Six tips for staying competitive in the packaging industry
There are over 7 billion people in the world and each person consumes on average $114 worth of packaging each year. There is no doubt that packaging is a lucrative industry with plenty of growth potential – however, market share is not equally distributed and smaller suppliers are often stuck in the shadows of their bigger competitors.
Larger suppliers have greater resources, which typically grants them more brand awareness, wider access to and presence within a variety of sectors, and the ability to undercut on products without a significant impact on their overall profit margins.
It’s a tough, competitive landscape for smaller companies but nonetheless there are ways in which they can take on the industry’s ‘big players’. Here are six simple suggestions that can help suppliers, without the budget or influence of their larger rivals, improve their relationships with customers and steadily grow their business.
1. Get your pricing right
The packaging industry is sensitive to price and the smallest difference can turn a seemingly loyal customer into your competitor’s latest acquisition. Bigger companies have the infrastructure to play with price as the market fluctuates; dropping the price slightly here and there won’t do their bottom line any harm. For a smaller supplier though, it can be devastating for business.
The reality is that packaging is a cost driven market and customers are in the dollar seat. If news spreads that one supplier is offering cheaper goods elsewhere, customers will move on. Without the right tools in place to alert you to any immediate changes in a customer’s buying behavior, your response time will be slow and, more often than not, too late.
The correct use of technology will give you greater insight into the health of your accounts, enabling you to act fast and decisively. As soon as a customer’s regular spend dips or changes, your sales team can contact them, find out why – and most importantly, win back the business with a tailor-made offer that is priced right.
2. Be (competitively) different
Let’s be honest, there’s not much differentiation in the packaging industry’s product offering: one roll of bubble wrap is the same as any other. The market is essentially made up of a number of suppliers offering similar products to a specific pool of customers: which further explains why price is such an important differentiator.
However, price is not the only possible point of difference. Customers are more socially conscious and environmentally aware than ever before, and thus concerned about the impact packaging can have on their present and future world.
According to Nielsen (nielsen.com), 66% of global customers have said that they are willing to pay a premium for goods that are produced sustainably. This could mean creating products that are recyclable, or packaging that takes into account allergies and health-issues, or using new technologies and processes to reduce any environmental impact during manufacturing.
Whatever you choose to do, even the smallest change to company culture can help you stand out from the crowd in a big way. Of course, make sure that you tell the market what you are doing and how it is of benefit to your existing and potential customers. A shared set of values will inspire great loyalty between your brand and its target audience.
3. Encourage brand loyalty
With competitors ready to undercut you at every corner, competing on cost alone is not a viable long-term solution. Here’s a crazy idea: stop thinking about money. To build strong relationships with your customers that stand the test of time, you need to offer them more.
By that I mean those relevant value-adds and extras that keep a customer coming back to your business time and again. Check in with your customers, share interesting industry news with them, ask them how business is – what problems are they facing and how could you possibly help? Don’t just be a supplier, be a trusted business partner.
4. Identify up- and cross-selling opportunities
In a competitive market, cross-selling is one way to win the price war – and it’s a seriously under-utilized tactic in the current packaging industry. If you produce cardboard boxes, no doubt you also make the tape to stick the boxes together. So, if your customer is buying boxes from you but no tape – where are they getting the tape from?
There are plenty of up- and cross-selling opportunities in the packaging industry: most of the products can be paired for greater convenience and customers love a bulk deal from one trusted supplier – especially when it helps them do business better and faster. With the right business intelligence tools on-side, these opportunities will be flagged immediately, allowing you to respond to your customers’ needs quickly with relevant solutions.
5. Know your customers
The more insight you have into who your customers are, what their business needs are, and what goods they buy, the better you’ll be at communicating (and selling) effectively to them.
Customer relationship management (CRM) software improves visibility into your customer relationships. This tool can monitor your customers’ product preferences, buying habits and contextual information such as their budget forecasts. What’s more, with heightened awareness, your response time will be far faster, allowing you to react to any issue or opportunity before a rival supplier can get in on the action.
6. Sell proactively
While it’s important to react to any changes or opportunities triggered by your customers’ buying behavior with speed and agility, a proactive approach is just as important.
Technology can amass huge volumes of information for you that, when stored and analyzed correctly, can forecast future spend. Predictive analytics tools put big data to work, detecting correlations between the who, what, when and why. This information gives your sales or customer service teams valuable insights that can be acted on - before the real need arises - to further strengthen your relationships.
Demand for packaging goods and materials may be on the increase, but so too are the number of industry suppliers. To establish themselves securely in the market, smaller businesses need to focus less on cost and more on their customers. Technology can aid this shift in thinking and provide wider insights into actual customer habits and needs. Armed with this knowledge, your company will be able to drive a far superior and more accurate customer experience that ultimately maintains existing relationships and wins new business.