What Do You Do When You & Your Competitors Are Fighting For The Same Customers?

Let’s pretend you are fortunate enough to be able to delivery your product, service or solution remotely during social distancing…

You likely still face problems.

Stock markets are falling rapidly and maybe people aren’t spending as much as they were before.

What do you do?

Let’s start with a bit of context…

Here’s the thing:

A rising tide floats all boats.

The opposite is also true…

A falling tide sinks all boats.

Either way, if a tide is rising or falling, all the boats move in the same direction.

Up or down.

Practically, what this means is, everyone is in the same position, including your competitors.

You are losing revenue?

So are your competitors.

You don’t have customers?

Nor do your competitors.

Everyone is on the same playing field, relatively speaking.

Yes, less cash is going around, but people still spend in downturns.

The ultimate questions is, will they pick you or a competitor?

This analogy gets me to the punchline:

The vast majority of our products, services and solutions are not different for our competition.

That is called a commodity.

“A basic products, service or solution that is undifferentiated that it is and can be interchangeable with other products, service or solution of the same type.”

Think about if this is true for you.

Hint: it likely is.

When I line up two vendors selling the same spa, which one does a prospect choose?

Usually the cheapest.

The lowest price is one way to differentiate.

It’s easy to mark down stock and takes a few minutes.

But unless you are the cheapest, being cheap is not a competitive advantage.

Thankfully there are many other ways to differentiate.

One is changing the way the product is delivered.

Another is building a brand.

But, the easiest and quickest way I know to differentiate a product is offer the most value.

Let’s take those two vendors selling the same spa…

Let’s pretend the cost of the spa is $1500.

Let’s say vendor A sells it for $2000.

And Vendor B Sells it for $2500.

Vendor A makes $500 profit and Vendor B makes $1000 profit.

All things equal, a prospect will buy from vendor A 100 times out of 100.

Let’s now say Vendor B sells it for $2000 also.

Both now potentially can only make $500 profit.

Who does the buyer now choose?

“The vendor I like the most!”

Great, that is from brand building.

That takes a long time, maybe more than the period of a downturn.

“Okay, the vendor who is the closest to me!”

Sure, if one vendor didn’t change the way the product was delivered.

What if all things were still equal?

What if one vendor takes the same spa as the other vendor, but now adds a spa cleaning kit for the same price, $2000?

A prospect will now buy from that vendor 100 times out of 100.

Now, let’s pretend the cost of the spa cleaning kit is $500.

That vendor made $2000, but $0 was profit.

In essence what that vendor did was make the same spa the cheapest ($1500) on the market, but for the same end price for the prospect ($2000).

The spa went from $2000 to $1500 (cost price) in the prospect mind, which is also the cheapest, whereas the other vendor was selling it for $2000.

That’s a 25% discount.

There are only two ways to make something cheaper:

1. Lower the price; or

2. Increase value.

Offering the most value and offering the cheapest product, service or solution are the same path to the same destination for the customer.

The only difference is how much revenue you get.

Now, I hear you say “there is no profit in the example you gave” and you’re right, there’s not!

But here is where lifetime value kicks in.

It’s far harder to sell to a prospect the first time, than it is to them the second time.

It also assumes you are going to add a physical item.

What if that vendor didn’t give a $500 spa cleaning kit, but gave a training pack on how the prospect could save $500 in spa maintenance?

Now the vendor is making $500 profit and the prospect is getting $500 extra value.

But more importantly the vendor has differentiated the product that used to be the same as every other vendor!

That is where the magic happens.

And to create a training pack on how the prospect could save$500 spa maintenance takes slightly longer than marking down prices, but far less trying to innovate a new way of delivery or building a brand.

So, in these tough times, how can you differentiate what you are selling to stand out in the sea of competitors?

Remember, all your competitors are in the same ocean with the same tidal movements as you are right now.