What Have You Got That’s Better?

While we all wait for the economy to turn around, many business owners are still trying to figure out ways to survive. A great temptation for business owners is to cut prices to win business. Sure, it sounds tempting, but this move has the potential to create a downward spiral of shrinking margins – possibly forcing eventual cost reductions, like personnel, in other areas.

Case in point: A long-time client of mine recently faced such price pressure from a larger competitor. But instead of buckling, she took the time to size up her company’s offering against the less expensive competitor. What was her firm providing their customers that the lower priced competitor did not, which allowed her firm to command a higher price?

• A more personal experience: Her staffers know the company’s people and systems well and enjoy working with them. The competitor does not track past experience and has no frame of reference when the company has a problem.
• A more comprehensive product: Her product includes a monitoring service and quick responsiveness when a problem arises. The competitor only offers a service when something goes wrong and does not anticipate problems.
• A proven track record: Her company has a good reputation of attending to problems promptly and reliably. The competitor does not enjoy the same reputation.

Instead of competing on price alone, my client retained the business and held firm on price by taking the time to understand what differentiated her product and service from the lower-priced competition. Once you know the added value that your business offers, you can begin to focus your marketing message so that your clients will also see the value added.

So how do you identify those areas where you enjoy a competitive advantage?