Here are five tips for small business owners to position their product or service as the best value for the price.
As a small business owner, you can’t compete on price. The big box retailers and national service providers have more buying power to negotiate the lower cost of goods. Also, they have larger advertising budgets to broadcast their low prices. To survive, you must price for profit, and to succeed, you must deliver a perceived value so customers are willing to pay more for your product.
Reinvention gives you a competitive advantage and helps you maintain profitability by refreshing the value you’re delivering to consumers.
Why is Paul McCartney one of the greatest musical composers of all time? After leaving the Beatles in the early 1970s, he went on to form his band, Wings. He also had a successful solo career, and at age 76, continues to collaborate with singers, rap artists, and bands. What’s his secret? He continues to reinvent himself. He’s still a singer-songwriter but finds new ways to keep his customers coming back, happy to attend his expensive concerts and buy his music.
Businesses can follow a similar strategy, with several different options for reinvention.
Find a new revenue stream for your business that adds interest and excitement.
For example, in 2010 during the midst of the Great Recession, Fenway Park, home to the Boston Red Sox, was looking for ways to boost lagging revenues. The six-month baseball season ended, and the leadership team made a few observations.
1. It gets cold in Boston.
2. Hockey is a leading winter sport.
Put those together and voilà, it’s Frozen Fenway, an ice arena built on the ballfield that hosts winter events like Capital One’s two-week event and the collegiate Beanpot hockey tournament.
2. Repurposing works for service industries, too
A 100-year-old Boston restaurant also struggled with sagging sales. They delivered traditional business dinners with white tablecloths, tuxedoed waiters, and fine wines to customers with large expense accounts. When businesses cut back on nighttime entertaining, the restaurant reinvented its offerings. They opened for lunch, cut prices in half and delivered the ‘power lunch.’
They also started a take-out option at $100 a meal. It sounds crazy, but well-heeled Bostonians were willing to pay for their known fine food and have the convenience of dining in their own home.
3. Service, service, service.
We’ve said it three times to emphasize the power of excellent service, particularly for small businesses.
We’re familiar with a local appliance store that relies on service to compete with national chains. After the store delivered and installed a refrigerator in a redesigned kitchen, the homeowner realized the unit was too big for the space.
When the salesperson learned about the problem, he sent a truck back to the home with a smaller model of the same brand. The team removed the food from the too-large unit, washed it down and replaced it with the right size, at no charge to the owner. In fact, the store refunded $200 since the smaller refrigerator cost less. Now that’s service!
Service begins with taking time to know your customers.
Think about your favorite neighborhood restaurant. The staff knows your name, brings your usual drink to the table as you sit down, has your credit card on file, and may even run a take-out order to your car because they recognize your vehicle. Alternatively, recall the gift shop where the owner knows you and your family well and gives you the perfect suggestion for any occasion. Will you go anywhere else? Not likely – you’ll go back to those stores and restaurants every time because they stand behind their products and take care of you.
“Service of the highest magnitude will attract a level of clientele that you can’t pry away.”
4. Be the Best or the Most
Become THE place to go for the product or service you provide.
Let’s say you decide to open a store selling athletic footwear. Stay true to your concept by offering an assortment crossing all sports – running, tennis, walking, basketball – and make sure you go deep with sizes and styles. Your customers will know when they walk into the store they’ll be able to find what they need and want.
5. Commit to your niche and your competition won’t be able to keep up.
For example, a music store decided to focus on stringed instruments. They purchase inventory online from sources across the country – old tools, new ones, antiques, and premium items. They advertise their specialty and customers are willing to pay for the one-stop, complete access to a broad variety of options.
Expand Vertically or Horizontally.
Reinvention also happens when you grow vertically by becoming a manufacturer, distributor, importer or exporter. Your business changes when you open new locations and engage with different customers in new markets.
Why do Reinvention Strategies Give you a Competitive Advantage?
These ideas keep you ahead of the competition because they can’t quickly reproduce your strategy. If they do follow you, they’ll be one step behind as you continue to innovate and reinvent your offerings, always providing value worth your price.
The goodwill you create with customers is forever. When your customers are happy with your products or service, they’ll be satisfied, loyal, and spread the word about how fun it is to do business with you. And they’ll gladly pay your price.
Reinvention is the path to pursue – if you’re playing to win.
Learn how Second Wind Consultants can help on your path to reinvention. Contact us for a free consultation.