When competitors move in to your space, or you are the competitor, the most obvious play is to undercut the competition in price. How can we do the same thing at a lower price? All the while you might be looking at the cost somebody is trying to improve the benefit. Think about Henry Ford and solving the physical limitations of a horse at a competitive price. Now you are looking at the market and wondering how big it could be. The benefit is just as important as the price, but it’s often overlooked in favor of short-term results. It’s simply easier to lower the price.
When you’re in a competitive space, you can’t compete on price alone. You probably know the market leading home improvement behemoths, Home Depot and Lowes, but if youre outside of the Midwest, the third largest home improvement chain, Menards, has a ruthlessly creative leader. As the larger competitors were wiping out similarly sized hardware chains across the country, Menards was getting creative. When Menards was undercut on price for construction material, managers would go buy the entire inventory and resell it at their stores. Menards also chose to offer a unique blend of products by negotiating on overstock material from suppliers for lower prices and higher margins. A great understanding of their thrifty shoppers created incredible brand loyalty and a unique experience. Although somewhat controversial, Menards corporate headquarters utilizes scrap pallets to heat the campus, something most companies simply discard. Although Menards clearly hasn’t won the home improvement battle, they’ve stayed alive possibly on creativity alone. The entire home improvement space has been creative. Home Depot has built one of the best customer service brands in the world. A book about the Home Depot founders, Built From Scratch, mentions a customer walking in to return a set of tires even though Home Depot doesn’t even sell tires. Home Depot initiated a customer is always right policy and never looked back. You can’t afford to compete on price alone. Benefit has to come into play at some point to survive. How can you add more value for your customers? If you walk into a Home Depot today you will have a world-class customer experience; credit card return look up, emailed receipts, self check-out, price-matching with a 10% premium, and contractors lined up to perform work. So look at your competitors, the problem, the benefit, the market and get creative because that’s who stays around.
The Challenger Sale championed a “challenger” personality, but that’s really a creative spirit. How do you exert expertise, or connect the dots between a problem and your solution? In order to get creative, your team needs to understand the fundamentals of your solution:
- What do your good customers look like?
- What problems does your solution solve?
- What are the top reasons a prospect buys?
- Whats the value of solving each problem?
As the market changes, so do the opportunities. Check out this gem of an idea:
A small bicycle shop noticed competitors had gone out of business and their telephone lines were no longer active. Working with the yellow pages, they were able to capitalize on the advertising dollars that had already been spent by another company and had those calls redirected with a friendly message. The program paid for itself in the first month.
Where there is money, there is competition, where there is a winner, there is creativity.
Recommended reading:
Built From Scratch
Big Money
The Challenger Sale
