How to eliminate marketplace saturation

I was asked a really good question on a forum and I wanted to share that question here. Given the subject matter of the forum, I wasn’t able to get into all the specifics but I have a little more space on my blog to talk about it.

So here’s the deal: Saturation is a concern that businesses have. They’re worried that there will simply be too many competitors in the marketplace. In the forum I was on, it was one freelance writer concerned that there would be too many other freelance writers but of course that’s not the only place where saturation is a concern. I’ve heard of book authors and SEO firms and foreclosure consultants all concerned about saturation; I’ve worried about it in a number of industries I’ve worked in as well.

But here’s the thing to remember: Saturation is only a problem when you are exactly the same as the majority of other competitors. If you offer the same freelance writing services as 100,000 other people then saturation is a problem because you’re competing against 100,000 other people. Your prospect will be overwhelmed by 100,001 proposals and pitches and resumes and C.V.’s all touting superiority (but demonstrating similarity).

If you want to avoid saturation, you need to make one simple tweak: You need to differentiate your business. Identify a smaller group of prospects (perhaps a subset of the larger group that your competitors are fighting for, or a completely different group that is overlooked by your competitors) and focus your offering exclusively on the needs of that group.

You’ll sell more because your marketing communication is focused on that group and your product is more in sync with what they are looking for. You’ll reduce or eliminate the competition because they’re all scrambling against many other competitors or a big group while you are connecting in a more relevant way with a smaller group.

The cost required to surpass the competition

I’ve said before that I’m a fan of NASCAR and I’ve observed an interesting aspect of racing that provides some insight into running your business.

Throughout the race, the cars string out in a line and the faster and more competitive cars end up at the front while the slower, less competitive cars end up at the back.

Now let’s say that you have a fast car and in the middle of the race something goes really wrong. You pull into the pits, the pit crew makes the changes it needs to make, and you get back out on the track. Unfortunately, you’re way at the back of the line.

But you have a fast car so you start passing cars to work your way to the front.

The closer you get to the front of the field, the harder it gets to pass cars. That’s because the cars at the front of the field are faster and more competitive than the cars at the back.

So it doesn’t take a 1x effort to pass each car. Rather, it takes a 1x effort to pass the very last car in the field… And a 2x effort to pass the second last car in the field and a 3x effort to pass the third last car in the field and a 4x effort to pass the fourth last car in the field, etc.

See my point? The higher you ascend, the harder it becomes.

The same holds true for businesses. Brand new entrepreneurs view competitiveness as a 1x effort: That is, they think that they can pass each and every competitor with 1x effort. But that’s not true. They pass the bottom tier with 1x effort to get into the next tier. Then they need 2x effort to pass that tier of competitors and get into the next tier. Then they need 3x effort to get out of that tier and into the next tier. (How many tiers are there? Well that depends on the industry). Ultimately, it’s going to take WAY more effort to get to the top than to get out of the bottom.

This effort is a cost (not always financial — sometimes it’s financial but it’s also time and other resources; and sometimes it’s a matter of what you are willing to do).

So here’s what this means for your business:

  1. If you want to be more competitive than you are currently, you’ll need to invest more of something (time, money, etc.) to get higher. You can’t get away from this fact.
  2. Your business is only as competitive as you want it to be. At some point you will achieve an amount of competitiveness that you are comfortable with and you won’t rise anymore because you don’t want to. That’s okay.
  3. If you have dreams of rising to the very top of your field, you need to stop thinking about using the same old strategies to compete… you’re going to have to look at what the top tier is doing and you’ll need to do more than they are doing. This is probably the hardest and costliest effort of competitiveness. (Case in point: Many companies that want to rank high in search engines adopt the cheapest-possible strategies that are comparable to what their current competitors are doing rather than discovering and surpassing the strategies of those that are ranked higher.)
  4. Many of your competitors are doing the same thing, which tends to drive the cost of competition even higher.

There is a cost required to surpass the competition and it’s not always a 1x cost. How high you want to ascend on the ladder of competition depends on how much effort and cost you are willing to invest to be more competitive.

The one time that you SHOULD make your prospects feel stupid

I remember one time trying to sell insurance to a prospective client and I fell into the terrible industry insider habit of using an acronym instead of the actual name of the insurance product. That client called me out on it (rather harshly, but for good reason) and reminded me that I was the expert and she didn’t know what the acronym meant. It put me in my place and I’ve never forgotten the lesson.

In general, it’s a bad idea to make your prospects feel stupid. Salespeople lose sales because they (unintentionally) belittle their potential customer by speaking down to them or by acting in a condescending manner. It can be easy to do, especially if your profession requires a lot of education or qualifications, or if there are a lot of difficult-to-understand intricacies (like with the insurance I was selling).

But there is one time when it’s okay to make your prospects feel stupid.

Okay, I don’t mean that you should actually TELL someone that that they are stupid. You should always sell positively and professionally! But it’s okay to construct your sales presentation in a way that your client draws their own stupidity inference:

Without explicitly stating it, it’s completely acceptable to make your prospect think: “I would be stupid if I didn’t buy this right now.

Apple does this brilliantly. By setting up their products as brilliant innovations of genius (and by setting up “the other guys” as a foil) it makes it very clear who the hip buyers should emulate. They do this pretty consistently in their various marketing efforts and particularly in this series of videos…

They’ve done it so brilliantly that Blackberry embarrassment has become a thing. (Note: I’m a Blackberry user. Don’t judge me.)

Apple isn’t the only one but I have to say that they are probably one of the most effective I’ve ever seen. Their marketing not only promotes their products but it tells users that they’d be STUPID to buy something else. (Again, they never do this explicitly… and that’s the beauty of this method).

As business owners, many of us approach a potential sale (i.e. when we make a sales presentation or when we write a sales letter) and we try to sell with the minimum amount of selling. We try to close the deal with as little sales effort as possible. So rather than building deep sales tactics into everything we do, we simply slap a thin coat of selling on everything and then wonder why no one is buying. But if you want to tip the Scales of Purchase in your favor, one of the ways you can do this is to make your prospect feel stupid about not purchasing your product and about even considering purchasing anything else.

The way to do this is to consider all of the possible sales outcomes and to overwhelmingly point them in the direction of buying now while setting up a disdain for any other option.

The usual sales outcomes are…

  1. Buying now (awesome!)
  2. Delaying the purchase
  3. Buying from someone else
  4. Buying an alternate solution (i.e. a substitute solution from an indirect competitor).
  5. Putting up with the problem

To help increase the likelihood of closing the sale, your sales efforts should make the potential buyer think “I’d be stupid for not buying now!” by establishing the buy now option as the best option and every other option as a terrible choice.

Here are some ways to “make your prospects feel stupid”…

  • Overwhelm them with value. (By the way, have you read my primer on value? It’s a must-read if you want to sell more.)
  • Sell with the Chain of Agreement.
  • Learn to think that objections are awesome and masterfully handle every objection a potential customer offers up.
  • Stir up a sense of urgency.
  • Highlight the cost of not acting right now and put that cost in terms that your clients can understand.
  • Increase the scarcity of the your solution. (This one is tricky because a lot of businesses use a false sense of scarcity).
  • Make it INSANELY easy to buy — as few hoops as possible.
  • Overwhelm them with testimonials of other people who are completely happy.
  • Set up all other choices as a foolish foil against buying now.

Note: I want to be absolutely clear here! I would never advise that you belittle your prospect or actually make them feel stupid. However, you can sell more by selling so effectively that your prospect thinks “I would be stupid not to buy this right now!”

Small business strategy question: Who are your indirect competitors?

Businesses face stiff competition and entrepreneurs must bring to bear all of the tools and strategies and resources they possibly can in order to compete. One activity worth spending time on is to go through my list of 100 small business strategy questions to analyze what your business is like, where the opportunities are, and how you can compete more effectively.

In today’s blog post, I want to go a little deeper into one of the questions: Who are your indirect competitors?

When you think of competition, you probably think of your direct competitors — the companies that sell the same product or service that you do. It’s well worth thinking about them… and it’s worth your time to consider why someone would buy from you instead of your competition.

But one area where a lot of entrepreneurs get blindsided is by not thinking about their indirect competitors — the products and services that aren’t similar to yours but which your potential customers buy instead of yours.

Here’s a simple example: A pencil manufacturer’s direct competitors are other pencil manufacturers. But that’s not the only competitor. A pencil manufacturer also has indirect competitors…

  • Pen manufacturers
  • Among artists: Other drawing media like charcoal, pastel, watercolor, oil paints, etc.
  • Mobile phones and sound recorders (and other electronic devices used to jot notes
  • Remembering! (Okay, that’s not a product or service but it’s an alternate choice that the potential buy can take instead of using a pencil to write down their shopping list or whatever

Here’s a well-known example: Coca-Cola holds a pretty significant marketshare among its soft drink rivals (its direct competitors) but its “share of throat” — an industry term used by the beverage industry to describe overall beverage competition against direct and indirect competitors — is much smaller.

Coca-Cola’s direct competitors are soft drink manufacturers. Coca-Cola’s indirect competitors are alcoholic beverage manufacturers, water bottlers, coffee and tea makers… and even the utility company that sends water to your tap.

As a business owner, you need to not only know who else in town is selling the same stuff as you; you ALSO need to know who else in town is selling something that your potential buyers might use an an alternate or substitute.

This is a tricky challenge because it’s easy for insiders to develop blinders to the way the outside world views your solution. One way to overcome this is to spend time talking to your customers — in person; on social media; wherever! — and try to find out the following two things…

  • Who would you buy from if my business wasn’t around?
  • What problem does my product or service solve/what need does my product/service fulfill?

The answer to these two questions SHOULD hint at who your direct and indirect competitors are.

And once you know, it can completely transform how you market your business and how you package your products and services… and it can even reveal new ways to position yourself in the industry.

Sherlock Holmes had Moriarty… Who is your villain?

Branding has traditionally been thought of as defining who you are, and there are many branding techniques and methods that start with you defining what your business’ purpose is and then working outwards from that central point to identify the brand.

But it’s worth considering what your brand is not. It’s worth thinking about the things that define who you aren’t!

Sherlock Holmes had Moriarty.

Luke Skywalker had Darth Vader.

Superman had Lex Luther.

Seinfeld had Newman.

Although we could probably define these protagonists on their own, what they stand for becomes even clearer when they are portrayed against their villain – that is, when they are portrayed against the person who opposes them.

The same thing is true in your business. As you develop your brand, you’ll articulate your brand easily enough with some of the buzzwords and characteristics that you like – either they describe you now or they describe what you aspire to.

But take a moment to describe who your villain is.

I don’t mean that your villain is necessarily yoor competition, and I don’t mean that your villain is necessarily the opposite of you. (Take Sherlock Holmes and Moriarty as an example. They might be on opposite sides of the law but they are similar in some ways, too).

Describe what you don’t want to be. Describe the kind of brand that you don’t want to be described as.

I think a great example in the corporate is Apple versus Microsoft. In fact, Apple blatantly used Microsoft as their “villain” and many of their commercials pitted the two brands against each other. To PC users, it was a mildly humorous dig. To Apple users, it helped to unite them against a common “foe”. Today, Apple’s audience does the same thing now between Apple and Blackberry.

I’ll give you another example from my own business: I’m a freelance writer who specializes in business, finance, and real estate. I’ve always liked those elements as part of my brand. It resonates with something I’ve always aspired to. But when I consider who my “villain” is, they are someone who writes anything for anyone (i.e. a generalist) or someone who is a novelist or someone who is a jounralist. Obviously there is nothing wrong with those professions but I use them as a way to describe what I don’t do. I’m not those things and by describing what I’m not, it becomes clearer what I am.

Here’s what this means for your brand: I believe that branding is an ongoing, constantly-evolving process and how you brand yourself today might be a little different than how you brand yourself tomorrow. And part of branding is figuring out who you are and what your business stands for. But that will only go so far in helping to define your brand. You need to constantly assess who your villain is – who are you NOT – to determine your brand.