Be careful of the race to the bottom …

You might just win!

A mentor of mine used to warn me against engaging in the race to the bottom – the race to provide cheaper, faster or simpler things.

He constantly asked me to think about what happens when you win that race – when you have actually become the cheapest or the fastest.

At that point, you will be providing a similar product at a much lower price than your competitors. Is that sustainable over the long run? And more importantly, what positioning is gained by becoming the cheapest?

Of course, in the B2B marketplace, I recognize that there will always be a percentage of the business community that will seek the lowest price regardless of quality or fit or result.

But even those companies have to realize at some point that buying based on the lowest price isn’t always the right solution for their needs.

In marketing, the race is on

In my 25 years in the marketing industry I have never witnessed as big a race to the bottom as I have seen in the last five years. New technologies have created a lower cost of entry into the marketplace, and have provided companies with a platform to offer “marketing services” at a significant discount.

The burgeoning sector of tiny web programming groups that offer websites for $599 (or less) in our market is a prime example of that growth. The second, but no less telling, example of the change is the growing sector of video development “companies”. The availability of digital HD cameras at a surprisingly inexpensive price has created an entry point that enables pretty well anyone to promote themselves as a “video expert”.

In many ways, it is easy to understand the cheap website offer – use a template site, stock photos, client supplied copy and graphics, and there you have it – a business website.

But as I look at this growth, three questions come to mind:

1. If you can do it for $599, and are eventually successful, will someone come into the market and use the same template process to produce a site for $550?
2. If price is your differentiating feature, what is your response to the new competition? And if you respond in kind where does the “competition” end?
3. More importantly, as it relates to the service being offered, if price is your only differentiator, what are you really offering the client?

I will not argue that a website can be built for $600. But the question is whether it is a website that actually serves the client’s needs? For example, here are a few questions that we think the client needs to ask:

• Has our brand been a consideration in the development of the site?
• Is the brand message even incorporated into the site?
• Is the built-in functionality capable of servicing our current and future needs?
• Did we even talk about the company’s future needs when building the site?
• Is this site scalable or capable of growing with the company – or will a new site be required when growth occurs?
• Has the site been developed with SEO principles in mind?
• Has the copy been written to assist in SEO?
• Is the site mobile, and will the business elements of the site work on mobile devices?

Are the client’s needs being  serviced?

Technically, you can develop a site for the lowest cost. And in the same way, a decent video can be built for a client at the lowest cost possible. From a marketing perspective, however, we must ask ourselves whether those products will truly serve the client’s needs? At the very least, we must make sure the client has been made aware of the other elements they should be considering and been given the option to buy those services a la carte?

The race to the bottom can produce some truly inexpensive (I am trying to avoid the word cheap) results. But for the client, the restrictions that come with fast and inexpensive rarely enable the client to address all of their marketing needs.

And for the company that wins the race to the bottom – where do you go from there?