Unfortunately, a lot of small businesses “play to play”.
They are in business to be in business, but without a clear idea of why they are different, and without a product or service that stands out from the rest.
For most prospective customers, you’re no different from any of your competitors. After all, you’re not the only gym, florist or Italian restaurant around. So there’s no reason whatsoever for them to choose you specifically.
The most successful small businesses own a local monopoly.
They have a product, experience and positioning that make it crystal clear to potential customers what their product or service is, why it’s different, and why it matters to their customers.
Fail to do this, and customers won’t buy from you any more than they’ll buy from a competitor or use a substitute product.
That does not necessarily mean being the biggest or most profitable business in town. Rather, it means identifying an opportunity and doing a better job with it than anyone else.
It is about creating loyal customers and word of mouth in your local market that makes your business a magnet for new and repeat business.
The trick is to find a position that no other business occupies, or create an experience that delights customers and gets them talking after they leave. A market position in which you can simply be better than anybody else and exploit that position to maximize growth and profitability.
You can own a local market by:
- Defining your market clearly and relatively tightly,
- Determining who your target customer are and understanding what they are looking for from your business,
- Understanding the three main drivers that create customer satisfaction, whether it’s convenience or a sense of joy,
- Using your fanatical customers and the
- Creating the fountain spring of word of mouth that brings customers through the door in droves.
It means creating unique talking points during the customer experience. Moments and touchpoints that customers want to go and tell their friends and family about, and come back for. It’s about creating an experience that will bring joy to customers, and plant a seed in their mind that makes them think of you, and brings them back.
You might think this isn't for your business. But it's for all businesses. This works equally well in construction as it works for restaurants.
Don’t be a “me too” player, no matter what business you’re in.
You can be number one!
WIIFM: What’s in it for me?
Which businesses is it for? This initiative can be adopted by any small business that sells a product or services that can be differentiated from the competition. Excludes commodity businesses like building supplies.
What is the potential benefit? Some small businesses operate in a constant battle with local competition. Others take steps to create a unique position within their market. The difference between these two approaches can be drastic. It’s not unreasonable to expect that a small business with a defined market position can generate 50% more sales and over 10% higher profit markets. For a $500,000 business with 10% profit margin this could mean up to $250,000 more sales, and $100,000 more take home profit.
How much does it cost to implement? This initiative may require an upfront investment to get started, depending on the nature of the business and the improvements you wish to make. These costs can range from free and low cost improvements, to major projects. Always assess the cost and benefits of any projects against the risk, and get professional advice before proceeding.
How often should I revisit this? Every year.
Instructions for running this initiative
The instructions will help you find a unique point of differentiation for your business that will set you apart, plan the changes you might need to make to capitalize on the opportunity and make sure you have a system in place to measure and capture more value.
Step 1: Determine the Market
Choose a group of consumers that you can turn into devoted fans by appealing to them in a unique way. You must answer the questions:
- Who can I serve best?
- How will I do it?
For example, you could become known as the healthiest place in town, the best place for families, the most romantic spot or the best dining value in the neighborhood.
If you have already done this, you know that achieving this kind of domination and growth requires mental concentration. The greatest mistake in most growth strategies is to try to expand into too many areas.
Step 2: Create the Experience
Produce a “special kind of experience” consumers get when they visit your business. This comes from what you can provide that is different and distinctive in product or service or a combination of both.
Don’t hide your differentiation. Intentionally make decisions on why customers will come back, and why will they tell (feel compelled to tell) their friends about it.
- Signature dish
- Dessert home for kids
- Cookie on coffee
- One company put a Lego figuring in each kids sized pizza box for kids orders
Go public to gain and maintain your niche. You would be surprised at how many small businesses defer or under-do the advertising and promotion it takes to own their niche.
Step 3: Control your Space
Control has to do with the penetration of new units, filling in the gaps on a calculated basis. Cultivate strong relationships with your operators/managers to keep informed of new opportunities. New market penetration requires constant monitoring – do not leave it to chance.
- Better quality
- Higher service
- More convenient
- More selection
Make sure all subsequent decisions support this choice. For example, if you want to offer better quality food, you can’t choose cheap or subpar ingredients. You’ll have to find suppliers of better quality ingredients.
Step 4: Establish Value
Do not get into heavy discounting to undersell the competition. No one can have the lowest price all the time but you can always give added value for the price you charge. Price and added value can be sold just like your differentiated product or service. You must build and enlarge the perception that what you offer the customer is worth more than you are charging.
- Understand who your best customers are.
- Form a positioning and align your positioning vocabulary across teams/departments.
- Figure out the attributes and features that make your product/service unique.
- Figure out the true value of these attributes and features—what do they do for your customers?
- Find a target market that makes your value obvious to the customer segments that care most about your unique value proposition.
Here are some important questions:
- What memorable things does your business do?
- Why do customers want to keep coming back?
- Do you offer a specific product, signature item, a feeling of comfort, the best service available?
- What is it that keeps people coming back?
The opportunity to dominate the market in a territory that you select is up to you. With courage, foresight and the determination to create and sell a product in a market you create and dominate, you really can be a monopoly in a market of one.
Before you go...
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