While we all wait for the economy to turn around, many business owners are still trying to figure out ways to survive. A great temptation for business owners is to cut prices to win business. Sure, it sounds tempting, but this move has the potential to create a downward spiral of shrinking margins - possibly forcing eventual cost reductions, like personnel, in other areas.

Case in point: A long-time client of mine recently faced such price pressure from a larger competitor. But instead of buckling, she took the time to size up her company's offering against the less expensive competitor. What was her firm providing their customers that the lower priced competitor did not? What allowed her firm to command a higher price? 

• A more personal experience:  Her staffers know the company's people and systems well and enjoy working with them. The competitor does not track past experience and has no frame of reference when the company has a problem. 
• A more comprehensive product: Her product includes a monitoring service and quick responsiveness when a problem arises. The competitor only offers a service when something goes wrong and does not anticipate problems.
• A proven track record:  Her company has a good reputation of attending to problems promptly and reliably. The competitor does not enjoy the same reputation.

Instead of competing on price alone, my client retained the business and held firm on price by taking the time to understand what differentiated her product and service from the lower-priced competition. Once you know the added value that your business offers, you can begin to focus your marketing message so that your clients will also see the value added.

So how do you identify those areas where you enjoy a competitive advantage?

Feedback, feedback, feedback. We always advocate getting feedback from your customers, suppliers, industry experts, and other key stakeholders. Each of these groups has a valuable perspective on how your company is performing and how you match up against the competition.

• What are your unique differentiators?
• Where do you have a competitive advantage?
• What is your reputation?
• How are your people regarded?
• Is your offering, be it a service or product, modern or distinct enough to be a "must-have"?  How vulnerable is it to new offerings or new technology? 

Granted, every company will have different points to emphasize in the selling process: better flavors, more attractive fashions, a superior finish, faster service, healthier ingredients. The key is to really understand each and every way in which your company leads the competition and to sell these together as the value of your brand.

If you can learn how to sell value, showing ROI and highlighting benefits, you will feel less pressure to compete on price alone. Sure it's a poker game, but the more of these you win, the sturdier a foundation you can build for the rest of the company.