In previous posts, we’ve discussed a number of drivers that lead to margin compression in a B2B context:
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We started with the pressure that comes from powerful procurement organizations and how to beat them at their own game.
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We talked about the myth of eliminating price sensitivity and how to get around the fact that your customer is always going to be sensitive to price.
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We also discussed the threat of global “same as” competitors and how to stand out as different and compete on value.
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Most recently, we looked at how to escape from the trap of trying to please every customer with every service to save sales volume on products by using strategic segmentation.
Today, though, we’re talking about something completely different. It has to do with attitude.
The Power of Attitude
Without going too far into the metaphysical, let’s all just agree that your attitude – whether positive or negative – will have an impact on your work. It’s inevitable.
Studies have proven that employees who are more engaged in their work and enjoy their jobs are more productive and more successful than those who are not. The difference is attitude: if they like their jobs, they look forward to coming to work, they hit the ground running in the morning, and they stay strong throughout the day.
On the other hand, those who either don’t care, or who are actively disengaged in their work, are far more likely to call in sick, do a poor job while there, and generally cost the company more than they’re worth.
This is elementary, and pretty much everyone understands and accepts these facts.
But, there’s a specific kind of attitude problem that affects B2B companies who have been dealing with one or more of the drivers listed above, and it actually can evolve into a driver of margin compression in its own right – one of the worst there is.
Internal Malaise and Self-commoditization
Here’s how the situation develops:
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The organization is getting pummeled with messages from customers, procurement organizations, and the competition, all of which shout, “you’re selling a commodity!”
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In an effort to save sales volume, salespeople become accustomed to offering discounts, which hurts margin.
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In an effort to add value and differentiate, added services are piled on to the sale for free, which further shaves the margin.
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After this cycle continues for some time, the salespeople and executives alike begin to agree with the customer’s messaging: they ARE in a commodity business, so they start acting like it.
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And, once that attitude is ingrained in leadership and the frontline, it’s difficult to rescue the company from itself.
This is a particularly insidious trap that organizations can fall into, and it can’t be blamed on any one person or department. It’s not even necessarily due to any wrong actions on the part of previous decision makers because in most cases those decisions kept the company alive when it may otherwise have crumbled.
But with global competition as it is today, this level of internal malaise can be deadly. The decisions it spawns can kill a company quickly, and recovery could be impossible.
Our goal when working with a client who finds themselves in this position is to help them get off the 91-day treadmill. Rather than just slogging along in the same rut, doing whatever it takes to bring in enough sales to keep the lights on, and starting the process over each quarter, we help them look further ahead and make the decisions necessary to improve the attitude of the organization first.
Then, solving the rest of the equation becomes possible. For more information on EMM Group's services, read our Integrated Commercial Strategy (ICS) ebook today:
