Price Wars - The 1 Penny Difference

1. PRICE WARS: THE 1 PENNY DIFFERENCE 6 reasons you’re fighting a losing battle (and 6 ways to win it). A GUIDE FOR PACKAGING COMPANIES.

2. STATE OF THE PACKAGING MARKET 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. 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. 02 www.sales-i.com

3. PRICE WAR 101

4. 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. 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. 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. 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 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. 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. 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. 04 www.sales-i.com

5. the same old

6. 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. 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. 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. 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. 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. 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. 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. 55% OF GLOBAL CUSTOMERS ARE WILLING TO PAY MORE FOR PRODUCTS PROVIDED BY COMPANIES COMMITTED TO POSITIVE SOCIAL AND ENVIRONMENTAL IMPACT. 06 www.sales-i.com

7. NO VISIBILITY INTO ACCOUNTS

8. 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. 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. 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. 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. 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. 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. What can you do? LOSING ONE SINGLE PRODUCT LINE TO YOUR 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. COMPETITION CAN BE ALL IT TAKES FOR IT TO BECOME A PROBLEM. 08 www.sales-i.com

9. LACK OF CROSS-SELLING

10. 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. 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. 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? 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. 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. 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. THE PACKAGING INDUSTRY IS A DREAM FOR CROSS-SELLS, BUNDLE DEALS AND BULK DISCOUNTS. 10 www.sales-i.com

11. ZERO ADDED VALUE

12. 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. 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. 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. 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. 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? YOUR COMPETITORS ARE READY TO UNDERCUT YOU AT EVERY CORNER. 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. 12 www.sales-i.com

13. REACTIVE-SELLING

14. 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. 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. 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. 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. 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. 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. 14 www.sales-i.com

15. ABOUT SALES-I We are the leader in sales performance for packaging distributors and wholesalers. 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. tellmemore@sales-i.com www.sales-i.com