From the March 1999 issue of Entrepreneur

Excerpt from The Titan Principle by Ron Karr reprinted with the permission of Chandler House Press.

We live in a world in which technological or product innovations can vanish in a heartbeat. Differentiation from the competition in today's marketplace doesn't happen solely by means of advanced products and services. In the computer industry not so many years ago, if you came up with a huge technological advance, you had a marketing advantage for, say, 18 months. Now, most high-tech players realize they have only a few weeks or months (sometimes days!) to rely on a technological advance. Before long, someone else is offering essentially the same product or service.

When prospects and customers perceive competing products and services as roughly equal in value, entrepreneurs face a challenge. How can they differentiate themselves and add the value that will clinch the sale?

The magic lies in learning which element is of greatest importance to given prospects and customers--which of your strengths you should emphasize or de-emphasize. You must then focus with intensity on your company's strengths in each of the appropriate value areas. Send the message that you can increase profits, increase productivity, reduce costs, and/or increase competitive advantage for your prospect.

How can you deliver on one or more of those objectives? Let's look at six value areas in detail, with an eye toward how you can deliver a better value proposition than your competition.

Information

This value area has to do with the experts in your organization and industry whom you can bring to bear in helping your prospects address critical problems.

It may sound strange, but it's true: Salespeople often give customers too much credit. We assume they are deeply educated in their industries; we underestimate our own important role in bringing critical information to the customers' attention.

Your contacts want solutions; they're looking for information, not just invoices. So stop fixating on products and services! Make a list of all the intellectual resources your organization offers. Find ways you can offer value to selected customers by supplying nonconfidential information. Consider, for instance, the newsletter. All kinds of companies are now sending key customers and prospects newsletters that discuss what's new, forecast trends and provide valuable information on their industries.

Some companies turn their newsletters into brochures and sales announcements, transforming them into part of a direct-mail campaign--not a great way for companies to position themselves as resources. If you're preparing a newsletter, make sure it contains information your customers will find valuable and newsworthy. It's OK to mix in a couple items on your new products and sales, but keep that content to 25 percent or less of your overall publication. Newsletters should provide impartial, user-friendly information to your customers that helps them do their jobs. You'll have trouble establishing usefulness if your newsletter looks and feels like a sales vehicle.

You can also establish value by passing along key referrals. Suppose a customer mentions a problem in an area your company doesn't handle. You know the problem has been addressed successfully by another customer of yours who works in a different industry. Pass along the person's telephone number. When you have the facts someone needs, you're no longer considered "just a salesperson." You're a resource to your customers!

Distribution

This value area has to do with the way you ship your products and deliver your services. Your prospects will be eager to hear how you can help them get products delivered against a tight deadline or ship items for less money. Accordingly, you need to know what kinds of strengths your organization will bring to the relationship when it comes to distribution.

Can you promise and deliver on an aggressive delivery schedule? Can you reduce the charges your prospect or customer is used to paying in this area? Do you know how your distribution costs and completion schedules match up with those of your competitors? Helping your customers beat their competitors to the punch is a great way to help them attain competitive advantage and add value to your products and services. Lowering shipping costs for a customer may be as simple as consolidating multiple shipments for maximum cost efficiency. Is your organization making this happen?

Look at order verification and tracking as part of the distribution value. Do you provide instant updates on where particular orders stand? Customers need up-to-date information to make good decisions.

What is the biggest potential obstacle for companies when it comes to distribution value? Missed deliveries! Not keeping your promises represents a body blow to the trust you've worked hard to develop. Yes, setbacks happen unexpectedly, and yes, there may be times when you can't deliver as promised. When this situation arises, you must at least call the customer so appropriate adjustments can be made. Don't leave your customers hanging. Accept full accountability, and do whatever it takes to minimize the negative impact of a missed delivery.

Systems

The next value area has to do with systems--the information tools you already have in place that you may be able to use on a customer's behalf. Identify your strengths as an information resource so you can present it at the appropriate time. What do you offer that a competitor doesn't?

A good example of adding value in this area is Electronic Data Interchange (EDI). Manufacturers use EDI to monitor inventory levels at customers' warehouses to streamline operations and automatically trigger reorder requests. Electronic ordering also reduces the time and expense associated with creating manual purchase orders. And, of course, the Internet provides companies with some of the most exciting systems for improving relationships with customers.

If you can use your organization's current information-management technology to help customers reduce costs and save time, highlight this area of value to prospects and customers.

Stabilities

Another important value area is your company's stabilities. How strong is your organization? How well capitalized is it? How long have you been in business? How certain is a customer or prospect that you'll be in business one year, two years or three years from today? Do you have a low rate of turnover in your company? Can you deliver greater value through reduced costs or superior service over an extended period of time? These are all areas where you may be able to differentiate yourself from competitors.

Product or Service Design

This value area has to do with quality, features and functions, and reliability. What can you provide that's better engineered, more reliable or less likely to break down than the competitor's product? What service do you provide that's more accurate, more reliable or more precise than the competitor's service? How does your product or service differ in terms of features and functionality--do you offer more bells and whistles for the same price? Is your service more flexible and easier to use? Is your product or service upgradeable to new models and levels in the future?

Software vendors are famous (some might say notorious) for coming out with upgraded packages with dizzying speed. A week or so after you've bought version 5.2 of a given product, version 5.3 is on the shelves. Some companies allow customers to download free version updates until the next major release is offered, providing customers with the latest changes so they can keep their systems up-to-date and on the cutting edge. That builds loyalty!

Assets For Your Key Customers

Let's face it, sometimes special customers get special treatment.

Airlines and hotels differentiate their most frequent customers from the customers who use their services only occasionally. Airlines offer frequent-flier award programs, while hotels offer free nights and discounts to their frequent travelers. These travelers also get additional amenities included at no cost (such as free room upgrades when available).

Remember the 80/20 rule: 20 percent of your customers will provide you with 80 percent of your business. While all customers are important and deserve your time and attention, your biggest customers expect, and should receive, a higher level of service. They want to be rewarded for the amount of business they bring you. If you're still hesitant, consider that it will cost you far less to capture additional business from existing accounts than it would to build up equivalent levels of business from new accounts.