I have to buy from somewhere. In today’s markets I have a huge amount of choice where and from whom to buy from. But, in fact it hardly matters who my supplier is – all suppliers have more or less the same product, the same quality, the same price and the same delivery service. Of course everyone screws up from time to time, but, on balance, all of my potential suppliers are more or less the same. I can simply demand the best possible price and then choose. I probably won’t choose the one with the lowest price – he might be in trouble, and end up giving me a lousy service. So I’d better be a bit careful. Its great being in a buyer’s market!
It’s great, but the trouble is my clients have exactly the same advantage over me as I have over my suppliers. It’s practically impossible to get a better price. Price pressure is everywhere. On top of that we have already cut costs to the bone, which might be weakening our ability to compete sometime in the (near) future. How the hell can I get out of this conundrum and make more money, gain market share? Is there even an answer? What will make a customer choose my company first? What will get me a decisive competitive advantage – on that will last?
Obviously I need to look at my market – that is a no-brainer! Everyone is doing it, everyone is trying to find what new product or feature will help him or her sell more. We are all doing it, and on top of that we are all very good at copying anything new a competitor comes out with.
I do know that my clients have similar problems to mine – they are all struggling to make more money, to satisfy their shareholders or owners. Pressure for profits are everywhere. BUT the conclusion is everyone is struggling! Maybe the answer is there. Maybe if we can significantly reduce a client’s struggles we can secure his business. Maybe. What is going to prevent my competitors from immediately copying my good ideas? I don’t know.
But, I have some criteria by which I can evaluate new ideas how we can compete better and more successfully:
Our new offer must significantly reduce one or more of our customers’ significant struggles (problems). The more we significantly reduce, the better our offer.
Our offer must be valid for a large enough segment of the market to make a difference to us.
Our new offer must be difficult for our competitors to copy. At least for quite a long while they should hesitate to try and copy our offer.
Once we have fulfilled the first 3 criteria, we can use them again and again to develop the next offer. It is a must to do that – competitors will eventually copy our first offer – we have to be ready for that!
Now comes the hard part. We have defined what is needed for a decisive advantage in our market – the easy part. We have to start the analysis of what would be an effective offer for clients, and how we can deliver that without breaking the bank. Such solutions exist, they might not grow on trees, but they do exist!
Maybe we should look for the answer in the way we, and our competitors, serve our clients – we need to look at our products and even more importantly the way we service clients. We impact our customers business in both positive and negative ways - ways that have become ‘the way business is done in our industry’.
Analyzing the causes and their effects of the way we do business will show what damage some of our policies and practices are to our customers. These are policies and practices our industry has followed for many years. But, there is no law that says we cannot change our practices and policies.
What will the impact be? If the changes bring significant benefits or remove significant problems for clients then it is likely we will gain business. But, why won’t our competitors simply follow our example? Well, eventually they will. But for at least some time, they will watch you to see what will happen – is it safe to make these changes. Inertia will protect you from competition at least for some significant amount of time.
