The Competition Doesn't Count!?!?!?

This old refrain popped up recently while I was interviewing for a consulting project. When asked about his competition and their impact in the marketplace, the business owner told me his philosophy: “The competition doesn't matter. Just do a good job, and the customers will come to you.”

I've heard this line before, and my response is 3 simple words:

Ba. Lo. Ney!

This attitude harkens back to a simpler, more gentile business environment. During the Eisenhower administration, maybe. But that was long ago.


Today, Your Competition Most Definitely Matters.

It sets the parameters for the conversation you have with your customers. Every one of your sales prospects has an idea of the products available in the market, and their price. Where do they get all of that information? From your competition.

• They listen to the ads,
• research their websites,
• and talk to their sales people.

If your competitors offer a similar product to yours for about $100, and you are priced at $120, your customers will be asking questions.

If the competitors have the product in stock, but you need 4 days to deliver, your customers will expect you to have a solid reason for doing things differently.

If the competition allows people to place their orders over the web, but you make them come in and talk to a sales person, your customers will want to know why.

The buying public won't allow you to operate within a vacuum. They'll evaluate everything you do in the context of what the competition does.

I read a great line recently: “we live in the age of transparency”. That is absolutely true in the sales environment. Your customers are familiar with your competition, their products, services and prices. And that frames the conversation when you begin your sales pitch.

So how do you operate effectively in this atmosphere? You need to arm yourself with two critical sets of information:

1. An understanding of your primary competition, and how they are viewed by the buying public.
2. Some key points of differentiation that will help your prospect see you in a different light, and perhaps justify increased margins.

Those two statements are simple to write, but might take a small business years to master. However, in them lies the difference between being a top contender in the marketplace and being just an also-ran. The competition sets the parameters of the game. How well-equipped are you for the challenge?

Practical Tip of the Day:

• Don't ignore the competition; embrace the challenge.
• Do a “shelf-space” analysis of your competitors, inside the head of your customer base. Do some extensive interviews with customers and prospects. (If you are the Boss, do this yourself. Don't delegate!)
• Figure out why you aren't considered at the top of the list, and develop a plan for the next 12 months.

HOWEVER, don't try to become #1 by mimicking the current #1. But more about that later.

Leadership Comes in Three Forms

I read a good book recently.

Actually, I've read several good books recently, but only a few have any bearing on the subject of this blog: Small Business Marketing Strategy. One that does, and has some trenchant philosophy to offer (translation: the author agrees with me), is:

The Discipline of Market Leaders
       Choose your customers, Narrow your focus, Dominate your market.
        by Michael Treacy and Fred Wiersema.

My reading list is eclectic. I don't spend a lot of time on “Just Released Best Sellers”. I do look for solid, non-fad ideas that can be translated easily into the small business environment. Although this book takes its examples from the world of well-known corporations, the strategies still apply on the smaller scale.

The book was written about 15 years ago, and many things have changed. In fact, some of the corporate examples used in the book have fallen from favor. However, their replacements as market leaders have succeeded by using the same strategies, which is an excellent validation.

The authors cover a lot of ground, but one key element is this:

All market leaders lead in one of three ways:

1. Operational Excellence
2. Long-term Product Innovation
3. Customer Intimacy

Lets look at these one-at-a time, and go through some examples.

1. Operational Excellence

These market leaders have a well-defined target audience, they offer only a limited numbers of products or services, and they use their intense focus to squeeze out costs throughout their organization and supply chain. This allows them to offer customers a very predictable and highly reliable buying experience at a low cost.

Typical examples would be McDonalds, Costco, Dell Computers, and Southwest Airlines. These companies have brands built around their operational consistency and the low pricing that it allows. In most every industry, you can name a low cost, tightly focused, operationally excellent company that is seen as a leader, and has significant market share.


2. Long-Term Product Innovation

These market leaders are often at the other end of the pricing scale, but they succeed because of their product reputation. A prime factor here is the words “Long Term”. This isn't the company with the latest, greatest product. Its the company with a tradition of innovation that has been earned over several generations of new products.

Some examples here would include, Johnson & Johnson, Apple, Nike, and Disney. One example used in the book was Sony, which was certainly a product leader for many years, but may have fallen by the wayside now. Then new leader in TV's might be Panasonic, and Virgin Atlantic might fit in this bracket in the airline industry.

Once you have a reputation for product excellence and innovation, the market rewards you with the ability to charge higher prices and earn higher margins. Its the long term performance that develops the brand, and its the brand that allows customers to feel justified in paying a higher price.

3. Customer Intimacy

With the advent of liberalize TV advertising standards, this term has taken on a new meaning. In this context, however, it means the ability of a company to truly understand all of the buying needs of the customer, and to offer customized solutions. In some sense, this is the opposite of the highly focused, “operational excellence” company.

Not that these companies aren't good at what they do. Rather, they offer a variety of products and services in an effort to create a unique solution for each customer. And, they charge for it. This type of market leader is going after the customer that can’t find exactly what they want off-the-shelf and are willing to pay more to get a precise solution to their problem. Some examples here would include IBM and Johnson Controls.

In this scenario, the company looks to create a long-term relationship with the customer, and seeks a deep insight into their needs. They also study how they customer benefits from the products / services offered. This deep knowledge allows the company to tailor solutions that fit the situation. The relationship has value to the customer, and is reflected in a higher pricing structure.

Applying these models to small business

In the Operational Excellence model, the secret is limiting your offerings and finding ways to squeeze costs out of your operations and supply chain. It is these cost reductions that allow for low prices while maintaining reasonable margins. I have some service-provider clients who have increased their use of automation, allowing them to offer faster results at lower cost than their local competition.

The Product Leadership model is harder to implement as a small business, because few of them actually create the products they sell. An exception, obviously, is the restaurant business, where many small operations have been successful by offering unique products and presentations to their customers. Another approach is to associate your business with a national product leader, such as offering specialized training and add-ons to Apple products, or becoming a local service outlet for a manufacturer with a major reputation.

Due to the close relationship between most small businesses and their customers, the Customer Intimacy approach may well have the most potential. I don't recommend trying to offer everything to everybody. Rather, you should pick a niche you want to specialize in, and then carry a combination of products and services that let your customers feel like they are getting a customized solution. You should also look for ways to make your business an integral part of their business success.

And now, the really hard part!

For each of these three models to succeed, they must be fully integrated into every aspect of your business operations. These are not simplistic “marketing veneers” that can be slapped on top of your existing business plan. They must be engineered into everything you do, and must be the focus of every customer interaction you have.

It took years for IBM to leave behind its Big Iron business and to get into services and consulting. It took even more time for the buying public to see how they had changed, and for them to once-again regain their leadership position.

The same can be said for most of the examples mentioned above. This isn't a quick solution to the problems of a mediocre brand, but it is an effective one.


Wiersema and Treacy have updated this great book. The new edition is entitled:

        The New Market Leaders: Who is winning and how in the battle for customers.

Fred Wiersema has written several other books about superior customer service. More information,  click here

Avoiding the 2 B's of Advertising- Part 1

In the next two postings, I will discuss some highly technical marketing terms:

Baloney, and Bumph

These two examples of bad copy writing appear far too often, and afflict all kinds of advertising.

We will start with Baloney, which is a polite way of saying:

• lies,
• half-truths,
• exaggerations,
• distortions,
• falsehoods,
• fabrications,
• deceits,
• fictions,
• hyperbole,
• and plain, old B. S.

Readers quickly identify this material and recognize it for what it is. And once a reader picks out something considered Baloney, they disregard the other claims in the advertising.

So, why are these types of statements used so often?

I'll answer that question in a moment. First, lets look at some examples of commonly-used marketing Baloney:

• Fastest Service in Town
• Lowest Price Anywhere
• Friendliest Service in the City
• If elected, I will lower your taxes
• As Mayor, I promise to represent all of the voters
• I've never done this sort of thing before
• Satisfaction Guaranteed
• Sale Extended due to Overwhelming Demand
• This may be your last chance to get rates this low

Some of these examples are from business advertising, some are from the political arena, and some are heard on the social scene. They all have something in common, however the audience thinks of them as Baloney!

Here is a critical point in this discussion. It doesn't really matter whether the statement is true or not. It only matters that the listener thinks it to be false, or at least highly suspect. That's what defines a statement as Baloney.

Now, back to the earlier question. Why do these statements appear so often in small business advertising? Four reasons come to mind:

• The businessman thinks the customers are rather stupid; the least likely scenario.
• The owner has come to believe his own advertising (has drunk the Kool-Aid, so to speak).
• The copy writer is just too lazy to create effective copy.
• The statements may actually be true, but are unsupported.

This last option is rather common. The advertising claims are true, but aren't automatically believed by the audience and are classified as Baloney. As a consequence, the whole ad becomes tainted.

How do you address this problem?

If you are going to use a statement that a skeptical audience might find hard to believe, add some support.

Instead of:      We have the best sandwiches in town.
Try:                Winner of Daily Gazette's Most Popular Sandwich Award three years running.

Instead of:      Fastest Service in Town.
Try:                In and Out in 10 minutes, or it's free.

Instead of:       Lowest rates available.
Try:                 If you find a lower advertised rate, we will match it.

You can see the point here. Make a statement that the public can believe, and that they think is credible. Don't just blow smoke. They will see through it every time. It doesn't make sense to pay for expensive advertising media, and then send a message that isn't believable.

Baloney is everywhere, and it is a huge waste of advertising dollars. Don't let it waste yours!

In our next post, we will discuss the other “B” you should avoid: Bumph.

Practical Tip of the Day:

• Look through your marketing materials, and tweeze out statements that could be considered suspect.
• If a statement has some real positive impact, find a way to support it.
• Tighten up your copy, add some more credibility, and you will gain the public's trust.

Have you Checked your Brand Today?

One of the biggest buzzwords from the past decade is “Branding”. The word has been used to describe every form of image, from personal to political to commercial. In spite of, or perhaps because of, all that over-use the original concept has become obscured.

In the business environment, the term “brand” is too often used to refer to a company logo, trademark, or slogan. These are the images constructed by companies in order to communicate their message. But they don't equate to the company's Brand.

Your Brand exists in only one place: within the mind of your target audience!

What kind of impression do you make on your customers? That's your Brand. How do prospective buyers perceive your company? That's your Brand. What do people think of when they see your logo? That's your Brand. How does the marketplace rate your business versus your competitors? That's your Brand.

If the buying public thinks of your company as being “middle of the pack”, then you probably have modest sales, limited growth, and mediocre profits. Many small business owners experience these problems, but don't make the connection with their weak Brand.

Surprisingly, I often meet entrepreneurs who aren't concerned about managing their Brand. They focus entirely on their operations, hope that customers will be impressed, and expect sales growth. This strategy may have worked once, but no longer.

A Strong Brand = Solid Profits

Every time a company touches a potential customer, either directly (through sales interaction or advertising) or indirectly (through some publicity, or comments from a friend), the company's Brand is impacted. Every time a customer is happy with the sales experience or unhappy with a service issue, the Brand is impacted. Every time the company's product is used, and it works well or doesn't, the Brand is impacted.

If you aren't happy with you sales growth, or how the market ranks you versus the competition, CHECK YOUR BRAND.

Check inside the head of your customers, both large and small. Check inside the head of those who don't buy from you, preferring your competition instead. Check inside the head of your vendors' sales staff. And (although this is tricky to do) check inside the head of your own sales staff.

Don't be afraid to discover the truth. Therein may lie your future success.


Practical Tip of the Day:

Add a Survey Widget to your company website (there are many available, some free). Ask your site visitors what aspects of your product / service are most important to them. Then ask them how well you deliver on those issues. If you are worried about the answers you'll get, your instincts are telling you that some problems need to be addressed.