The danger of trying to undercut competitors. How can we add value in different areas?
This was a question posed on Twitter last week and my immediate response was: “Don’t compromise & undercut competitors, offer something special/better in areas such as customer service, added extras…”
My thinking behind this reply was that all too often we focus on price as a way to compete yet this can be a disastrous strategy for small business operating within already tiny margins. If you are in an industry competing with big business, it’s essential to find and build on competitive alternatives. This may be in areas I mentioned in my Twitter response such as customer service and those ‘added extras’ which big business are just, well, too big to offer. So, here are some ideas to get you started.
Your flexible friend – the thing about big companies is that decision making is often a laborious process, going through layer upon layer of staff before action can be taken. If there is a change in the market then you as owner of the business can act immediately, taking decisions quickly and efficiently. You can adapt your business plan at a moment’s notice – a business plan should NEVER be set in stone after all. Use the flexibility you’ve been given as a small business to try new ways of doing things, whether that’s online, offline, using technology etc. While big businesses are still talking about ideas you can be out there putting them into action.
Collaborate – I’ve written an earlier blog about collaboration so I will just reiterate the importance of building alliances with other small businesses offering complementary products/services as an effective way to compete with bigger companies. If you want to go for a big contract but are missing an essential element (e.g. design) go and find a company who can and are willing to provide that service as part of the winning contract.
The power of plenty – this is a wonderful phrase I’ve borrowed from the UK Enterprise Rockers movement. Small businesses joining together can secure cost reductions in overheads and every day purchases through for example group purchases, marketing costs e.g. sharing exhibition space and much more.
Customer Proximity– chances are as a small business you know your customers by name and/or face or are at least getting to know them. How many big companies can say that? You can offer continuity of customer care throughout their buying experience, tailoring the service to what best meets their needs. You have the flexibility to follow up on that purchase and incentivise loyalty and are far closer to understanding their needs and wants than many of your larger competitors.
Differentiate – take a look at your larger competitors and think about where the gaps are in what they’re offering. Often logistical and/or financial issues mean it just isn’t worth a bigger business offering particular products on a small scale even though they may meet customer needs, however as a small business it may well be worth your while producing them so just because your competitor isn’t offering them, doesn’t mean you shouldn’t.
Online – many small businesses have a web site now but chances are they’re not making the most of that online presence to connect with their customers. Be clear about your brand and present that consistently and professionally online. There is no reason why anyone has to know that you’re just a one or three person band provided you deliver on what you’re offering. Most large companies are using social media (e.g. Twitter, Facebook) to engage with customers and you can do the same, again provided you are consistent and genuinely have a two-way communication with them, so there is a far more level playing field online when it comes to securing customers.
Be social – not social in terms of having a chat (although that’s always a good way to engage with customers) but through offering social incentives for customers to buy from you. There are many ‘shop local’ initiatives taking place and if your business operates in a growing and thriving local community then getting involved in charitable events e.g.advertising, sponsorship, donations and working with other small businesses to offer each other’s customers loyalty discounts can be a great way to build your customer base.