I got a question from a reader recently. He wanted to know “How do you differentiate yourself in a saturated market?”
Seems like with the internet and everybody being connected to everybody (including your customers being a couple clicks away from all your competitors) this question is more important than ever.
I could give a much longer, more complex answer around proof and credibility, though for that discussion I’ll refer you at the end of this article to another article I wrote last year. (That means read this article first!)
When it comes to differentiation, I recommend three major strategies.
One, offer something different.
Okay, so this is probably the single easiest, quickest way to differentiate yourself in any market — regardless of how saturated it is. I’m going to use pizza as an example because, well, I like pizza. And I have a couple examples from the industry.
First is the famous Domino’s pizza example. Domino’s started as a corner pizza shop much like any other corner pizza shop. Not much to distinguish it in a world of corner pizza shops. Definitely not better pizza. Not a fancier atmosphere. Not better service. It was a corner pizza shop.
Then, Tom Monaghan had a bright idea. He realized customers liked their pizza delivered fast. Reliably fast. It didn’t matter that the pizza wasn’t the best. It didn’t matter that other elements of the pizza buying experience may have been lacking. Fast, fresh, hot pizza and people were happy.
So he came up with the most profitable 10 words in the history of the pizza business:
“Fresh, hot pizza delivered in 30 minutes or less, guaranteed.”
No more, no less. And importantly, nobody else was doing it. And he built Domino’s into the world’s largest pizza delivery franchisor (and for a long time the most recognized name in pizza) in very short order on the back of that differentiated offer. (Eventually some trouble came of this promise so now they’ve dropped the offer for something much weaker… And Domino’s is not what it once was as a result… Though that doesn’t diminish the power of this lesson.)
My second pizza example. Little Caesars. Here’s how they’ve won a lot of business from me over the last few years, even though I don’t particularly like their pizza.
“$5 Hot and Ready Pizza.” I show up, I say “Pepperoni” or “Cheese,” and I get the pizza from the little warming box behind the counter onto the counter in seconds. I pay $5 and I’m walking out of the store with the pizza. Round trip from home to pizza store to home again is under 15 minutes.
And it’s cheap. Even being reasonably successful I’ve stayed pretty spendthrift — and $5 pizza keeps me coming back. (Compare that to the $15+ I spent last weekend on a pizza I really like… And I feel like I have to go back to Little Caesars for my next trip just because I spent too much last time!)
I go back to Little Caesars again and again because they offer $5 pizza that’s guaranteed to be hot (note, not fresh) and ready for me when I walk in the door. And as far as I know there’s nobody else in the industry doing the same thing.
These are both great examples of offering something to your customers that nobody else does. Creating a packaged product or service that your competitors are unwilling or unable to match. And then riding that wave as long as it continues to bring in sales and customers profitably.
What can you offer that your competitors can’t or won’t? Six minutes, six months or more spent thinking of this could pay many dividends, as it obviously did with Domino’s and with Little Caesars.
Two, be different.
This is a fundamental shift in what you do. A long-time client of mine is a good example of this in action — what you could aspire to.
A brief description of his industry is that it’s selling career training to techno-geeks. People who work on computers. Everyone else in the industry (his competitors) goes for the packaged, professional look. And they typically have long delivery times, a “salesy” sales staff, and focus on “corporate” appeal.
Not my client. From the beginning he approached it differently. He treated every customer like they were a friend, not a credit card transaction. So his training is different — it’s like having your smart friend sitting down next to you and explaining the topic in language you can understand. His service is different — 2-day delivery is standard, overnight is optional, and all orders ship same day if possible. And all sales staff are taught to be consultative for the most part, and friend-like in all follow-up.
This resulted in the company going from nothing to one of the most recognized names in the business in under a decade, and knocking many of the “big boys” in the industry funded by old publishing money off their high horses.
These are great examples of ways you can “be different.” I like them because they transform the interactions with the customers from transactional to “How can I serve you as a person?” (Sometimes the result of this question is referring the customer to a competitor or complimentary product.)
This “How can I help you as a person?” is a radical question. And a question most merchants are unwilling — even afraid — to ask. Because it may not serve you in the near term. Though as my client found out it can lead to more loyal customers, and customers who not only come back to you over and over again (exclusively or not), but also customers who refer their friends and associates to you en masse with glowing recommendations.
So how can you be different and get noticed? Think about your IDEAL customer experience. How you’d like to be treated. And work on rearranging your business to create that experience for your customers. Trust me, they’ll take note.
Three, educate more.
I like this one. Perhaps because it leads to more business for me. (Grin.)
Most competitors in most markets do not educate their customers or prospects. They sell. The only thing they do that even comes close to educating customers is educating them on new opportunities to buy. This does not connect with customers, and it does not differentiate you as a merchant.
Before I talk about a couple ways to differentiate yourself through customer education, a caveat. Educating can be a double-edged sword. You think you’re doing it right because you’re giving the customer all the possible information they could need. Yet you quickly find they’re just not responding. That doesn’t mean the strategy is wrong, it probably means the implementation is off.
Two ways to ensure your customer education will lead to more sales.
First, one lesson per communication. Notice this entire article is dedicated to teaching you how to differentiate yourself. Sure, there are subtopics. Yet it all comes back to differentiating yourself. Keep each communication focused around one idea — one lesson — and it’ll have the biggest impact.
Second, have a personality. Just because you always have a new lesson to teach doesn’t mean people will stick with you. In fact, customers will stay with someone they like yet who is educating less rather than the person who educates more yet in a bland or boring way. So be sure you’re making your personality shine and even entertaining a little along with educating and selling.
Now on to types of education that will lead to more sales.
Online, it’s easy. There are so many forms of media and different technologies that allow you to stay in constant contact with your customers at a very low cost.
You can start a video blog where customers get to know you and learn about your products, plus where you answer their questions and help them solve problems. Or if you’re a writer you can do the same thing with a regular blog or article site.
Autoresponders. When a potential customer comes to your site interested in what you offer or the problems you solve, offer them a series of free lessons on how to solve their problem. Deliver them through an automated email service such as Aweber (http://royfurr.aweber.com). And then continue to follow up with more helpful tips (genuinely helpful, focusing on helping and serving first and sales last and not always). A good series of autoresponders can start with daily emails for the first 5, 7, 9, or more days, then space out to every couple days, twice weekly, weekly, or even every couple weeks. I have even poorly-put-together autoresponder sequences that are converting 25% of subscribers into buyers over a 3-4 month period (which reminds me, I need to work on that!).
You can also put together a newsletter where you regularly (monthly, weekly, even daily) send out articles that are helpful and of service to your readers. I consult with multiple divisions of a 9-figure publishing company that uses this type of newsletter as one of two core elements of its online marketing strategy and has done VERY well with this approach.
Offline many of the same strategies apply, though the cost difference is significant. I like to use offline media to drive customers online, and online media to get offline contact information for customers. Reaching customers through these multiple media can lead to a multiplication of average customer value.
And here’s something else. How to differentiate yourself further by combining a unique offer with customer education. A very easy way to offer something your competitor doesn’t is by creating an educational supplement to the product or service you’re selling.
If you’re a service business, why not write the book on it?
So you clean carpets? Write at least a booklet, if not a full book on how to keep your carpets clean between professional cleanings. Or hire someone to write it for you.
If you’re a financial planner specializing in helping newly-successful entrepreneurs manage their new wealth and income, your book can be “How to turn your new financial success into a lifelong income stream and the ultimate financial independence.”
Sell products? Let’s look at both ends of the spectrum.
With an utterly simple product like Pyrex storage containers (like you may take your lunch to the office in) you could offer a recipe book specifically designed for the different sizes of containers — so customers can cook delicious lunches easily, and have them ready to grab and go in the morning on the way out the door.
Or let’s say you sell high-end industrial robots to manufacturers, like an associate of mine did for a few years. You could include in the sale price a week-long training session for your client’s maintenance team and other employees on proper ongoing care of the robots to ensure minimized downtime and service calls.
Offer education as a supplement to your product and all of a sudden you’re in a league of your own. You’re educating more, and you’re offering something your competitors don’t (and often won’t go to the trouble of matching).
So those are just a few strategies for differentiating yourself in a saturated market. I hope they help!
To your success,
Roy
P.S. — Here’s that article I promised on proof and credibility. It’s specifically talking to people who are doing Self-Publishing, though the lessons apply pretty much across the board regardless of industry. http://www.awaionline.com/2009/10/build-self-publishing-credibility/
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Uncle Sam Putting A Choke Hold On Your Small Business?
I’m pissed. What in theory could have been a good thing — cost controls on health insurance, especially for small business — has turned into an absolute nightmare.
I’m sorry if you’ve come looking for another article on marketing and advertising — you’re not going to find it here. In fact, this may be the first of many articles that discuss finance, politics, and the corruption of The American Dream as seen from the perspective of a modern entrepreneur.
It’s a big shift for me — all I’ve written about for years now is marketing, advertising, and entrepreneurship, and I’ve stayed well clear of the political realm. But there’s just too much going on right now for me to sit silent, and too much for you to ignore it.
So mark this as my first of many articles on these topics. And this first one is a doozy.
Starting in 2012, Uncle Sam is putting a choke hold on US Small Businesses. Remember when Obamacare was going through, how no member of congress actually admitted to having read the entire legislation? At 2,409 pages, of course they’re not going to read it! It’s only going to become LAW and have an effect on the lives of every American. Why the bleep should they READ it?
Well as the legislation is being combed through for the purposes of implementation, some nasty secrets are coming out. And this is just one of them.
Let me quote CNN on the details:
I came across this bit of news from the gold bugs — who have figured out that this means every precious metals transaction over $600 will now be tracked by Uncle Sam. (Gold, silver, and other precious metals are one of the few private investments left… For now.) With tracking, Uncle Sam knows where the gold is. Which makes confiscation of physical gold much easier. And for those of you who think, “Not my government,” you only need to look back to 1933 and FDR’s Executive Order 6102 “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates” by U.S. citizens. (http://en.wikipedia.org/wiki/Executive_Order_6102) It could happen again. We’re getting off track though…
The implications for sole proprietors, home office workers, freelancers, and other small businesses of these new 1099 rules are tremendous.
While a major corporation can hire a few more accountants to churn out 1099s as fast as they blow cash, small businesses (the heart of the US economy) can’t afford to waste time mired in more government paperwork. (Just think: your local locksmith will have to file a 1099 for the gas station they buy more than $600 worth of gas from; entrepreneurs attending trade shows will have to file 1099s on the show’s producer plus multiple vendors; direct mailers will even have to file 1099s on USPS on the postage they buy!)
Personally, every minute I spend filling out paperwork for Uncle Sam is a minute I can’t spend earning an income. And I suppose I could hire out the task, but as a small business this is an undue burden — it stifles productivity and hampers commerce.
The good thing is how quickly politicians on both sides of the aisle are working against this particular item. Representative Daniel E. Lungren of California has introduced a bill to counter the new 1099 rules, H. R. 5141, “to repeal the expansion of information reporting requirements for payments of $600 or more to corporations, and for other purposes.” And he’s one of many speaking out against it.
But bullheaded politicians bent on re-election over all else are standing firm against such efforts.
Because the current administration — and by that I mean the executive branch down through the powers that be in congress — have made this health care legislation their “last stand,” they’re not ready to budge on any legislation to modify it. No matter how counter-productive a line item may be, they see the entire legislation as a house of cards where if just one card is removed, the whole structure will fall.
So how likely is it that Section 9006 — the 1099 debacle — will be repealed? Well, I don’t know. We’ll have to wait and see. Though it’s unlikely we’ll see any real action before the November elections, and if the current administration stays in power it’s unlikely we’ll see it repealed before the 2012 implementation date. So this may be a new burden your business will have to deal with — Uncle Sam’s strangle hold on your small business.
I’ll wrap this up with an idea an associate of mine had. Ron Paul’s run for president was great in helping people become aware of Libertarianism. But what we really need are a large number of Libertarian lawmakers on Capital Hill. What if instead of supporting a national candidate for president, Libertarians instead made it a point to get representation in Congress, starting with the highest-probability districts? Increase the voices calling for less government meddling at home and abroad, support of individual freedoms, and support for small business (and cutting loose our government from its indentured servitude to Wall Street and the biggest of big businesses). It’d take a while, but it may start to change things for the better. Food for thought.
Until next time,
Roy Furr