Let’s face it: If you are competing only on price, then the price becomes the conversation.
You know, it goes something like this:
Bob comes into your shop looking for an item or service. Upon hearing the price, he says he can get it cheaper somewhere else.
Now you are faced with three options:
1. Lower your price, and potentially engage in a transaction that is not worth your while – because next time, the customer will want the best price again.
2. Lose the customer.
3. Try to explain why you ask for more.
Fact: If your potential customer fails to see any meaningful difference between buying from you versus a competitor, price becomes their easiest way to make the choice.
But here’s the kicker:
Being the cheapest is not always the best strategy for you as a small business owner. On the flip side, you will have to give customers a reason or reasons to choose to buy from you, and not from a competitor.
You don’t have to be completely unique to be different.
Let that sit for a moment:
You may be thinking that several other businesses already off what you offer, and for less. How can you stand out?
Differentiation doesn’t necessarily mean you have to reinvent the wheel. Just do something better, different, or do something specific your competitors don’t.
For instance:
You can offer service that is more personal.
You can offer greater convenience, and/or have a more convenient process.
You can respond faster to inquiries, and/or communicate better.
You can target a specific type of buyer.
Your service can be more flexible, or you can pay more attention to detail.
You can have better expert knowledge.
You can – where possible – offer a better guarantee.
None of these would make you unique. However, any of these could result in a different experience for your potential customers or clients.
To start, look at the customer first.
Instead of looking at competitors first, ask yourself one question: What does your potential buyer actually care bout?
Does he/she value reliability, speed, convenience, quality, delivery speed, personal assistance, or expertise? Does he/she place value on simplicity, availability, after-sales service, or quality? or does it come down to trust or local knowledge?
Not all customers value the same things. For instance, when buying a car, one person may choose it because of fuel consumption, another may choose it because of compact dimensions, and yet another may choose the same car because it is the safest in its class.
So if you compete on quality or service, the person looking at price alone might not be the right one to target. Instead, target people with specific needs or wants that you can address.
The bottom line is this: Not every potential customer needs to be YOUR customer.
What does your business do really well?
Ask yourself: Why do your existing clients or customers choose you, and not a competitor?
Don’t, guess, but look for evidence.
Ask your existing customers.
Read customer reviews and feedback.
See if you have received compliments via email or WhatsApp.
Instead of guessing, look for evidence.
Consider what customers frequently ask for.
Look out for patterns.
For instance, if people repeatedly mention you getting back to them quickly, or explaining things clearly, or being reliable, for instance, these can reveal points of existing differentiation which you can tap into.
Stop selling ice cream.
(Unless you actually sell ice cream, of course)
Steve Jobs once said: “if you want to make everybody happy, go and sell ice cream.”
The moment you want to appeal to everyone, you become less distinctive.
Consider this:
Business “A” says: General bookkeeping services for local businesses.
Business “B” says: We help local businesses get their bookkeeping under control without complicated accounting language.
The second message signals simplification. It messages personal, tailored service.
It says what the business does, for whom, what issue it solves, and why it might be relevant to the potential buyer.
Being this specific makes you stand out, and be more memorable.
Find your “why choose us?” – and be sure it is customer-focused.
Ask yourself this question: Customers should choose us because….?
Avoid giving vague answers like “excellent service”, “we care about our customers”, “we have lots of experience”, etc.
While it might be true, the more vague your answer is, the better the chances that competitors offer it too.
Instead, ask yourself:
What do you do or offer that matters to customers, and isn’t something anyone else can claim they already do?
Answering this question will result in a more meaningful value proposition.
Using your expertise as a competitive advantage:
Depending on the market you service, this may be of value to potential customers.
But instead of saying “we have 30 years of experience”, rather translate it into what it means for THEM.
For instance:
After helping customers for 30 years, we know which potentially costly issues commonly arise, and how to spot them early.
This statement connects your expertise to a customer benefit – several in fact (reason to trust, avoiding issues, preventing losses).
Customer experience can also be a potent differentiator.
The differentiation doesn’t have to come from the product itself. Two local businesses can sell the same thing, yet provide two very different buyer experiences.
Consider the customer’s experience…
Before the purchase.
During communications.
When trying to find information.
During the purchase.
After the purchase.
Can they get help easily?
Is everything as simple as it can be?
Do you follow up afterward?
For a small business, it is usually easier to offer personal service that it is for larger competitors.
Make your brand reflect your differentiation.
How do you want your brand to be perceived? Your brand messaging can carry your differentiating message.
Do you want to be perceived as being professional, premium or an expert? Do you want to be perceived as being approachable, friendly or traditional? Or do you want to be perceived as paying attention to personal service?
Let your branding support your positioning, in all of your branding materials, from the colors you choose to your tone of voice, and everything it appears on.
Instead of having a brand that just “looks attractive”, create one that reinforces how you would like your customers to perceive your business.
Next, tell customers what sets you apart.
Regardless of what you offer, if the customer doesn’t know it, it might not help much. Where can potential customers see your differentiation?
Can it be seen on your website’s home page, your Google Business Profile, social media profile and posts, your advertising, sales conversations, reviews, etc?
Do your customers ever naturally mention the things you would like to be known for?
Being different alone is not good enough. Potential customers have to understand your value proposition before they fall back into looking at prices.
Discounts do not necessarily equal value.
Value and low prices are not the same thing.
If you offer discounts, not only does it eat into your profit margins, but it eventually becomes an expectation from potential customers, and you are back to competing on price.
Once people come to expect discounts, they may hold off their purchase until you run your next discount, because “the normal price is too high”.
While the odd promotion or discount can be good, don’t turn it into the way you do business. Compete on value, not price.
Let customers understand that they are paying more to ensure things like peace of mind, time saved, reliability, better quality, reduced rick, personal service, convenience, etc.
Ask yourself these five questions:
1. Why do our best customers choose us?
2. What do customers compliment us about most often?
3. What do we do better or differently from many competitors?
4. What issues do we solve particularly well?
5. If we couldn’t compete on price, why would someone still choose us?
Instead of coming up with the perfect answer immediately, write your answers down, and look at the facts.
Take one single strength, and turn it into a marketing message.
Is there one thing you do particularly well? bring it into your marketing messaging.
For instance:
Have questions? We respond within one business day.
Home improvements explained without confusing technical jargon.
Knowledge of local challenges accumulated from two decades of serving homeowners in our area.
The more specific the messaging is, the more it wll speak to a specific type of customer – the wan you WANT to do business with.
In conclusion:
Give customers a reason to choose YOU. And that reason should NOT be “because we are cheaper”.
Know what your business offers, and know what matters to your ideal customer. It might be expertise, convenience, quality, or it may even be a combination of several other factors.
At the end of the day, you don’t need to be the cheapest.
But you do need to communicate the true value of what you offer. The people who appreciate the value – not just the price – will become your customers.
Make it worth their while to choose you, and let them know.