PRICE WARS:T H E 1 P D I F F E R E N C E
6 reasons you’re fighting a losing battle (and 6 ways to win it).A G U I D E F O R PAC K AG I N G C O M PA N I E S .
Research by the Smithers Group estimates that the value
of global packaging market will reach $975bn by 2018. It’s a
bustling industry, a truly global one and it has its fair share of
fierce rivalry. Dominated by some of the biggest companies
in the world, the difference between winning a deal and
losing one in the packaging world can often come down
to a penny or two; that’s just how cutthroat an industry it is.
Furthermore, the loss of a single SKU can lead to losing an
entire customer account.
STATE OF THE PACKAGING MARKET
From tin cans and vacuum packaging to glass bottles and
bubble wrap – the packaging industry is one of the most
competitive around and can often make you feel like you’re
fighting a losing battle with the big boys. This eBook will take
a look at the 6 biggest reasons why the battles can be so
challenging and how you, as a local packaging supplier, can
overcome them and take the market share you deserve.
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PRICE WAR 101
In a price sensitive industry, a one or two penny price
difference can often be all it takes for your customers to
switch their allegiances to one of your competitors. Bigger
players are often better poised to take a hit on price just to
get a deal over the line, but as a smaller supplier, shaving a
penny or two off your unit price can be devastating.
For many packaging suppliers, competing on price can be
one of very few ways to increase their market share. In a cost
driven market, your customers have all the power; they can
inform price (“I can get this cheaper elsewhere”), slate your
offering (“Company X’s product does A, B and C”) and word
of mouth can spread like wildfire, good or bad.
The cost of raw materials continues to fluctuate and a steep
rise in plastic prices across Europe has had a detrimental
impact on many packaging suppliers across the world. As
margins continue to be cut, international price wars are
breaking out. Add poor brand loyalty to boot and customers
are in a very powerful position to dictate the ebb and flow of
sales for many packaging suppliers.
What can you do?
Many packaging suppliers are stuck between a rock and a
hard place. With thousands of customers to look after, it’s
common to only notice a customer has gone AWOL when
it’s already too late.
Despite the packaging industry being incredibly forward
thinking, businesses are still having to manually trawl through
dozens of spreadsheets to get even an inkling of a slipping
customer. Software tools can be one of very few easy ways
to stay on top of thousands of the kaleidoscopic account
activity within your customer base.
A slight change in price can inform a customer’s buying
behavior overnight, but with a little insight into your accounts,
you can act fast and treat your customers like individuals, not
just another name on an order sheet.
Sales intelligence and CRM software can be a total game
changer and a springboard into the digital side of sales.
Armed with the information gleaned from these sales tools,
your customer facing team will be able to call a customer
whose spend has changed, ask why and make them an offer
to win the business back. Who bought cardboard boxes last
year but not filler? Who’s been buying bubble wrap from
you for the last 11 months but is yet to buy this month? Who
stopped buying from us altogether in the last month?
The answers to these kind of questions will not only put
your sales team on the front foot against the big boys and
smaller competitors, too, but will hand them the ability to
craft bespoke offers that will keep your customers hungry
for more.
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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
your local ones.
With so few differentiating packaging products available, but
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
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
packaging for the health-conscious buyer, the emergence
of new technologies and processes is one of the best ways
packaging suppliers can differentiate themselves in what
has become a bustling market.
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
following the crowd can get a real buzz started about your
company, even if just for a small number of buyers, the fact
that they share your values will create very strong loyalty in
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.
5 5 % O F G LO B A L C U S TO M E R S A R E W I L L I N G
TO 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
C O M PA N I E S C O M M I T T E D TO 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.
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NO VISIBILITY INTO ACCOUNTS
A lack of visibility into your accounts can be a killer for even
the most seasoned of companies. Not being able to spot the
movers and shakers within your customer base can have the
most detrimental of impacts on your bottom line. A lack of
visibility will make the lives of your salespeople much, much
harder too.
Losing one single product line to your competition can
be all it takes for it to become a problem, giving them the
opportunity to build relationships with your customers and
start eroding away at your revenue.
With little-to-no insight into shifting customer accounts, sales
can become a haphazard job carried out on a wing and a
prayer. Visibility’s not only beneficial to your salespeople, but
is valuable for every corner of your business. Management
can monitor the sales pipeline, finance can forecast with
accuracy and marketing can plan ahead for any peaks or
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
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.
If you don’t already have one, a CRM tool can really transform
your approach to sales and can make your conversations
that little bit more personal. How was their holiday to Costa
del Kent? How was that round of golf last month? Opening a
sales conversation with a bit of friendly chat will make for a
much warmer conversation with your customer.
Forget the “umm’ing” and “err’ing” and the “I’ll have to check
with XYZ and get back to you on that one” when you next
talk to your prospect – you’ll be able to make sure you have
everything you could possibly need at hand.
Not only will this insight allow you to develop lasting
professional relationships with your customers, but you’ll also
be able to consult them on things such as the practicality,
technical issues, quality and functionality of your products.
Any customer feedback is helpful and can help to both
inform and inspire your next lightbulb moment.
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 TO YO 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 TO
B E C O M E A P R O B L E M .
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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 cross-
selling in the packaging industry is an opportunity to win
back some customers from your competition with irresistible
deals that really pack a punch.
The packaging industry is a dream for cross-sells, bundle
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
them, where are they getting it from?
Cross-selling makes for a more personalized experience for
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.
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
a well-oiled machine. Attributing over 35% (predictableprofits.
com) of their sales to cross-selling, it’s a proven technique to
get more share of your customer.
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
the kind of software that can keep an eye on your product
range and match up complementary products, a simple
look back through your customers’ buying patterns can be a
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
be making smart sales left, right and centre. 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
C R O S S - S E L L S , B U N D L E D E A L S A N D B U L K
D I S C O U N T S .
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ZERO ADDED VALUE
Competing on cost alone won’t get you anywhere in today’s
bustling packaging market. The sheer amount of competition
within the packaging industry means it’s easy as pie for your
customers to switch supplier.
Even if you win a battle on cost and gain a new customer,
soon enough your competitors will be ready to undercut you
at every corner. One of very few ways to remain front of mind
is to emphasize value at every opportunity you get.
As customer expectations in every industry continue to get
higher and their demands of you get more complex, bringing
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
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.
The added extras and value are often what keep us, as
consumers, going back to a particular supplier for more.
Every call doesn’t have to be a sales call, but instead a way
to check in with your customers, share interesting news, spill
all about a new product release and see if they have any new
problems that need solving.
When it comes to the packaging industry, offering a range
of freight options, holding a reasonable amount of stock for
those last minute rush deliveries and even managing your
lead-times so orders can be churned out sharpish can all
help to add that little extra value to a sale.
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
YO U AT E V E R Y C O R N E R .
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REACTIVE-SELLING
Packaging suppliers can no longer sit back and twiddle
their thumbs waiting for customers to come knocking. Being
proactive in your approach to scoring a new customer or
even keeping existing ones is a must.
In a reactive business world, your customer can dictate the
entire relationship. In the packaging industry in particular,
salespeople are relying wholly on customers reaching out
to place an order.
By getting in touch first, it’s more than likely that they
are ready to buy, regardless of your sales patter. They’ve
probably already made their mind up, they know what they
want and they don’t want to be sold any added extras. This
in itself limits the ability of your salespeople to cross, switch
or up-sell them.
What can you do?
Given your customers’ and potential customers’ wealth of
options when it comes to packaging choices, being proactive
is the only way you’re going to stay afloat. Being proactive
however, demands a certain level of product knowledge, an
insight into the market and customer challenges.
Supplying your team of salespeople and those in customer
facing positions with the information they need to be more
proactive in their selling approach will stand them in better
stead to secure repeat orders on the spot rather than
waiting for customers to fall at your feet. Simply looking
back through your customers’ order history can be insight
enough. If they’ve bought shrink wrap from you for the
last 11 consecutive months, but haven’t yet bought on the
30th of this month – chances are, they’ve sloped off to your
competition.
Or, get a business intelligence tool that can do all of this
legwork for you!
With this know-how under their belt, your salespeople will
be fully primed ahead of their next interaction with their
customers and can proactively get in touch before it is too
late and your competitors move in on your patch.
Don’t forget about your delivery drivers too – they can be
order takers in their own right, so empower them to make
proactive sales and provide outstanding service. Delivered
a few pallets of cardboard? Offer a free sample of filler or
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.
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ABOUT SALES-I
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.
www.sales-i.com
We are the leader in sales performance for packaging distributors and wholesalers.