Last week we discussed how to grow your revenues, profits and customer bases when facing the challenges of industry overcapacity or a dying industry. Both situations leave sellers believing that customers are scarce.
Another reason for this belief is that sellers view their competitors’ offerings as superior to theirs. You may be surprised to find how rarely that’s true. Here’s why.
Competitors’ offerings are better
An unfortunate human tendency is to place greater value on others’ capabilities than on our own. When a competitor’s offering provides something that ours doesn’t, we place great value on it because we don’t have that capability. Yet when we provide something that our competitors aren’t, we tend to discount it. Why? Because it’s so natural for us that we assume everyone can provide that value.
I’ve lost count of the number of times a client or prospect has said “It only takes me ‘x’ hours to do that?” My retort is always the same “Does the fact that you can produce the result so quickly make it more or less valuable to your customers?” It’s amazing how often this simple concept is overlooked by sellers.
There is another assumption that we make about the advantages of our competitors’ offerings. That assumption is that their customers value that ‘advantage’. My experience has been that often these competitors don’t really know whether or not that advantage is valued by their customers. Why? Because they never asked them to pay for it. Which begs the question “Why would you discount your offerings when you don’t know whether your competitors’ customers value their ‘advantages’?
The more that we believe that our offerings are inferior, the more likely we are to view customers as a scarce resource. Let’s see how we can overcome the natural tendency that creates this mindset.
Overcoming this tendency
The first step in overcoming this natural tendency is to ask yourself “How many customers have I lost to competitors vs. how many I’ve gained?” Unless you or your competitors are really screwing up badly, the likelihood is that your customer bases are fairly stable. There’s a reason why your loyal customers are choosing you over your competitors. Find out what it is and focus your attention on becoming even better at what’s most important to them.
The second step is to talk to your competitors’ customers and find out why they buy from them. Often you’ll discover that the reason they’re doing business with your competitors because they have a long history with that competitor. It has nothing to do with your offering, it’s ‘family.’
Another reason that they may be doing business is that their value systems align better with your competitor’s than with yours. Let’s say that your competitor has a Walmart value system where you have a JCPenney value mindset. If that competitor’s customer also has a Walmart mindset, there really isn’t anything you can do to attract that customer to your value proposition. The one thing you don’t want to toy with is your value system – that is one misstep that is likely to ring a death knell for you business.
Next week we’ll discover how our inability to communicate value can make it seem as if customers are a scarce. In the meantime, please share your thoughts, experiences and recommendations with us whether you agree or disagree.
If you want to increase your prices, grow your profits and increase your customer base, call Dale at 314-707-3771.