Tag Archives: innovation

If you match your competitors’ prices… STOP

By Aaron Hoos on May 23, 2013 in Business

“Price match guarantee“.

I see that advertised frequently by stores proudly proclaiming that they will “gladly match all regular competitor prices”.

The thinking is: Mr. or Ms. Consumer will see the flyer for one store but bring that flyer to your store to get the same deal.

Or on larger ticket items, Mr. or Ms. Consumer will shop around and get a great price at one store but then go to your store to have you match it.

But why would they?

It doesn’t make sense to offer a price match guarantee. What’s to stop them from going to the original store that offered the flyer? What’s to stop them from hanging up from the company offering them one price to call you up and get the same price.

More effort for no extra benefit. People won’t do it.

Price matching only works when you are already the last store they’ll visit or the last salesperson they’ll call on. You can say “well, you’re here now so I’ll make it easy on you and just match the lowest price so you don’t have to go back to that other store.”

But you can’t use price-matching as a way to entice people to come to your store in the first place. There is no reason for someone to come back to you to get the same thing they can get somewhere else… unless you have some other competitive advantage.

I frequently say that you shouldn’t compete on price, although I realize that sometimes you may have to. So, if you are going to compete on price, don’t just match prices because people don’t have a reason to go to your store.

You have to beat the price. “We’ll beat the competition’s lowest advertised price by 10%” is what one price-beating advertisement says for a store near my house. 10% isn’t huge but it’s something. I’d love to see more than that but that’s just a pipe dream.

Yeah, I know margins are razor thing. I get it. So maybe you have to beat the price more creatively. Or maybe you have to find some other innovative competitive advantage. This is especially true if your competitors are already advertising a price-beating offer.

So stop price matching. It’s costing you.

11 ways to build credibility for your business

By Aaron Hoos on May 17, 2013 in Business

Prospects are more likely going to turn into customers when they feel that they will be buying from a company that is credible. The more credible you are — the more trust and authority that prospects ascribe to you — the more likely you are going to win their hard-earned dollars when they are ready to buy.

So how do you build credibility for your business? Some entrepreneurs are fooled into believing that any marketing builds credibility but this isn’t the case. Many businesses market but only a few build credibility.

Here are 11 ways you can build credibility for your business. Mix and match them to build your own unique credibility (even if your competition is already doing some of these).

#1. CRITIQUE OR EVALUATE SOME ASPECT OF THE INDUSTRY

Every industry has its popular aspects and its shadowy underbelly. Your competition is trying to shine the light on the best parts but you can build credibility by being honest and up-front and showing quantitative comparisons or frank critique about the industry.

One example is a grocery store near my house: They usually have a couple of shopping carts by the front door, loaded with products, showing how much you’d pay at their store compared to a couple of the other major chains. It’s an effective way to position themselves as the low cost option.

#2. SHATTER MYTHS AND MISCONCEPTIONS

Consumers are outsiders. They only encounter your industry and your business when they need your product or service. Therefore, they develop myths and misconceptions. You can build credibility by educating them about these myths and misconceptions.

A good example here, in my opinion, is Chris Brogan. Brogan does a great job of shattering the misconceptions of social media by coming back to the ideas of listening, building trust, and connecting to your network rather than focusing on the number of followers or how to explicitly sell on social media.

#3. REVEAL SECRETS OF THE INDUSTRY AND YOUR BUSINESS

This is similar to the above idea, I guess, but it’s different enough that I wanted to include it separately. Every business and industry has secrets. They aren’t always bad, they just haven’t been explained to customers. Pricing is one secret. Ingredients is another common secret. And while you may want to keep some parts of your business a secret for competitive reasons, you might gain credibility with your prospects by revealing some secrets.

One example is from McDonalds. In this video posted on Mcdonald’s Canada’s YouTube site, the McDonald’s Executive Chef explains how to make a Big Mac, and he reveals the ingredients that go into the “secret” sauce (which, he points out, isn’t really a secret at all).

#4. CREATE INNOVATIVE SOLUTIONS

Many industries suffer from “same-as” syndrome, where all the competitors offer exactly the same product or service as every other competitor. I have been very critical of the real estate industry for this very reason but I could list a number of industries that suffer from this problem: Financial advisors, dentists, chiropractors, optometrists, locksmiths, roofers, mechanics, and I could go on and on. You’ll build credibility if you break out of the mold and offer something different. It doesn’t have to be massively different — even just slightly different is good. (The Business Model Canvas and Blue Ocean Strategy are both good ways to innovate your business model). And click here to read my best advice on innovation.

I’m going to piss some people off by mentioning this example: Property Guys is providing a very innovative solution in the real estate industry. (Note to my real estate friends and clients: Don’t let their growing success annoy you. Rather, let it spur you on to further differentiation in your business).

#5. SHARE CANDIDLY

Many businesses maintain a barrier between themselves and their customers. I think there are a number of reasons that this happens (depending on the business, I’d guess that profitability, receivable-collection, competitiveness, privacy, and safety are all potential reasons). But customers want to connect with the businesses they buy from, and they are more likely going to buy from people they know, like, and trust. And when things go wrong, customers feel like they can reach out to a person instead of a faceless corporation. You can build credibility by being yourself. Or, if you have a large company, you can build credibility by having a representative be the face of your company. But as you’ll see in a moment, it doesn’t have to a specific person. The point is to share.

One example of a business that shared candidly and built credibility with their sharing is Domino’s Pizza. They have had an amazing transformation since their pizza turnaround commercial. That’s just an example of how one company used sharing in a one-off way. I think Twitter and Facebook give businesses the opportunity the share on an ongoing basis.

#6. SURPRISE WITH MORE INSIGHT THAN YOUR COMPETITION

Businesses put a barrier around what they know. There is a very distinct scope of information in a business’ marketing and a very distinct scope of information in their deliverable. The internet has really challenged many businesses to rethink how much they share before they deliver their deliverable. Some businesses share, for free, as much as 90% of the value they provide customers for free, leaving the 10% as their monetized value. This is smart but it’s not widespread, which means that many businesses can build credibility by educating their market and providing further insight.

One example was given by Perry Marshall a couple of years ago. (I’d link to it directly but I can’t find it). Perry described a local home repair company that produced a book — a beautifully bound, full-color book with pictures and how-to instructions. Perry rightly suggested that any home maintenance/renovation company could produce a similar book for their type of work — a plumber could produce a book about basic household plumbing; an electrician could produce a book about basic household electricity; and so on. They wouldn’t even have to give away the “secret sauce” of their business but rather just establish credibility by showing people how to care for that part of their home. You may be able to do the same thing in your business.

#7. DEMONSTRATE YOUR SOLUTION

I have a secret fascination with product demonstrators. They’re like carnies. They entice people to their booths and show them how sharp their knives are or how absorbent their shammy is. They need to do this because these products sell well when they are demonstrated. We have gotten away from demonstrations in our infoproduct world but products are still being demonstrated. Can you demonstrate some aspect of your product? You’ll build more credibility if you do.

I recently heard a consultant who demonstrated his methodology on a recorded call with a client. He got their permission first (of course), and then performed his consulting process on them while recording the call. Then he used the call to help sell the consulting service he was selling. This is a brilliant way for a service-based business to demonstrate a solution to build credibility.

#8. CREATE BEST PRACTICES

As industries grow, old businesses exit and new businesses enter. The growth is organic and messy. Years later, industries become complicated and fuzzy and even sometimes difficult to understand. You can build credibility by creating industry best practices. Even if other businesses don’t follow them, you’ll still position yourself as a pioneer. Your best practices don’t have to be all-encompassing or industry-wide. You just need to pick one thing and establish best practices. Codify them and establish yourself as an industry leader.

Many of today’s “gurus” in the world of B2B services have done just that. Seth Godin created what is ultimately a set of best practices around permission marketing. Dan Kennedy created what is ultimately a set of best practices around direct mail. Chris Brogan created what is ultimately a set of best practices around social media. I just wrote a report for a client who is building a certification process in an industry that has none.

(Note: It’s easy to overlap this idea with the “create an innovative solution” idea, above. But in this example, you’re not actually doing something new, necessarily; you’re just codifying it for others).

#9. PROVIDE DEEP ANALYSIS OF YOUR PROSPECT’S SITUATION

Successful sales people understand their prospect’s problems and use that knowledge to sell more effectively. The more you know about your prospect, the better. But often, that knowledge of the prospect’s situation is gained and then used to sell. But you can build credibility by gaining that knowledge and then feeding it back to your prospect. You’re not telling them that they feel a certain way. Rather, you’re telling them why they feel a certain way, and you’re listing and quantifying the many, many, many factors that contribute to their problem.

One example of a company that does this well is SAP. They’re a huge software company and they write a lot of whitepapers and reports. Those reports focus on the problem their customers have; not just the problem but the deeper, underlying reasons for that problem, along with the “cost” of the problem. They gain credibility by exploring the problem in-depth and, of course, positioning their software solutions as the answer to their customers’ problems.

#10. EMPATHIZE WITH YOUR PROSPECTS

Your target market doesn’t want to buy from you. And, in fact, they don’t even care about what you’re selling. They’re thinking of themselves and their problems or needs and how those problems can be solved or those needs fulfilled… not only that, they’re focused on themselves and they have much bigger lives than the problem that your product solves. They’re also thinking about how they’ll pay for their kid’s braces and they’re trying to remember to pick up milk on the way home from work. They don’t want to buy from you. They want to solve a problem with the help of someone who understands. You can build credibility by understanding — activity listening and seeking to see through their eyes.

I hate to say this but I’m having trouble thinking of an example here. I see it happening a bit… but not nearly to the degree that it could happen.

#11. BORROW YOUR CREDIBILITY FROM OTHERS

All of the examples I’ve given so far are credibility-builders that come from you. But your credibility doesn’t have to come from you. There are many ways that you can build credibility by “borrowing” it from others. For example, you should collect testimonials, write case studies, take before and after pictures, encourage customers to provide reviews and to tweet about you and provide a backlink to you on their site. If you’re an author, get a foreword written by someone famous. If you own a restaurant, get a food critic to visit. If you have awards, credentials, and degrees, these can all help with your credibility.

We see this in the film industry all the time: When a movie is about to be released, the trailer is full of accolades by critiques and film festivals, and it will list actors and actresses who have won (or even been nominated) or major awards.

Customers buy from businesses that are credible. Mix and match from these credibility-builders to help you establish authority and trust with your target market!

Small business strategy question: Where are your business blindspots?

By Aaron Hoos on February 13, 2013 in Business

Small business owners can sometimes get too close to their business — so close, in fact, that they struggle to do anything other than focus on the day-to-day operations and fail to work on the big picture strategy. (And many small business owners don’t know how to work on strategy because they are moonlighting or building their business organically from a hobby they have monetized, for example).

So I published a resource called 100 Small Business Strategy Questions. It’s a list of questions that any entrepreneur or small business owner can go through to help them take a deeper look at their business and figure out how to run it more strategically.

After I published that list of questions, I’ve been periodically taking each question and writing a blog post about specific steps or ideas that they the small business owner can use to work through that question.

SMALL BUSINESS STRATEGY QUESTION: WHERE ARE YOUR BUSINESS’ BLINDSPOTS?

I love the imagery of a business as a car and the business owner as the driver of that car. It perfectly captures the idea of what a business is all about: Heading toward a destination as safely and efficiently as possible, and making constant small and large adjustments along the way.

Continuing with the car imagery for a moment, is the idea of blindspots — those nasty sections around our car where we simply cannot see. (On most cars, they are typically an invisible triangle that extends out of the back left and right quarterpanels). There are also smaller blindspots elsewhere on some cars, depending on their design: Larger posts between the door and front window are blindspots in some cars. And a lot of cars (until recent design changes) had blindspots around the front and front right quarterpanel. These blindspots can hide hidden dangers that might suddenly leap out to damage your car and keep you from completing your journey.

If your business is like a car and you are like a driver, the idea of blindspots is just as relevant and just as dangerous. Business blindspots are those unexpected things that you simply didn’t see coming.

When driving, smart drivers check their blindspots and anticipate potential dangers based on the driving environment. In business, smart entrepreneurs likewise try to figure out what blindspots there might be and they do something about them. I think it’s impossible to completely and comprehensively handle every possible blindspot but the more you work on identifying your blindspots, the better.

One example of a blindspot is the newspaper industry. Frankly, they didn’t see the web coming and, when it was there, they didn’t realize soon enough the ability it gave people to share quickly and informally. Not surprisingly, the newspaper industry is struggling.

Another example of a blindspot took place in the automotive industry in the 1970′s and 1980′s. The American automotive industry boldly designed gigantic cars with enough sheet metal that you could run a hobby farm in the trunk of your car. In their blindspot was the social changes that took place as a result of the economy and the oil crisis and changing ideas about vehicles and that was enough of a foothold for Asian car manufacturers to enter the market.

Another example of a blindspot is in the finance industry. In the early and mid 2000′s, banks were flush with cash and happy to give out low interest, adjustable rate mortgages with (sometimes) aggressive or unclear marketing. They simply didn’t see what could (and did) end up happening when the rates adjusted and people could suddenly no longer afford their homes. (This wasn’t just a blindspot to the individual players in the finance industry but also to the whole industry and the organizations tha provide oversight).

Another example of a blindspot is with Blackberry. They led the market for years in portable email technology and then smartphone technology. But they became so confident in what they could see that they didn’t see the rise in consumer demand for smartphones, as well as the various functions people were buying phones for. Soon, Blackberrys became “corporate-only” devices… and then uncool altogether.

We see blindspots happening all the time in many industries and companies; and businesses of every size are impacted by blindspots.

But if you can identify as many blindspots as possible and prepare for them, you’ll be prepared.

Permit me one more example, this time from my own business: I was hired on a big contract for a company and it was drawing to a close. I knew there was talk about renewing my contract but that was still up in the air due to several factors. So at first glance, it looked like I would have two options: Either to renew my contract and continue with my client or to not renew my contract and stop working for the client.

But I wanted to be prepared for blindspots. So I sat down one day and tried to think of all of the other possibilities that could happen — including an offer to continue contracting, but at a lower rate, and an offer to become a full-time employee of the company. (There were others as well but those are the two I remember right now). I listed them and gave some thought to my choices and decisions based on all of those possibilities as well. Guess what happened: When it came time to talk about the contract, the first discussion centered around one of the blindspots I had identified! I countered it effectively, but I could only do that because I had prepared. Then the second conversation centered around another blindspot I had identified. Again, I countered it, only because I had prepared.

Blindspots can happen to any business, in any aspect of business, and at any time. The more you can anticipate them, the better.

So how do you anticipate them? Here are some ideas for you:

  1. Create a structure first, just to give yourself something to work with. Two good structures to use (I would use both) is the Business Model Canvas or the sales funnel. My Business Diamond Framework or McKinsey’s 7S model are also good tools to use. You can also mindmap all the different parts of your business (perhaps by activity — sales, marketing, etc.).
  2. Your structure might not be entirely comprehensive but if you pick a couple of these, you’ll have a good starting point. Once you have a structure to work with, think about what you currently do in that section. For example, maybe your marketing consists of activities like “online content”, “blogging”, “social media”, “face-to-face networking”, etc. It might not be easy to list them all but the more you list, the better. Yeah, it’s a big job but if it saves your business then all the better.
  3. Think about what would happen if any of these pieces was suddenly no longer available to you. You can get more specific than that (“what if technology changed so that I couldn’t use this anymore?”; “what if there was a better replacement?”; “what if clients didn’t interact with this anymore?”; etc.) but now you’re starting to think of nearly unlimited possibilities and who has the time for that!?! So start somewhat more generically by just thinking about what would happen if that one particular aspect of your business was something you could no longer do or use.
  4. Another really useful tool is Porter’s Five Forces, a strategic tool created by Harvard Business School professor Michael Porter. The Five Forces are the things that threaten the survival of your business and they include changes in industry competitors, changes in buyers, changes in suppliers, new entrants to the marketplace, and potential substitutes that your buyers might choose. In each case, think about how changes in these factors can impact your business.
  5. Don’t forget to think in the same way at the industry level, as well as the local level. How might your business be affected if your industry was suddenly irrelevant? Or, what would happen if your local marketplace suddenly stopped needing your services?
  6. Confession: I feel like I’m being a bit vague here, but that’s only because there are so many things you could do and sometimes it depends on the business. (And they’re called “blindspots” for a reason. How do you talk about something you don’t know?). But ultimately what you are trying to do is break your mind of the habit of thinking “the current way is the only way” and train yourself to start seeing the possibility of watershed changes that can shatter current systems. You’re trying to see what can’t be seen. It’s hard to imagine specifics but you can think about the possibilities in general and prepare.
  7. Once you have thought about potential blindspots, you can start to prepare. In my experience, preparing for blindspots often means spending more time innovating, diversifying various efforts, seeking more clients and clients in new areas (who might use your product or service in different ways) and trying to stabilize your finances. Obviously this won’t solve every problem but it’s a good start.

Small business strategy question: What is it about your business or industry that keeps you awake at night?

By Aaron Hoos on August 10, 2012 in Business

In a previous blog post, I listed 100 small business strategy questions that an entrepreneur can answer to help them grow their business successfully. Question #100 was: “What is it about your business or industry that keeps you awake at night?”

Before I talk about the answers you might have, I want to first say this: If NOTHING about your business or industry keeps you awake at night then you should be very, very worried. I say this because the moment we become complacent, we become vulnerable. Just because nothing keeps you awake at night doesn’t mean there are no threats. It means you’re not seeing them. Unexpected threats are the worst ones. So, if nothing keeps you awake at night, take a very careful look at your business, your industry, and short- and long-term trends of your target market to see where you should be worried. I promise you that something is lurking on the horizon that will threaten to derail or even destroy your business.

Now that I have that warning out of the way, let’s talk about what might keep you awake at night.

WHAT KEEPS YOU AWAKE AT NIGHT?

Hopefully you are worried about something in your business or industry. I say this because it probably means that you are paying attention to it. Now it’s time to be intentional about thinking about it and dealing with it.

Here are some tips to do that:

  1. Look at the issue from different angles. The “PEST” acronym is useful here – consider the political, economic, social, and technological changes that are impacted by the thing that keeps you up at night.
  2. Articulate the issue. The more clearly you articulate the issue, the better. It doesn’t matter how big the issue seems to you. Spend the time to figure it out. By writing it down, you’ll develop some clarity about it. It might end up being bigger or smaller than what you thought.
  3. If you haven’t done so, write down the causes, the short-term impact, and the long-term impact. For example, in my business, there is a trend toward getting marketing content written by offshore who might appear more cost effective. The causes might include a pressure for profitability in increasingly tightened budgets, as well a misunderstanding of the role of different types of content and whether all content or only specific pieces of content can be offshored.
  4. Consider the implications to you, to your competitors, and to your customers – remember that there are often positive and negative implications so try to consider them all.
  5. Use a tool like the Blue Ocean Strategy to help you find new ways to compete in what will eventually become a new reality in your business. Even if this new reality is a year or two or five down the road, spend some time thinking about how you can shift to be more competitive in that new reality.
  6. Start laying the foundation of your solution today – even if the actual trend won’t hit for a while yet. When it does, you’ll be ready.

When something keeps you up at night, that’s a good thing. It’s your brain telling you to keep an eye on your rear-view mirror because something is coming up behind you that could seriously impact your business. And now, you can do something about it!

Ideas and opportunities in the location-based social media space

By Aaron Hoos on March 23, 2012 in Business

Earlier this week I was writing an article about real estate investing and the value of using location-based search and location-based social media for real estate investors.

As I was clicking around to link to relevant sites, I noticed something quite interesting: On the location-based social media side, only Foursquare survives as a strictly location-based social media. Two other sites — Gowalla and Loopt — both shut down in 2012:

In very short order, the race changed. There is a a big marathon of location-based social media and Foursquare, Gowalla, and Loopt were far ahead of the rest, with sites like Facebook and Twitter also offering some aspect of location-based social media as well.

But now Gowalla and Loopt are gone and Foursquare remains as the only real pure-play contender against “consolidated” social media sites like Facebook and Twitter. (And the other location-based social media sites are so far behind right now that they don’t really count).

One pure-play social media site that owns the industry right now. That’s a HUGE opportunity. So what’s going to happen next? All the elements are in place for new competitors to step up and do something exciting in the location-based social media space: Social media is hot, gamification is hot, EVERYONE has a smartphone now and that is driving change in mobile search and mobile marketing.

So I think the location-based social media space is ripe for MORE competitors not fewer.

8 OPPORTUNITIES IN THE LOCATION-BASED SOCIAL MEDIA SPACE

  1. Facebook has an opportunity to dominate this space by taking its geotagging up a level, perhaps by combining some of the concepts that Foursquare uses — like recommendations and lists based around the places you are visiting.
  2. Twitter has an opportunity to do what Facebook decided not to do — buy a location-based social media site and integrate it. Maybe people can tweet to check-in at locations, and businesses that are ‘registered’ with the location-based side of Twitter can auto-DM deals to the people who have checked in. (Hello! Possible revenue stream, Twitter).
  3. It seems to me like Groupon also has an opportunity to extend its reach by offering daily deals to people based on where they are. Groupon can offer more deals and customers who are at a specific location can take advantage of specific relevant deals rather than relying solely on whatever deals are offered that day.
  4. Yelp has a similar opportunity as Groupon to invest in a location-based social media site to leverage its database of reviews.
  5. What about a time management system that uses location based social media to prompt you to do stuff? (“Hey, you’re at work: Here’s a list of the things you need to do”). Foursquare does this to some degree but it’s not really that cool to check in at work or at home so you miss out on an opportunity to use lists in a meaningful way (and Foursquare’s list system is rudimentary to the point of barely being useful, IMO).
  6. Foursquare encourages check-ins and makes it possible for people to see who else is there but it’s not a communication tool like Twitter or Facebook. (You check in on Foursquare and then you text with the people who are there). So there’s an opportunity for existing communication platforms (Facebook and Twitter were mentioned but also texting platforms/smartphones/BBM/etc.) to leverage the location-based aspect to strengthen their service.
  7. There’s an opportunity here for the next big location-based social media to own whatever happens after check-in. Ordering? Shopping? Exploring? Working? Socializing? Oh, that reminds me of another idea…
  8. Paying. Location-based social media does not need to always be about checking-in. (Yeah, that’s a nice thing but there’s more). Mobile payments are on the horizon and this is an opportunity to help make that happen. So an opportunity to innovate in the location-based social media space might not be to create a new social media site but to find a way to safely integrate mobile payments into a location-based social media so that people who are all together in one place can all spend money at the same time. No, that’s not as weird as it sounds: People split the bills at restaurants all the time; churches take up offering and don’t always need to pass around a plate anymore; timeshares use a group-selling method; seminars can leverage the mass-buying phenomenon to encourage everyone to check-in and buy the “back-of-house” sale, musicians can offer special deals to people who are checked-in at a concert, etc.

When there’s only one pure-play company that is the clear forerunner in an industry, they have a huge target painted on their backs. And, from what I’ve observed, the risk isn’t from businesses that are doing similar things and are farther back in the race. Rather, the risk to those forerunners is from innovators who join the race late and do something surprising and different.

Watch out, Foursquare! Your competition may have disappeared for now but soon you’ll discover some new competitors and they WON’T be the ones you’re expecting.

What’s the “pickaxe factor” in your sales funnel?

By Aaron Hoos on June 7, 2011 in Business

I’m renovating my kitchen. I have a company come in and do the cabinets, the countertops, and the floors, but I do the plumbing myself.

The reason? I’m a half-decent plumber (usually — there was one time when that wasn’t the case, but that’s another story) and I don’t mind the work of plumbing. Since I can solve most plumbing problems in less time than it would take for a plumber to even get to my house, I just do it myself. But cabinets and countertops and floors? That’s another issue. I don’t have the skills and tools or time. Therefore, I pay someone else to do it.

THE PICKAXE FACTOR

I call this the “pickaxe factor”. To me, a pickaxe represents work. Hard work. Nearly impossible work that builds up a sweat, breaks your back, and makes you wish that you could just sit on the couch and pay someone else to do the job while you drink something cold and watch American Idol. For me, plumbing has a very low pickaxe factor. I’m happy to knock out a plumbing job in a short time. On the other hand, kitchen cabinets have a high pickaxe factor (for me) so I pay someone else to do it.

There are lots of problems/challenges/needs that have a high “pickaxe factor” because they are difficult to solve/overcome/fulfill. For example, some people may find it hard to…

  • Start a business when they’ve worked for someone else all their life
  • Meet a potential romantic partner
  • Get to work in nasty weather
  • Look good
  • Do your taxes

These are just a few examples of problems, challenges, and needs that people find hard… they have a high “pickaxe factor”.

Now here’s the exciting part for any business owner: The higher the pickaxe factor, the more value people place on a product or service that solves the problem, overcomes the challenge or fulfills the need. That’s why people pay for the following products or services to help them with the high pickaxe factor the challenges I listed earlier…

  • Business consulting services to get help starting a business
  • Online match-making services to meet a potential romantic partner
  • A vehicle to get from home to work in comfort and style
  • Personal trainers, dieticians, and plastic surgery
  • An accountant

THE PICKAXE FACTOR AND YOUR SALES FUNNEL

Your products or services help people to solve a problem, overcome a challenge, or fulfill a need. If you want to sell even more products or services, or if you want to charge more money for your products or services, you have to do one thing: Identify and exploit a higher pickaxe factor in your sales funnel. In other words, you need to demonstrate to your sales funnel contacts how the hard task they’re facing can be made easier by you. And, the harder the task seems to them, the easier and faster you’ll sell your products and the more money you can charge for them.

WHAT YOU CAN DO RIGHT NOW

If you are just starting a business and looking for a great product or service (or a point of differentiation on a product or service), then figure out what your target market finds difficult, hard, impossible, or unfathomable, and sell a solution to that.

If you are in business and looking to grow, take a look at that problems your products or services solve and how high the pickaxe factor is. Then, take a look at the marketing messages in your sales funnel and identify whether you are making full use of the pickaxe factor by highlighting the challenges of hard work and explaining how your product or service eliminates the pickaxe factor completely.

Schedule time to return to the pickaxe factor in your sales funnel every 3-6 months. Develop your products or services further to solve even higher-pickaxe-factor problems, and hone your marketing and sales language to keep up with the challenges that your target market faces.

6 reasons why you WANT to have competitors in your marketplace

By Aaron Hoos on May 4, 2011 in Business

When I was in high school, my friend’s family owned the very first computer store in town. I was always sort of impressed that they had a lock on that market. I imagined a business without competition to be the highest level of business achievement – a sort of entrepreneurial nirvana.

Then, to my surprise, I learned that they were helping someone else start a computer store in the same town. In other words, they were helping to create their own competition! I didn’t understand it at all. When I asked my friend’s dad about it, he said that competition is good for business. Although he didn’t go into detail, it was a lesson I never forgot (I even remember the exact moment when he told me – it was in the kitchen of their house – it was a watershed moment for me).

It took me years to learn why competition is a good thing, but I now realize that it is essential to a strong, prosperous business. Here are my top 6 reasons why I embrace competition:

REASON #1: COMPETITORS DEFINE YOUR BUSINESS

Competitors help you to figure out what you do. If you are starting a business and you examine how your competitors define themselves, you can identify a point of difference that they are not addressing.

It’s like being lost and using a couple of fixed objects to help you figure out where you are. Your competitors are those fixed objects and you can easily find your way in the marketplace when you compare yourself to your competition.

Creating a business that has too much identical competition (everyone sells exactly the same thing at exactly the same price – real estate agents are a good example) will eventually result in a price war with your competitors. But if you look at your competitors as a starting point and then you define yourself carefully, strategically, and in a different way from the rest of the pack, you’ll help to attract the right people to your business (people who might not be attracted to your competitor). You won’t have to compete on price because your competitors are different from you.

For more information about differentiation and competition, read my blog posts: Equal is not good enough and Mine is bigger than yours — competitiveness and marketing content.

REASON #2: COMPETITORS KEEP YOU HUNGRY

A couple of years ago, I met someone who owned a business that was in-demand and the only kind like it in the entire state. The guy charged insanely high prices and 100% interest on unpaid debts. He could make his own schedule and he didn’t need to provide good customer service. Sounds awesome, at first – you can do what you want and you basically have a licence to print money. But eventually, some other entrepreneur will spot the opportunity in that market and see that he or she could make a financial killing while charging less AND providing exemplary service… and suddenly the first guy’s business is in trouble.

When I was a freelance writer, I would sometimes get frustrated at the low-priced freelancer writers who would charge next-to-nothing, undercutting my prices. On more than one occasion, it caused me to look at my prices and sometimes consider lowering them. (Fortunately, I never did). I realize now that those low-priced competitors kept me hungry and I worked harder to out-work and out-earn those competitors. I’m glad for them now.

REASON #3: COMPETITORS COMPEL INNOVATION

In economics, inflation is kind of like a swarm of termites. You don’t see them but they eat away at the stuff you own. Inflation causes upward pressure on prices so that $1.00 tomorrow is worth less than $1.00 today. In other words, if you’re standing still in your finances, you’re actually going backwards.

It’s the same in business. If you want to create a product or service, build a sales funnel, automate it, and then go sip margaritas on a beach, think again. Your business is “standing still” (not innovating) and your competition will outpace you with newer, faster, shinier products and services. While you’re asking the lifeguard to put sunscreen on the places where you can’t reach, your competitors will be inventing a better mousetrap. Before you know it, your business will sputter and die because no one wants your clumsy old offering.

Your competitors are innovating, so you need to as well. Their very existence forces you to get creative, invest in your business, and reach for more. That’s great for your customers and for your business’ longevity. Read more about innovation at my blog post: My best advice on innovation. And this blog post provides an interesting take on innovation: Want a competitive advantage? Offer the same products as everyone else!

REASON #4: COMPETITORS BECOME CASE STUDIES

In your own business, every interaction in your sales funnel is a piece of data that you can analyze to make your business better. You watch for patterns, for sudden changes, and for opportunities. You put all of these pieces together, you compare it with your metrics, and you can make huge, positive changes in your business.

But if you raise your head out of your sales funnel for a moment and glance across the street at your competition, you’ll learn quite a bit, too. Yes, you won’t have all of the facts or metrics, but you can put together an awful lot just by looking in their windows, browsing their website, mystery shopping them, and listening to both happy and disaffected customers.

Watch for competitors’ marketing campaigns that have a huge impact. Analyze the types of people going through your competitors’ doors. Find patterns among the disaffected customers who decide to switch providers and buy from you instead. By simply watching your competitor, you can learn so much from them to benefit your own business. They become a living, breathing MBA case study to make you a smarter entrepreneur.

Want a place to start? Why not do some really simple competitive research to figure out how to price your products or services. Learn more about it at this blog post: How to easily discover the best price for your product or service.

REASON #5: COMPETITORS RAISE MARKET AWARENESS

Imagine a town in which there are only two companies providing window cleaning services. They both market their services aggressively and have their own point of difference. Simply by advertising the benefit of cleaner windows, they highlight the problem of dirty windows in the market’s mind and the market will search for a window cleaning company – even if it’s not the one whose advertising initially prompted their awareness.

It’s the principle of 1+1=3. Competitors’ marketing will attract new Leads (and sometimes YOUR Leads) to the competitor, but it will also alert the general marketplace to the general problem or need. People from the marketplace will look for a solution or fulfillment and may end up in your sales funnel as a result (all because they became aware of the problem or need from your competitor’s ad). Note: I’m not suggesting that you don’t leave all of the marketing to your competition. However, I think that competitors who advertise in the same market will have a greater cumulative effect than if they each advertised in their own market).

REASON #6: COMPETITORS CAN BECOME COOPERATORS

I love motorsports, especially NASCAR. One of the things that makes the sport great is when two competitors will work together to push ahead of everyone else. Overall, they are still ruthless competitors, but for a brief moment they can put aside their differences to eliminate the rest of the competition.

The same thing can happen in business, too. You can work together with a few carefully chosen competitors to win more customers and outpace other competitors. Now, please note: There are laws about collusion and I’m not suggesting you circumvent those laws – you’re not doing this to raise prices across the board or to destroy a few competitors. There are ways to legally cooperate with your competitors for mutual benefit. For example, you can share the costs of joint advertising to reach different markets through the same channels. Or, you can send each other potential customers who may be a better fit for the other than for you. When I was a freelance writer, I competed against other freelance writers, of course. But when a Prospect wanted to buy from me and I discovered that they were not a good fit (perhaps I didn’t have the bandwidth to help them, or maybe they were in an industry I knew nothing about), I had a few carefully chosen competitors who I felt comfortable recommending them to. And the relationship worked both ways – those competitors knew who I was interested in working with and they would send people to me.

WHAT THIS MEANS FOR YOU

First, welcome competition. If there are no competitors in your marketplace, be wary. Dare to invite competitors to your marketplace! Get to know your competition as individuals, but also get to know their businesses. Use competitive analysis to learn as much as you can about them. Find out how you can help them (and take the first step to do so) and you may see some reciprocation. And always keep an eye on your competition to motivate you to stay hungry and stay innovative!

Hey, this blog post gives another reason to love competitors: 4 ways to insert yourself into your competitor’s sales funnel and steal their customers.

Older posts