Imagine you could click your heels, and just like that – you are not in competition any more. You are now the undisputed number 1 in your market.
Your regular customers love you. You have no trouble at all asserting higher prices. All your new customers come from word of mouth, and you only use your advertising budget to apologize to customers whose overwhelming demand you cannot meet. – sounds pretty good doesn’t it?
Oh well! Unfortunately you are still in Kansas and Dorothy’s red slippers only work in the movies. But the good news is that a method exists to transform your company in such a way, as though you were able to click your heels.
The positioning trap
You may think:
“When customers want to buy my product, they will make their decisions largely based on quality and price.
Ergo, I have to provide good quality at the lowest possible price and outstanding service. Since others sell products similar to mine, I am in direct competition with them. How can I possibly sidestep that.”
I can appreciate this thinking. Most of us are primarily focused on comparing ourselves to the competition. Michael E. Porter’s advertising strategies are based on this, and are widely used and accepted. You are probably familiar with these:
- Positioning as the price leader
- Positioning as the quality leader
- Positioning as the service leader
These strategies are directed toward conglomerates. Catastrophically so, many small companies also focus on these competitive strategies. The only problem is: this makes sense for hardly any of them. Or are you aware of a small company that is able to demonstrate long-term profitability while also being the price leader in its industry? Focusing on the competition is mostly ill advised.
In the end, small companies can much more easily sidestep competition than larger ones. How? The key is to modify one’s point of view!
“The kernel of any good strategy is to change the perception!”
What does my customer buy?
This is a key question. It does not matter whether you are active in consumer markets or in B2B markets: Think about it: a customer is never truly interested in your product!
A cosmetics manufacturer may well be producing cosmetics. But its customers are buying hope and beauty. Xerox is a copier manufacturer. But the customer is buying increased office productivity.
“No one buys products because of their features. People buy a promised benefit and the expectation of having their needs met!”
It’s all about the customer benefit! It can be rational in nature if you are solving your customer’s problem. But the customer benefit can also be emotional in nature when you fulfill your customer’s desires.
What problems do you solve and what desires do you fulfill?
If you want to sidestep your competition, you must stop focusing on products or product features. You must rigorously explore the problems and desires of your customers and supply solutions that address these.
You may say to yourself:
“That is nothing new. This is exactly what we did. We redesigned our product to benefit the customer.”
Truly? Do you genuinely know your customer’s problems and difficulties? Does your product truly solve one of your customer’s important problems? Never mind what you think may benefit the customer. The key is the customer’s perceived benefit. A small but essential distinction.
What customer are you focusing on?
Many entrepreneurs start by developing a product and then look for customers. That is ill advised. This is how many unmarketable products get developed, especially in B2B markets.
Only begin to develop a product if you are certain that this will solve the burning issue of your customer segment. But before you do this, you must first decide what customers you want to focus on, and find out what their burning problems are.
Many companies only segment their customers by industry or location. That is not enough. Customers vary too much. You need to specialize. Take dead aim at the market. Find small customer groups who have similar problems. The smaller the niche, the easier it will be to become number 1. Ask yourself:
- What customers do we want to address?
- What customers are a good match for me as an entrepreneur?
- Which of these customers have similar problems?
Identifying the most burning issue
Get to know your target group inside and out!
- Talk to your target group.
- How does their business model work?
- Who are your customer’s customers?
- What problem burdens your target group the most?
Transform yourself into the number 1 “Customer Appreciator” in your industry. Only then should you develop a product or service – and this product should solve the most burning issue for your target group.
This is how you will become number 1 in your niche.
By taking these steps, you will get to know your target group better than anyone else. You will acquire background knowledge and industry know-how that is second to none. You are speaking your target group’s language. You are focusing on true benefit and not on the product. Over time, this will all combine into your customers perceiving you as the number 1 in your niche.
If your product truly solves the burning problem of your customers, the customers will buy from you – at least if the perceived benefit exceeds the expense. You have a better understanding of his business and his problems than anyone else. In the eyes of your target group you therefore have no real competition.
Are you buckling under your competition?
What customers are you specializing on?
Are you solving your customer’s most burning problem?
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