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The Old Business Strategy is Still the Good Business Strategy

July 15, 2013

It doesn’t take a genius to get business right, provided you remember some common strategies.  Here’s one in action, in a slipped webcast:

A competitive strategist at Microsoft has told cloudy partners that competing with Google on price is proving to be commercial suicide, particularly in industries where firms are under financial constraint.

The confession was made at a breakout session at the Worldwide Partner Conference, which Microsoft plainly didn’t intend to go any further judging by the “private and confidential” wording heading the webcast.

There are very few exceptions where you can compete purely in price and hope to win.  When people argue that this is what Wal-Mart does, I usually point out that their strategy is based on cost reductions that drive prices down, not on price cuts.  If the store can keep a price higher to command margins, it will.  More likely, it relies on packaging, placement, and volume to cut costs, which enable it to win.

Back to Microsoft.  Its small business arm is fighting tooth and nail to keep Google at bay, as the Dynamics business is a big winner for Microsoft.  Other than Apple nibbling at the edges, the SMB market has been a stalwart Microsoft territory for many years.  Now that Google apps and their cloud services have really matured, many small businesses are looking at Google as a better option.

In the process of the discussion, this bit comes out, which is another traditional business statement:

“If you have allowed Google to engage in the conversation before you get there then you are a little bit behind that eight ball and you’ve got a much higher propensity to lose,” said Connor.

She said letting Google set the agenda was a no-no “because the minute you engage in a price conversation it’s very difficult to compete,” but added there were hidden extras with the rival.

You really have to know your customer, and make sure that the customer understands why they’re still working with you.  Forgetting that enables your competition to roll in and position something new.  Then, it could turn into a price debate, and nobody ever wins on cutting prices… not even the customer.

The advice in the webcast?  Um, go talk to your customer.  While this seems pretty basic, you’d be surprised at how few businesses actually keep track of customers when they’re not asking for help.  An occasional call or e-mail can do a lot to keep the customer happy, and they’ll remember why they went with you in the first place.

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