As an entrepreneur, how often have you tried simply tinkering with your price to see if you can gain just a little bit of advantage over your competitors? Truth be told, this is how we all tend to think at first reaction, as the almighty dollar always dictates a biased decision. But of course it does not. In any wildly cluttered marketplace, where price based marketing is prominent and is often shut out by the consumer, the key is differentiation. Don’t try and compete on price alone, but make sure your organization has something very distinctive to offer that others do not.
We are not trying to say that price is irrelevant and you will surely be disappointed if your pricing structure is badly skewed, but there comes a point when the consumer makes a decision based on other factors as well. If you have been able to differentiate your operation sufficiently, then in the ultimate scenario, price becomes irrelevant.
Are you aware of who your competitors are? Many an entrepreneur is not really able to answer that question, but this form of intelligence is not difficult to gather and you should always be aware of how others are seeking to reach your targets. If you do not know the “modus operandi” of your competitors, you will be badly placed should they choose to launch an initiative to try and steal your revenues. Setting yourself apart from the competition will invariably require you to reassess how you handle all your business processes, how you interact with your clients, and how you treat your relationships. You must have a hands on and conversational relationship with your clients and ensure that you are communicating what sets you apart.
If you just focus on price, how much of a difference are you likely to make? You could pare your expenses to the bone and imagine that you could make up what you’re losing though additional clientèle. Would your existing clients take a dim view of this? There is a danger that you could project yourself as budget quality, driving down the perceived value of your services. In reality, the pure profit involved when you tinker around with marginal price differences could be more than accounted for by a concerted effort to differentiate your service.
Overdeliver at everything that you do, to the point when people wonder just how you can manage to do this and still maintain a profit. This kind of creativity does not have to be the domain of those late-night infomercials on television, which promise you more and more in terms of savings and add-ons, rapidly creating the hook. Take a good look at what your competitors are doing and do it better, or provide distinct value when they are not.
How do you differentiate?