When I was in my early twenties, I met a guy on a golf course who ended up being a business partner and friend. He owned a small company that photographed houses for real estate agents. One day we were playing golf, and he was lamenting that a new guy had come to town and was offering the same service he was for $20 less. We spent the majority of the round talking about it, and at the end, I made a suggestion that he thought was crazy — I suggested that he double his prices. More about that later.

No matter what you sell, no matter how inexpensive you feel you are, there is always someone, somewhere, that is willing to sell it for less.

In the motorcoach industry, it seems we are constantly being asked to sharpen the pencil and compete on price.

When I was selling charters, there was not a week that went by that I didn’t get a call from someone asking if I could match or beat the price of one of my low-ball competitors. Often as I hung up the phone, I would wonder how in the world they could even afford to roll equipment at those prices — but they did, and I lost a lot of business to them.

Unfortunately, those kinds of calls are an all-too-common reality in our industry. There are ways to compete, though, even in a market where you are the most expensive operator.

Overcoming pricing issues

Back to our photography story. When I made that suggestion, he thought I was crazy. He went on and on about how he was currently dealing with all the phone calls about matching the other guy’s price and how doing it would kill his business. After some time spent sitting around the 19th hole, I finally convinced him to try it. We went on the website, doubled his prices across the board, and added some new products that were 10 times more expensive than his competitor’s. He was a nervous wreck.

We agreed to meet the following week to play golf again and go over the results of our little test.

The next week on the way to the golf course, I was admittedly nervous. I wondered: What if this doesn’t work? What if he hasn’t landed a new booking all week? To my relief, however, quite the opposite had happened.

The report back was that most of the calls had changed from “Can you match the other guy’s price?” to “Tell me why I should pay twice as much for your service as the other guy’s.” Yes, he got the occasional “Can you match this guy’s price?” question, but now he had some ground to stand on.

You see, what he had forgotten was that he was indeed better at doing what he was doing than the other guy. The photos were better, the service was better, the delivery of the product was better, and it was a better experience to book with him than with the other guy.

The problem was he was so focused on competing on price that he forgot to actually sell that he was better. Now that he was no longer concerned about being the low-cost provider, he could, with confidence, sell why someone should choose him over his competition.

Now, I will be the first to admit that while he did book lots of new business, he still lost some to the people who were legitimately looking for the low-cost provider. But with the new products and pricing, he had also never been as profitable or confident in his ability to deliver a better service.

Determine customer needs

As I travel the country speaking to operators large and small, I hear a lot about how cost-sensitive our consuming public is. While I can appreciate this from my own experience, I believe that there continues to be a remarkable opportunity for those who understand how to address these sensitivities in ways other than simply marking down the price until such time that a shopper is “comfortable enough” to book.

For most people who book our services, the path they take is predictable and follows generally accepted modern consumption models: a little internet research, some phone calls, get a couple of quotes, talk to a few friends that may have done this in the past, figure out what fits their needs the best, and make a decision.

“Figure out what fits their needs the best” is where we start to see people calling about discounts and asking the infamous question: “Can you match XYZ company’s price?” What that question actually translates to in “buyer speak” is this: “I really like what you have to say better than this other company. I like your website, your sales people, and what I know about your equipment and company better than this other company. But, they are cheaper. I want to feel like I am getting a good deal, and still don’t know enough about why I should pay more for your services. So, will you discount your prices so I feel better?” But let’s face it: that’s a mouthful, and “can you match their price?” just rolls off the tongue.

If you ask most owners of motorcoach companies about the companies they are constantly being asked to match prices with, they can give you a laundry list of reasons why buyers should be skeptical of booking with those other companies. Whether its safety concerns, equipment age or condition, drivers, or cleanliness, they can tell you exactly why they would not book that bus for their friends or family.

Yet far too often, when the call comes in and the question gets asked, the net result is a discount given to try to land the business.

The truth is — when I was selling, I was guilty of it, too. “Yes, Mr. Smith, I understand. Let me talk to my manager and see if I can get a discount approved.” I would hang up the phone and call the managers to get approval to drop the rate. They would ask the question: “Did you try to sell them on our company?” I would answer in the affirmative, and then they would give me some discount to offer them — many times exactly what I asked for, which was my competitor’s price.

I have thought back to those days often and wondered why that happened so frequently, and the answer that I have come back to time and time again is that it is easy. You see, Mr. Smith told me exactly what I needed to do  to land his business. I needed to discount my prices, and at the end of the day, while I was the “sales manager,” it didn’t cost me anything to offer a discount. I understood what set us apart from the companies we sold against. I knew why people should book with us. But at the end of the day, I knew I could get that deal done with a phone call and a discount.

Selling your operation

Price is one determining factor in any person’s search for any product, but it is most definitely not the only factor.

If it were, products like Rolex and BMW would not exist, as there are far less expensive ways to buy a watch or a car. When people call and ask for discounts, the truth is that we have done less than we need to separate ourselves from the competition. We have not yet shown them this: “Yes, you can indeed buy a Timex watch at Walmart for $9.99, but this is why you should pay $8,000 more for mine.”

Doing so is about branding, training, and creating a culture in a company that understands the importance of being the company that is not the low-cost provider. This starts with the owner and goes right down to the people washing the coaches.

Train your sales staff to actually sell your product, to look for opportunities to show a consumer why it is that booking with your company is a better decision for them to make. Show them all of the reasons why the few hundred dollars that you are talking about is money well spent.

When your sales people come for discount approval, use it as a training tool to better handle objections in the future, and firm up your commitment to sell from your price sheet — not your competitor’s.

We operate in an industry that suffers from profit margins that do not have a great deal of room for reduction. One of the fastest ways to add bottom line dollars to your Profit and Loss Statement is to reduce your discounting.

Will you land every deal? No. Will you find people who are actually shopping for the low-cost provider? Yes. Will you have professional customers who will require discounting or they will indeed book with your competition? Yes — in fact, that margin is how they make money.

But will your company be more profitable? Yes. Selling this way takes more selling. It takes more communication and effort. But, at the end of the year, it results in more profits and the establishment of a brand that stands for more than just its prices. This change leads to exciting new opportunities, empowered sales people, and a stronger bottom line…things every motorcoach company could use.

About the Author: Christian Riddell is CEO at The Bus Network