Sent by Jonathan Stark on November 8th, 2016
One of my coaching students and I had a chat about one of my recent emails (i.e., “How to differentiate yourself from the competition”). Based on some questions and comments I got on that same email, I decided to share with the list. I think you’ll find quite informative. Enjoy!
JS: Why would someone buy bananas at Whole Foods when they’re half the price at Walmart?
AB: completely different kinds of buyers
JS: Sure. But why does the Whole Food shopper pay more for something they could get cheaper elsewhere?
AB: perhaps I would assume they value high quality, organic foods (assuming that’s true at Whole Food)
JS: Let’s say it’s the exact same brand of bananas. Or the exact same bag or pretzels. Or milk. Why would someone pay more?
AB: at that point it all depends on other factors, same product, different price, if Whole Food is a lot more convenient then it’d make sense to buy it there. All other things equal, lower price would win.
JS: Ah ha! You’re onto it! All else being equal, price is the only differentiator. But all else is NEVER equal. Think of how many factors there are:
In a pure service business, there’s almost always a massive difference from one provider to another.
AB: I think it also depends on what the prospect values themselves too. You may have a massive difference, but does the prospect care about that difference.
JS: Yes, absolutely. You’re never going to sell expensive bananas to a Walmart shopper. And you’re never going to attract Whole Food customers by being the cheapest. If you can highlight differences that matter to your target buyer, you can avoid competiting on price.
JS: So… to attract the high value Whole Food type of customers, one needs to differentiate themselves in a way that will repel Walmart shoppers. The easiest way to send a premium message is publish high prices.
JS: And put up a velvet rope. “If you are looking for cheap, go somewhere else.” Of course, you’ll have to do something to back up those higher prices. Got to make some sort of credible claim that you’re worth it.
AB: was just about to get to that point
JS: Some reason why you are a better fit for a particular kind buyer than anyone else.
AB: premium prices repel cheap buyers, but then you’ll need to appeal to the needs of premium customers
AB: not that that’s bad. it’s just that needs to be figured out.
AB: figuring that out is the difficult part. At least in my experience.
JS: The easiest way to do it is to specialize
AB: specialize in something they care about
JS: Yeah, like themselves :-) Specialize in dentists or coal mine operators or credit unions or whatever. “I help TARGET MARKET with EXPENSIVE PROBLEM”
AB: one of my hesitations always has been: entering a space that I’m a complete newb in and feel almost completely unqualified for but that has a need. it’s the whole imposter syndrome, but with good reason: there’s a lot I don’t know to make me “good enough”
JS: Haven’t you been a newb (with regard to your client’s vertical) with every client you’ve ever had?
AB: that’s true. I learn new domain knowledge all of the time
JS: Exactly. I’m suggesting you pick one and stick to it for 18 months or so. And most importantly, market yourself directly to them and only them
AB: great pointers. I’ll need to sit on it, let it soak in.
JS: Roger that.