Positioning Blue Collar Services for Economic Uncertainty

Many businesses are dealing with stagnating sales right now. In a time where cost-cutting is rampant, your customers may also be asking for discounts and in some cases pausing or ending partnerships altogether. If this sounds familiar, you’re not alone.

There are many strategies companies use to shelter from these headwinds (e.g., loyalty or retention programs, revising contract terms and conditions, or talking to customers more frequently to see what else you can help with), but there’s one strategy that can help you play defense and offense at the same time.

Enter the “flanking product”, which is effectively a lower-tier product or service that strips away costlier pieces or parts from your flagship or original offering. There are three key situations where developing a flanking product pays off in spades.

Situation 1: Sales have slowed

At some point, it’s necessary to look beyond your early and current customers who willingly paid higher introductory prices. The flanking product is just the tool to unlock this opportunity. First, you continue serving your most important market segments with your existing services. Then, you can leverage the lower-cost flanking product to target new segments of price sensitive customers.

Additionally, for customers with budget constraints, you’re giving them an option to stay with you as a partner while keeping the relationship “fair” to both sides – the value you’re delivering is balanced against what they’re paying, which avoids unnecessary discounts that are often the knee-jerk reaction to customers who come to you with a problem. When their budgets are restored, you’re still there to resume the higher value business as usual.

Situation 2: Holding competitors at bay

If your company is well-established, you may have experienced “ankle-biter” competitors approaching your customers. Take the example of janitorial supplies – once designed and sold, other companies quickly follow with attempts to make similar items faster and cheaper to steal market share from you. Flanking products address the ankle biter competitors by offering a lower cost option to the market while upholding your company’s unique value to the customers who care about top tier service or quality.

The reason this strategy is often effective is that it makes purchasing easier for your customers, increasing the likelihood that customers keep a larger share of their wallet with you rather than seeking out secondary suppliers for their low cost needs.

Situation 3: Improving negotiations

Flanking products also unlock another option for your business development or sales teams to deploy as a negotiation tool. Give-Gets (essentially trade-offs) provide your commercial teams with an easy to communicate structure to maintain price-value alignment. Instead of granting or negotiating over discount requests, you enable sellers to take ownership of the conversation by responding with “Sure thing, we can absolutely support your budget constraint – but here is our product for that price.” This either calls your customer’s bluff and they’ll respond with “well we actually need the higher-tier product” if they’re just playing poker (fishing for a deal), or will increase the odds they’ll make a purchase if they’re a price buyer looking for bare bones specs.

Flanking product examples

In most business situations, there are inherent tradeoffs to pursuing different strategies. Case in point – should companies cater to fewer customers with a high-priced product, or cater to more customers with a moderately-priced version? The flanking product allows you to do both – sell the higher value service to your key customers that can pay for it - while protecting and expanding your customer base by offering a lower-priced flanking product. You know your business best, so be creative to think about sensible ways to differentiate your products or services and get started today.