How to Win Business in a Competitive Marketplace

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Article originally published in the American City Business Journals on March 5, 2019

All business leaders face the issue of how to win business in a competitive marketplace. Price the product or service too low, and you are leaving money on the table. Price it too high, and the customer or client will go to a competitor.

While I was national sales manager of PQ Corporation, a producer of both commodity and specialty chemical products, they constantly faced competitive pricing decisions to retain current customers’ business was well as win the business of new customers.

Many of PQ’s customers and the customers of our competitors were supplied under the terms of sales contracts that were one or more years in duration. Before the end of their supply contract, many of these customers would put their business out for bid for the next contract term.

In the competitive marketplace, this was an opportunity for us to win a future customer’s business currently supplied by a competitor, and an opportunity for a competitor to win the business supplied by our company.

We worked hard to differentiate ourselves on customer and technical service, as did our competition. Price, however, played a large factor in whether we won or lost the business.

So, as a business leader, how do you increase the probability that you will win in the competitive marketplace?

Work to be the preferred provider

At PQ, we were always on the journey to be the preferred provider by providing a great customer experience. We wanted to be the company that every customer would preferentially buy from. Our goal was to help our customers be successful in their businesses by being a great supplier.

Our products always met specifications, our plants were responsive to emergency deliveries and our sales and customer service people worked to resolve any issues with the account.

Build strong customer relationships 

The larger and more strategic the customer, the more we called on them and developed relationships with the leadership hierarchy within the customer’s organization.

Our sales representatives “owned” the customer relationship — they were the ones who kept in frequent touch with the customer to understand trends in their business and any issues they faced with the use of our products. They brought in our knowledgeable technical service people to trouble-shoot and resolve issues.

The regional sales manager as well as the national sales manager would develop relationships up through the customer’s organization. After I was appointed the CEO of PQ, I developed a relationship with my counterpart —the CEO, or if more appropriate, the group president of the business purchasing our product.

Get the “last phone call” 

If a competitor out-bid us for a customer, we needed to know about it before the competitor was awarded the business. We wanted the opportunity to convince the customer of the value we brought to the supply relationship beyond just the product price, and if necessary, meet the competitive price. That is the value of developing a strong customer relationship — to get the last phone call before the business is awarded.

When I was president of PQ’s Canadian subsidiary, we were working on a 10-year contract to supply a pulp and paper mill in Whitecourt, Alberta, with product used in pulp bleaching. Our plan was to build a production plant adjacent to the customer to ensure a reliable supply of product.

One afternoon, the business manager responsible for negotiating the supply contract with the customer came into my office in Toronto and told me he just learned that we had competition for the business — a U.S.-based supplier.

This customer was strategic for us. The plant we would build to supply their pulp and paper mill would be strategically placed to supply other pulp mills throughout Alberta. We didn’t want this opportunity to go to a competitor.

I asked our business manager to make an appointment with the customer’s CEO. I wanted to meet with him to close the deal.

We arrived in Whitecourt the next day and sat across from the CEO and his team. We presented how our company was in the best position to supply not only their product requirements but also their technical service needs, and how our multiple plants in Canada would be there as backup to provide product to their pulp and paper plant.

We didn’t need to cut the price we originally offered — all we needed to do was freeze the price for three years, something the U.S. competitor wouldn’t do. At the end of the meeting, the CEO and I looked each other in the eye, stood up and shook hands across the table. I knew we had a deal.

Without the relationship previously established by our business manager and the non-monetary value we could deliver to the customer, in addition to being able to freeze the price for three years, I am not sure we would have prevailed in winning the business.

Be dedicated to continuous improvement

In PQ’s commodity chemical business, where our products and those of our competitors were the same chemically, price was an important competitive differentiator. A strong commitment to continuous process improvement to drive costs down was critical to the ability to compete.

In our specialty chemical business, where our products and those of the competition were differentiated based on product cost/performance, this metric must continually improve at a pace greater than that of competition. Continuous improvement can be incremental or step-wise, with large improvements based on innovation and a change in paradigms. This permits greater pricing flexibility than a competitor, whose improvements may lag, and is key to long term competitive success.

When going up against a competitor, you want them to think, “Oh no. Not those guys.” That’s how good you want to be. That’s how you win business in a competitive marketplace.

Stan Silverman is founder and CEO of Silverman Leadership. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.

How Continuous Improvement Can Help You Achieve Preferred Provider Status

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Article originally published in the American City Business Journals on January 8, 2019

One of the most important objectives that a company can adopt is to achieve preferred provider status for products and services to its market — the company that customers and clients preferentially go to first before going to the competition.

This is the Holy Grail of any company.

In August 2014, I wrote an article headlined, “A culture of continuous improvement is no management fad … In fact, it could be the Holy Grail.” However, I no longer consider it to be the Holy Grail. It’s an enabler — it helps companies to be a lower-cost provider of products or services, which builds competitive advantage and enables a company to achieve preferred-provider status —the Holy Grail of any firm.

Given the importance of continuous improvement to building competitive advantage, I would like to offer an update to the August 2014 article on continuous improvement.

Over the years, many corporate initiatives have been proposed by consultants such as Six Sigma, Baldrige Quality Award and Kaizen. Many of these initiatives are not sustainable without significant time and effort by management. Today, some are rarely practiced.

At PQ Corporation, we found that the one initiative that generated results and was sustainable over time was the culture of continuous quality improvement, or CQI.

How was CQI different than other improvement initiatives? It was the way in which we implemented it.

We had employees get directly involved in the effort. Instinctively, most employees realize that continuous improvement is needed to grow the company and build competitive advantage. To not continually improve means that you fall behind. No other initiative has this innate imperative.

Even though CQI at PQ was led by the CEO and other senior leaders, it was driven by the employees at every level within the company. The senior leadership of the company was charged with creating an environment where employees developed a sense of ownership in that part of the business in which they work.

This cultural change put power and responsibility into the hands of employees, not managers, to initiate and drive improvement projects. Each of the production unit teams within our manufacturing plants was given $50,000 to spend on projects chosen by the team to improve their manufacturing processes.

Creation of a CQI culture required training of all managers to be coaches and counselors to their staff, empowering them to develop and implement their own improvement ideas. Training was needed to help employees analyze data to determine the root cause of issues, so proper solutions could be identified.

By adopting CQI, my company saved millions of dollars from ideas generated and implemented by our employees.

By relying on our employees to identify and execute these projects, it brought out the creativity in our people, encouraged them to be more proactive, and showed them in a tangible way that they mattered to the success of the company. This helped us be more competitive, and provided funds to reinvest in and grow our business.

There is nothing like having employees throughout the organization, hourly and non-hourly alike, develop and execute their improvement projects so they could develop a sense of ownership in what they do.

So, if you are looking for a way to build competitive advantage to help achieve the Holy Grail — becoming the preferred provider of products or services to the market — adopt a culture of continuous improvement. Companies that do not continually improve will be left behind. Those that do will win the competitive race in the long run.

Stan Silverman is founder and CEO of Silverman Leadership, and is the former CEO of PQ Corporation. He is a speaker, advisor and nationally syndicated writer on leadership, entrepreneurship and corporate governance. Silverman earned a Bachelor of Science degree in chemical engineering and an MBA degree from Drexel University. He is also an alumnus of the Advanced Management Program at the Harvard Business School. He can be reached at Stan@SilvermanLeadership.com.