Competing on Price is A Losing Game for Staffing Firms

Not long ago, almost every phone call we received at Staffing Robot started with the same question “how much do you charge for a new website?” Today however, when staffing and recruiting firms call us, more often than not they’re starting the conversation by saying

“I want to be innovative and I’m calling you because I want something different.”

That’s what we’re all about, so getting these phone calls is music to our ears. But it took a lot of effort to get here.

When we first started Staffing Robot we saw competitors charging incredibly low prices and turning out poor to mediocre work. Having yet to prove ourselves, it was easy to feel we had to compete on price in order to get traction. So we did. However, we weren’t happy doing such low budget work. Further, we felt undervalued in our skills and what we were delivering. This isn’t a good position for any business to be in.

So, very quickly, we decided to stop competing on price. We believed in the value of the work we delivered and we held to our prices. We believed strongly that if we found the right clients they’d see the value of the work we delivered and eventually enjoy a real return on their investment. Guess what happened? We lost a lot of business. I mean a lot. And I won’t lie, it was painful.

In these early days, companies were calling us and simply asking us ‘what do you charge for a website?’ We had less than two minutes to convince them to give us a chance, get them to understand the value of our work, and justify the investment we were asking for. For most of these prospective clients, it seemed it was all about price. Since our prices were higher than all of our competitors, we lost deal after deal to them. Until one day we didn’t.

Not long after, we built trust in a few companies that wanted to give us a shot. We put out a call seeking companies that wanted to be innovative, companies that wanted to create something truly unique, and eventually we found them. We do business with fewer companies than most of our competitors each year. However, we do bigger, longer lasting projects that showcase creativity, push innovation and deliver big returns.

Why does this all matter? Because it taught us a very important lesson. It taught us that during our change in direction, we weren’t losing customers – we just hadn’t found the right ones. When we did find the right customers, we realized there were more of them out there than we realized. We believe this lesson applies to staffing firms as well.

These days, people have several options and all kinds of deciding factors when it comes to looking at companies they choose to do business with. Budgets certainly matter, however, price is seldom the key deciding factor if you can successfully up level the conversation. More important than price, people want to ensure they are doing business with companies they trust, companies that deliver results and companies that have similar values. Getting potential customers to understand the value you deliver, that you’ll produce results and making a personal connection with them provides amazing opportunities for businesses of all sizes. It’s something every staffing company should keep in mind – particularly when a client starts talking with you about price.

Staffing firms that connect with their customers on a value basis benefit from fierce customer loyalty, and have the opportunity to develop true partnerships. This helps you move more into a ‘solution space’ with your customers and they will being to come to you for help with all of the challenges they face, not just the original one you helped solve. When you’re in this position, your clients will be happy with the service they pay you for, and confident they’re spending their money in the right way.

When it comes to competing on price, here are 5 things every staffing firm should keep in mind.

1- The lowest price only saves the client money in the short term.

I often talk to staffing companies that believe price is the most important deciding factor for their clients. However, when you get past talking about price with your clients you’ll discover what really matters – quality talent, quick turn arounds, excellent customer service, thoroughness, and helping them maintain appropriate staffing levels. If you can help your clients achieve these goals then you can justify a premium in your price. While a low cost competitor might look like a better option initially, if they can’t meet the client’s needs in these other areas they will be a much more expensive option in the long run.

2- Truly putting customers first beats a lower price every day.

One of the best ways to put customers first is to make it easy for customers to get a hold of you and to have a clear and direct connection to them. A big mistake many companies make is ‘automating the customer’ after a deal is closed with software, voicemail boxes, process and template service. Don’t get me wrong, I’m a big believer in technology and automation for everything – except customer relationships.

Customers that work with Staffing Robot know they can talk directly with any one on our team they need to, any time they need to. That means we’ve had several calls on mobile phones from East Coast clients at 6am our time and grabbing a last minute flight across the country so we can discuss important strategy meetings when urgent needs arise. It’s seemingly little things like this that can make all the difference with a client and lets them know they’re not just a number going into your contact queue.

3- Trust isn’t just a word. It’s an every day practice.

Throwing out the word trust these days can almost sound cliche. However, I’m not talking about trust from a big picture perspective. Of course your customers have to trust you. What I’m talking about is trust in your everyday delivery, stability, consistency and security.

For example, if you’re changing your prices frequently, swapping out candidates at the last minute, or changing your clients internal reps, this makes it difficult for your clients to manage their budgets and have faith in your recruiting/on boarding process. That’s why you and all your staff that interact with your clients have to practice trust every day, in everything they do. This lets your clients feel comfortable that they can expect the same great outcome from your company every time they rely on you.

4- It’s easier to go down than it is to come up.

One thing I’ve learned from selling software is that it’s easier to go from $1 – $10, than it is to go from Free – $1. Why? because once a client is used to getting something from you for free (or very cheap) it’s incredibly difficult to ever get them to start paying you, or to go up in price.

Further, if your prices are low already, you’re most likely operating at a very low margin. Therefore, you have little to no ability to ever offer discounts, bulk pricing or other incentives. However, if you’re prices are at a premium, it provides you opportunities to offer your clients periodic discounts for their continued loyalty, or bulk pricing discounts for larger projects or bundled orders. When you’re in a position to make such offers, your clients know they’re getting even more value from doing business with you.

5 – Cheap is easy.

That’s it. Cheap is easy. It’s easy to get someone to buy your services or sign up for your product if your price is low enough, or even free. However, it’s not a good way to build a long lasting, sustainable business. A business where you and your employees believe in the work you do, and your clients receive the value. If you want a long lasting, thriving business stand by the service you deliver, deliver it at the highest quality possible and price your services accordingly. If you’re doing all these things, eventually, the question of your price will no longer be discussed.

So the next time you feel the urge to compete on price, resist! Remember, your clients are not singularly focused on price. You might  lose some clients in the short term but you’ll gain better clients in the long run. Companies want to do business with staffing and recruiting firms that can truly meet their needs, match their values and deliver consistently in the long term. Focus on that, not on price.

If you’d like to discuss more information in this post or other sales/marketing strategies contact Staffing Robot.

 

 

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