I stood before a crowd of new and potential entrepreneurs. I had just caused a hush to fall over my entire audience. They stared at me as if I had grown an extra head. Finally one man raised his hand and asked in confusion, “What do you mean you shouldn’t compete on price?”
It’s simple, as Seth Godin put it “You can’t out-walmart Walmart.” There will always be a company bigger, more willing to race down to the bottom of the price war until you fold and go bankrupt. Especially for small businesses competing on price is a losing proposition. Can it be done? Yes for a short time, perhaps if you’ve found a time-saving or cost-saving technique. However eventually others will learn that secret too and you’ll find your price-shopping customers flocking to new competitors.
There are services and products we all buy that we’re willing to pay a premium for. Sure a Kindle Fire can give you a lot of the functionality and portability of a iPad, and at a tenth of the cost, but still we see iPad sales skyrocketing. I’m willing to pay extra money for name brand foods whose quality I perceive as better tasting. Jiffy Lube and other instant oil-change services charge upwards of $60-$80 for an oil change (and try to upsell you on everything from windshield wipers to transmission fluid) when if you did it yourself it’d cost maybe $10.
What do all these companies offer that make us not only flock to them, but willingly fork over the extra cash?
Many experts have tried to narrow down what the causes are, they all seem to distill to the following:
Offer more value than you ask.
The question is, what is the value that your ideal customers desire? Not the value you think people want, but the quality you know people will lean towards. A fantastic book about creating and connecting to groups willing to listen, gather and buy from you can be found in Seth Godin’s book Tribes. However, here are some great value points that might get your creative juices flowing:
- Great location
- Time Saver
- Spur of Moment Availability
- Ease of Use
- Ease of Set-Up
- Ease of Compatibility
- Perceived Coolness/ Social Clout
- One-of-a-Kind Technique
- Outrageous Guarantee
- Amazing Warranty
- Golden Rule Customer Service
- A Cause Behind the Product/Service
- A Culture the Company Supports
- The Story Behind Your Company
- Environmentally Friendly
- Health Improvement
- Family Improvement
- Human Connection
- Personal Attention
- Different Service Atmosphere
- Phone Attitude
Often times we get caught up in the features of our company and forget to consider the benefits. As the creators of the business, we may think those benefits are understood, but they aren’t. Here’s an excellent tried and true sales technique that will work just as well for preparing to market your company:
Divide a piece of paper into two columns. Write “Features” on the left column. Write “Benefits” on the right column. Write out all the features of your company on the left, get some coworkers or friends to help brainstorm it all out. Then looking at the features, write on the right column what all the benefits are from those features. Look deeper and you may find additional benefits inside the original benefits.
Example Feature: Meticulously hand-crafted wood chairs made by master craftsmen.
Example Benefits: Durable, Long-Lasting, Beautiful, One-of-a-kind conversation piece.
Digging Deeper: Long-Lasting = Also you save money by not having to replace the chairs every ten years. Added convenience because you won’t have to go shopping again in ten years. So you can add “Saves Money” and “Saves Time” into your benefits column.
This exercise can make marketing concepts leap off the page at you. Our example company might develop a tagline like “Leave the Jones in the dust for years to come with our designer, master-crafted chairs.”
Once you have your unique value properties and your benefits and features laid out you’re ready to start considering how to brand your company.