There’s an old saying, “You get what you pay for.” There may have been a time when that was true, but not anymore. In virtually every product category you’ll find relatively inexpensive products that do the job reliably and pricy ones with all sorts of bells and whistles that don’t.
While there’s no shame in being a cost leader, it does have its challenges, namely surviving on razor-thin margins. Marketers combat that with differentiation and premium positioning. But oftentimes, in their zeal to push marketable features and cool designs, they forget about basic functionality and end up with high-priced garbage.
That sort of thing happens all the time.
I used to have this old Waring blender. I paid maybe $99 for it, if that. It always worked perfectly and lasted more than 10 years. When it finally bit the dust, I figured I’d upgrade and bought a ridiculously expensive model with tons of features. It’s been nothing but trouble.
Years ago, I built a new house. We had maybe 30 different subcontractors on the job. Some were practically artists while others were horror stories, but there was little correlation between quality of workmanship and how much they were paid.
When it comes to food, we all have little hole-in-the-wall joints where the chow is remarkable and the prices are reasonable. Likewise, we all have stories of overpriced restaurants we wouldn’t go back to if the food was free and we were starving.
In every industry there are companies that, for whatever reason, lose perspective on what really matters and take their eye off the ball. It happens to leaders of companies big and small, but there’s a world of difference between the two.
Large, diversified companies can survive an occasional bad review of a product line. But it’s a lot harder for a startup or a small business to recover from that sort of thing without its brand being permanently tainted.
When you run your own show, your products and services tend to be narrowly focused. You lack the track record and credibility of an established company. And the smaller the business, the more competitors you typically have, so you’re not likely to get two bites of the apple. If the first bite tastes bad, customers are likely to just spit you out and never come back.
To avoid that, you need to focus on two very important things:
1. Your value proposition.
Internally, you want to be very clear on your value proposition: what you offer customers that they truly can’t get anywhere else. I say “truly” because executives and small-business owners alike are exceptionally good at breathing their own fumes.
I can’t tell you how many business leaders I’ve worked with over the years that had myopic views of themselves and skewed perceptions of their products. That’s usually what leads them to take their eye off the ball to begin with.
When it comes to understanding what value you uniquely bring to your customers, if you’re not going to be brutally honest, you may just as well pack up shop and go home. You simply can’t sugarcoat competitive reality. That’s all there is to it.
2. Your competitive positioning.
Once you have a good solid handle on what you do better than your competitors, the next step – determining how to position your company to your customers – is relatively straightforward.
Just think of it this way: how you market your company and its products and services is just like making a promise to your customers. A brand promise.
You want to tell them what they should expect from doing business with you and then you want to make damn sure you deliver on that promise. Simple as that.
And you know what? It’s always good to ask, “How did we do?” If every customer says, “We got exactly what we expected – exactly what we paid for,” then you’re doing it right. Just remember that things change so make sure you never stop asking. That way, you’ll never take your eye off the ball.