by Leigh Wallinger.
Most small business owners seem to find it hard to differentiate their company from their main competitors. Those providing services (rather than products) seem to struggle the most. If you own and run a small service provider, the lack of any differentiator is a huge risk to your future survival.
Owners who attempt to create points of difference can quickly become disillusioned, especially when their advantages are repeatedly neutralised by competitors. Differentiation becomes too much hassle for owners, desperately striving to keep their businesses alive. As a result, all suppliers of a particular service will look the same. In this situation, prospects use the cost of the service as the prime differentiator and the lowest cost provider wins the sale.
Experienced buyers will engage with several competitors and cycle round obtaining more and more discounts. After several cycles some suppliers will pull out, unable to cut their prices further. The “winner”secures a new client with little or no chance of generating a profit. Larger companies could cope with this but the impact on small service providers is more serious. Small business owners need to avoid this form of price-war.
It is essential, therefore, that you find ways to differentiate your services from those provided by your competitors. When you start thinking about this there are two criteria to have in mind:
1. Your points of difference must be difficult to copy. You want to establish points of difference that will remain unchallenged for months or years. There is little point striving to offer fastest delivery, longest guarantee, quickest problem resolution or lowest price. All of these are transient differentiators that can be readily matched or beaten by your competitors. This means your advantage will only last a matter of days or weeks.
2. Your points of difference must be seen as important by your prospects. They should attach a value to having these extras as an integral part of your service.
When you differentiate yourself in this way, your competitors will find it hard to succeed against you in competitive sales situations. You win more clients and you can charge at levels which generate a good profit margin.
It will probably be hard to create this sort of differentiation within your service itself. The most unique aspect of every service company is represented by the knowledge and skills of its people. Therefore differentiation based on a combination of your service and key individuals will create something that is impossible for competitors to match. This works equally wellforsole-trader service providers, with the owner alsobeing the key individual.
The best way to make this form of differentiation work in your favour is to combine your services with an individual who is widely recognised as an industry expert. The blend of an industry expert and your proven services is very difficult to compete against and it can give you an edge over your competitors for a long time.
This leaves you with two questions:
1. Who will become your industry expert?
2. How will they gain and maintain their expert status?
The person you select must have the right personality and attitude to carry off the role of industry expert. It is quite often one of the company founders who will take this role. They usually have the greatest overall knowledge of the company’s services and how they are used by clients. Sometimes the founder is the only employee, in which case the choice is easy.
The steps involved in becoming a recognised expert are straightforward but the process does take time. It cannot be rushed. Persistence and consistency pays dividends as your expert tackles these 5 activities:
1. Reading. Learning everything there is to learn about your niche markets, its trends, political and commercial influences. Learning about the issues and problems companies in each niche are encountering and how your services can help.
2. Listening. Attending conferences to keep up to date with industry developments and networking with key contacts, policy makers and trade bodies.
3. Writing. Producing books and articles to gain wide visibility and demonstrating depth of knowledge.
4. Speaking. Find speaking engagements to present to an audience which includes your prospects and other key contacts.
5. Networking. Engaging with prospects using online networking systems and at networking meetings.
There is one final word of warning and that is you must retain your industry expert and not let them be head-hunted into one of your competitors. If this happens, not only do you lose your competitive advantage but your whole marketing strategy would need overhauling. This would be a huge inconvenience. Prevent it by putting in place ways to keep your expert happy and committed to being part of your business.
Leigh Wallinger knows the problems that every small business owner encounters when trying to establish and grow a small business. After 30+ years’ experience he now helps small business owners to grow their businesses. Contact him by email (enquiries at salesmadeeasy.co.uk) or via www.salesmadeeasy.co.uk
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