packaging is that it shifts your packaging mindset towards solving prospects problems rather than giving them unnecessary or excessive discounts.  I always notice clients are surprised to be told of this approach to packaging and they quickly find that it empowers them to overcome the initial defensive position on price that prospects try to put you in.

For most organizations, positioning can play a big role in creating advantage when competition is a key issue.

Many times, a prospect is not just looking for a single product.  They are also looking to engage and test a relationship with anorganization for more long term needs.  This is a critical type of prospect for your company: they have long term revenue value and provide greater margins over time as selling is no longer required (like any returning customer situation).

While working with clients, AftertheNet helps them explore the right strategy for positioning their company in the market place.

The factors which affect positioning decisions include:

• competitive situation
• pricing point of products / services
• critical features for their customers

Companies have a difficult choice in positioning their brands in the marketplace.  They often avoid positioning out of fear of narrowing their customer base and thereby reducing their opportunity.

Our approach is to treat your brand positioning as more of a voyage rather than a one time tactical step

Consider this new angle on your company branding:

Is there a particular area in which your company excels:

• The customer service part
• The delivery of product or services
• The post purchase support side
• Anything else

Consider putting that strength front and centre in your tagline or opening branding statement.

Why is this important?

If you have larger competitors, often you’re the second or third company that people are looking at.  Immediately, your company is on a defensive footing in the sales process — struggling to stand out in a comparison shopping situation.

Creating a strong positioning statement around your core advantage area will give your company some of that control back:

• By creating a clear picture of your distinct advantage in the marketplace
• By connecting more strongly with those prospects who regard that area of strength most highly

This approach to positioning doesn’t narrow your company’s market opportunity –  it only creates a stronger starting footing in a competitive sales process.

But generating business growth requires reaching beyond product features or service elements to what affects customers in their daily lives (work or personal). Framing the benefits in that mindset is what we (AftertheNet) do for clients on a daily basis and  companies can greatly benefit from that approach.

Using a pain based selling approach, you can engage potential prospects who are not connecting your offerings to their critical problems.  Key goals are met by this approach:

• Gaining access to new segments which you have not previously had strong presence with
• Connecting the most emotional / critical pain areas of your prospects
• Increasing the value perception of your products

Here’s an example:

A technical training program for IT managers is offering courses about building Custom Content Management Systems.  In the past, the training organization has marketed to companies which currently use or are planning to use  CMS’s.

The focus has been around increasing the effectiveness or extending the capabilities of the CMS.  There’s a big missed opportunity here: direct marketing to the IT managers.  IT managers are always under pressure from the threat of new technology, the implementation of hosted technology (which don’t require internal IT) or outsourcing of the IT function.

This disempowerment creates both a morale and negotiation problem for IT managers.  An advance Customized CMS course can be marketed to IT Managers as a way to influence the direction of their company’s technology that is good for the company but also favours them in building their importance in the organization.

Once a custom CMS is implemented, the dependency level of the company on the IT manager with expertise and direct knowledge of the custom system will have increased exponentially.  This value to an IT manager can be tens of thousands of dollars of increased pay annually.  Hence greater inquiries to your company from IT managers for their own self interest.

These types of quantifiable association to salary negotiation power is an important marketing angle for training companies to reach companies whose management doesn’t see value in a particular program.

Direct access to a potential student’s personal career goals can play a big role in increasing the value perception and interest level in a particular program.

So how do you grow your average customer value?

Remember, your customers are not ultimately looking for products or services, they are looking for solutions to their problems. Most companies we talk to focus their packaging efforts on offering volume or multi-product discounts.
In part, this is the result of poor competitive positioning, but also reflects a lack of understanding of the power of packaging.

Taken individually, your offerings may only represent a part of the solution to a prospect’s challenges. But packaged together, several of your offerings can represent a complete solution to a defined problem of a prospect.

Lets look at an example

• A company decides to send an employee for Adobe training to a local training organization
• An internal challenge with creating campaign landing pages as add-ons to their website was affecting the effectiveness of outbound marketing
• Several weak spots were identified ranging from visual design to creating interactive functionality on landing pages

The company had translated this problem into a photoshop and dreamweaver skills deficit.

One of our clients told us that in this situation, they would sell a combined Dreamweaver and Photoshop training package with a 20% volume discount.  We asked the question back: why not create a premium course package: which includes Photoshop, Dreamweaver and a Javascript course into a new mini program:

• with a package name like Landing Page Design Essentials
• selling points focused on the pain areas associated with creating strong landing pages

Suddenly a higher price can be charged for the packaged set of courses
A much lower package discount is required because the prospect company sees a closer fit to their specific needs.
We’ve helped clients to build packages like these into their existing marketing efforts.   Leveraging industry or busiiness situation based packaging empowers the company to create a clearer value perception among prospects and (by extension) higher pricing and a raised average customer value.

You’ve had an SEO expert optimize your site and you’re getting traffic but the conversions on your site are way below your targets. Congratulations – you’ve impressed the search engines — now its time to impress your prospects

Getting traffic to your website is a fairly mechanical exercise in optimization (meta tags on your web pages and keyword rich content are two big factors).  But getting that traffic from landing to conversion (contacting you or purchasing online) is a completely different challenge.

The same rules apply online as offline:

• a visitor needs to see content which connects to them directly — either via needs, pains, features or product needs or their demographic / industry.
• Most importantly, the perception of value must be built and the obstacles to conversion must be removed

Creating the value perception among website visitors is an exercise in targeting each segment’s unique needs, perspectives and doubts with precise and time efficient content.  If you look at your website visitors, one way to divide them up is by their relative knowledge of your product category, company and products.  Depending on their level of awareness and connection to your products, visitors will need varied treatment and content.

On the surface the most knowledgeable visitors would appear to be the most promising prospects.  But they come with a price — a competitive sales cycle.  Prospects who already know what product type they want will typically already be talking to competing companies when the reach you.

To avoid the pressures of competitive sales, reaching prospects when they are searching for a solution rather than a specific product can represent a less competitive scenario.  Converting that traffic can take more time and a more targeted and optimized online experience.

Using an approach which we call targeted value selling, our company creates separate envrionments on clients’s websites for each key customer group. Taking advantage of more specific buying criteria for a specific segment, we create a deeper understandng of the value proposition, brand strength and compelling reasons to convert for each customer group.

At that point, our clients are putting as much effort into impressing their prospects as they’ve put into impressing the search engines

Lets look at a specific scenario
You’ve decided to incorporate offers on your website and in your overall marketing pitch.  Your key team members on the marketing and sales side are gathering at a meeting to discuss what the offers should be the first to be used.  You’ve scheduled a 1 hour meeting with three key managers and the first part of the meeting is used for each manager to suggest an offer which they feel would be effective

You can already picture this meeting:

• a set of very distinct and unconnected ideas for offers are generated based solely on the memory and experiences of the managers
• When the time of decision comes, a great deal of difficulty arises in coming to agreement
• Each manager is adamant about their offer being the right one and
• Time starts running out with no clear decision or plan being be formulated

So what went wrong
Having been through this exact meeting scenario on several occasions, our team can share what we see as missing in the process.  Any gathering of managers, particularly ones with considerable experience in the business will quickly fail to generate decisions if the strength of the options is too low.

The reason: managers’ experience and instinct will tell them that the right answer hasn’t been put on the table as an option

A better approach
Based on years of experience with these types of meetings, we’ve focused on a two stage methodology for successful decision making meetings:

Stage 1: We use research and brain storming to generate a list of options for the decision to be made (example a list of potential offers for prospects).  We also organize and rank each option based upon the impact it will have specifically on the sales cycle and for whom it will be effective

Stage 2: A structured management meeting, where additional ideas are added based on managers’ input and then ranked in the same way as the other ideas.  Then a systematic shortlisting and selection process is followed to determine the final preferred option.

This approach:

• Starts from a stronger place (more options fully analyzed)
• Allows a smoother decision process
• Yields a much higher level of consensus and buy-in and most importantly success rate

Its now a standard part of our work with clients on their web and marketing strategy: providing an engine for more ideas/options for key management meetings.  We’ve seen it consistently delivery better results and that’s we have  a dedicated research function to provide those options to our clients.

Your website is the great leveler in a competitive situation.

Unlike in the real world, a few smart decisions and you can start to look as strong as your bigger competitors without a massive budget outlay.  Try doing that in an offline ad campaign.
What advantages does your website give you in competitive situation?

• You can target your key customer segments more closely using your website
• You can spend more time educating prospects on your unique company and product advantage.
• You can set the tone in a sales process

Two key website tactics for competitiveness:
Targeting:
Give your key segments a more tailored experience, with content and branding information that more precisely meets their needs.  Its tougher for bigger competitors to narrow their brand and sales focus because they usually have to worry about the “don’t turn anyone off” problem.
Positioning:
Using its visual and word combination, your website is the ideal vehicle for creating a strong competitive positioning perception with your prospects.  What do we mean by “competitive positioning”?  We’re referring to creating an understanding in your prospect’s mind of where your company fits in your industry.

Impact of Positioning:
Pricing resilience: If your positioning is stronger for your key segments than your competitors, you can create a situation in which a (moderately) higher price doesn’t deter them from buying from your company.

Trust: Lost sales and pricing pressure are often attributable a weak brand / positioning perception. Buyers are always looking for reasons to trust a company and how they can extract greater value from their offerings.

What are my options for positioning?
Your company has a number of different directions it can go in choosing a positioning approach. Through a defined process, you can prioritize the following factors:

1. competitive strength
2. differentiation
3. sales efficiency
4. close rates
5. pricing pressure

Based upon that, you can consider a positioning strategy which best addresses your key concerns in your sales and marketing process.

We’d suggest that you take this opportunity to more clearly position your company in your industry.  Done correctly, its impact on key parts of your business in 2010 can be dramatic.

Why not take that powerful resource to improve your resource efficiency?
There are things that your website can do more effectively than your sales team:

• Educate – it’s more patient, more detailed and has more time

• Present Options – options should all be recalled after they are presented and the visual presentation on your website is an ideal way

• Target Specific Segments – visitors will self select content for them if you give them the option

• Availability 24/7 – your website never closes

Why are sales cycles inefficient?

• High education requirement
• Higher detail requirement
• Multiple people involved in review process

How companies underutilize their website

• Low expectations in terms of business impact
• Limitation of audiences that are targeted by website
• Portion of the sales cycle handled by the website

Our experience has shown a very wide level of impact of a website is possible.
What should you expect from your website?
How much of your sales cycle can be carried by your website?
The answer is a lot.  The trick is to build a website which keeps delivering focused and efficient information that helps prospects make a decision.

What you need to do

• Develop a more detailed plan around who your website visitors are (segments) and how you will meet more of their needs online
• Create a site flow which builds the case for your company and products more effectively
• Build your branding efforts to more precisely position your company against competitors

Result You Can Expect

• Better use of your salespeople / operations teams time
• More educated prospects
• Warmer prospects — ready to buy or closer to it

Is that how you’d like your company to be running in 2010?

What purpose can branding play in your business strategy in 2010?

Driving Visibility
Stronger Competitive Positioning
Improve Sales Efficiency
Support Value Perception
Build Trust and Credibility

How is your brand important to your business:

• Generating leads for your business
• Creating another advantage in competitive sales situations
• Speeding up the sales process
• Creating a higher value perception beyond product to company
• Meeting the trust threshold among prospects to allow deals to close

A lot of your brand gets built on your website:

Your most detailed brand development can happen on your website

• It can be multidimensional
• It can be specific to different segments
• It can be geared towards multiple goals

The key to powerful online branding: Start from goals
Our studies of branding in many industries suggests that it should start from business goals and challenges.
With those in mind, the focus exists to create a more focused and valuable brand building strategy.

The harder decisions become easier when you know:

• the audiences your brand is targeting
• the role your brand plays in your sales process
• how your brand needs to create competitive strength

Your company has a clear opportunity to start 2010 on a stronger footing in large part driven by a clearer branding strategy on your website.   Leverage this asset that you already have to increase your business effectiveness in multiple ways.

What does this decision depend on?

The nature of your product, the visibility of your competitors and their ability to retaliate and do material damage to your current business.

What are we talking about here?

If your company is in a highly competitive industry, there will be clear entrenched players and a large number of newer entrants seeking to take share away from the leaders.   Often newer players benefit from a better and more flexible business or technology platforms and boast superior features and higher value for clients.

The question becomes: do you attack your competitors head to head on your website?

The answer is the case of competitive industries is yes.    The easiest pickings for you to grow your customer base is to take them from your bigger competitors.   You’ll save huge amounts of sales cost because you don’t have to educate them on the benefits of your product category.   Your only hurdle is to demonstrate that your product has superior ability to address their core pain / need areas.

There are critical tactics that you have to incorporate into that competitive displacement strategy.   These include:

1) a clear head-to-head comparison from the perspective of the client’s need areas

2) an easy way for them to test (prove) that your product is superior (ie. easy transition and a well setup free trial).

When you have big competitors, every sale is a competitive one — so you have to meet the challenge head on with a precise, well executed competitive displacent strategy.