“I can’t do that” was the reaction of my client when I suggested a certain course of action. That’s not an uncommon reaction from people when I suggest something a little different. And usually it is followed by “nobody else is doing that”, or “I’ll lose my clients”, or “What if it doesn’t work?”
There’s a comment by Mark Twain I enjoy; “Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Dare to be different.
After all, you do know that to stand out from the crowd, you have to be different. You don’t want to be a match in a matchbox, chosen at random, with no control over the outcome at all.
You open a matchbox, which match do you choose; the nearest one, one from the middle, or do you just grab one. Does it matter; you just want to light something. The match is nothing but a means to an end. Any one will do.
Is that how potential customers approach your business. They want to light something, to achieve something. Will any product or service provider do? Will some do a better job than others will? Have you given them a compelling reason to pick you?
The problem in today's world is not so much that you are different, but rather that everyone else's product seems exactly the same. The box of matches.
My client provides a service. Now I know many of you sell products, but most products also involve a service, whether it is training, product knowledge, or after-sales support. In fact, the service element is usually a critical element in the sale and the customer experience afterwards.
It doesn’t really matter which service my client provides; it could be anything from plumbing, bookkeeping, financial planning, engineering to investment advice.
The “dare to be different” I was suggesting to my client was to increase his prices. And I don’t mean an incremental increase, I was suggesting a dramatic increase.
He needed to increase his profitability. Now, that could possibly be achieved by significantly increasing sales without increasing his overheads – once past the break-even point profits can increase significantly. The problem for my client is that his market was not a mass-market. To increase profitability he either had to reduce his cost of sales or increase prices. He had more room to move with the latter than the former.
If you undervalue yourself and just give away a service you are not doing yourself, your business or them any favours.
Like many of us, my client undervalued his competence, and the value he provides his clients. When we are expert, we do things without realising just how much knowledge and expertise we bring to a task. To the expert it’s easy. He just does it. But of course it’s not so easy for the client. They can’t just do it; they don’t have the knowledge, experience and expertise my client has in his field.
For my client to undersell himself, his business loses the revenue and the client won’t value the service because they are not paying as much for it as they should.
A much higher price will reposition him. He will get a much better type of client, one who is more likely to implement and follow through on his recommendations. Clients who argue about prices are costly to manage. The last thing you want when you are trying to increase profitability is high maintenance clients.
Selling is now a battle of differentiation, and no longer a battle of persuasion. Differentiate, and you are no longer a commodity. So many services are now a commodity, because there are so many people offering something similar.
When you first started in your field, you didn’t know what you didn’t know. But over time the expertise and experience you built lead you to start your own business and hopefully stand out in your field.
But even having become expert, as I have found, most business owners are hesitant about increasing their prices to beyond that charged by other businesses in the same marketplace. Perhaps they suffer from the tall poppy syndrome, not liking to be seen to be different, or afraid they will be ridiculed in the marketplace by their competitors.
Such an approach is not going to increase profitability. If a business chooses to be no different from competitors, it is nothing but a match in a matchbox.
By significantly increasing his prices my client will certainly not be a match in a matchbox. But he has to believe in his value and his competence. The value he provides his clients, and a price commensurate with that value, will reposition him in the marketplace.
Most small and medium businesses make some attempt to provide promote their business, whether it is via a web site, a Yellow Pages ad, a newspaper ad, or a flyer or brochure. What they don’t do is provide a compelling reason to choose them. Instead, because they haven’t thought through their message, they end up with a complex if not obscure message, trying to appeal to as many bases as possible in case they miss a possible prospect. They rely on a lower price to make the difference.
Of course, he will lose clients, but the ones he wins will be looking for someone like him, someone different, someone better, an authority in his field.
So why don’t you reposition yourself in your marketplace, and increase your profits? Pursue better, not pain.
Would you like to discuss with me how you might do that? Book a Strategy Consult here.
© Copyright 2015 Adam Gordon, The Profits Leak Detective
Some profit losses are pretty obvious - so you fix them.
BUT, what if you don't know profits are leaking, cash out the door?
Possible leaks could be anywhere.
Are there some clues or symptoms that are tell-tales?