Thursday, November 4, 2010

"We're Really Nice Guys"

I've been amazed at how many small businesses believe their competitive advantage is "we're really nice guys to do business with." Does that mean they have really great service? Not necessarily. It could mean they deliver with a smile, and they ask after your kids, and take you out for coffee or lunch once in awhile.

A long time ago, I learned from a couple of good people, Bob Nauheimer and Liz Holm formerly of Prism Strategic Services, that we compete on five dimensions for customers: price, quality, delivery, service and technology. It's hard to think of a customer need or desire that can't be defined by one of those parameters. To create value, your business has to be better at one of those than your competition. If you can't define the advantage, or the value, you bring to the customer, then it's going to be difficult for them to buy from you.

Unfortunately, many business leaders believe they can only compete on price and their niceness. This happens a lot in businesses who view their products or services as commodities, and there are many competitors. I know some businesses that are not competitive in pricing but they have exceptional quality or technology. The value becomes obvious after the customers experience what they're being offered. Recently, in a Fast Company magazine article, Chip and Dan Heath (Made To Stick) talked about changing your customers perspective of your offering from a vitamin to an aspirin. We all know we should take vitamins to be healthy, however, we don't always. But when we have a pain, we're pretty good at taking the aspirin. So they challenged businesses to find the pain that your customers have and solve it.

I work with banks and clinics who can be seen as commodity services. However, what is the prime reason for using those services?

Bank: safety, yes, is important and we use them because they're more secure than our mattresses. In a broader sense, we want different account services. We want returns on those investments. We want on-line banking, etc. The primary reason we deal with banks though is: when we want to spend our money, we want the ability to make the purchase without a lot of hassle. Could a bank structure a service account to take away the worry of a credit card rejection, overdraft, atm denial, deposit availability and so on? I believe they can.

Clinics: seeing a physician is one of the reasons we go to the clinic. Even though we go for different reasons--sick, follow-up care or preventive examinations--we all want the same thing: the answer to the question "will I be okay?" Clinics could figure out creative and effective ways to answer this question, that may set them apart from every other clinic available to the community.

Figure out what the core "pain" is for your customers and create a solution for it. This may be your competitive advantage. If you do it right, your customers will be your best marketing campaign. Customers (like all of us) are creatures of habit. It's hard for them to change unless you disappoint them or they discover a compelling attraction. Your competitors will also respond, trying to imitate or mimic you. Niceness can be mimicked. Find a different competitive advantage and succeed.

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