Make your Competition Irrelevant

Make your Competition Irrelevant

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Challenge

Alistair Davis, sales and marketing director and part-owner of Green Power Solar Systems, a fledgling solar water heating company, is looking to differentiate his company from the myriads of other ‘renewable’ energy companies currently springing up. He needs to manage his company’s growth and build a value proposition that works as a differentiator.

Solution

Solar is indeed a hot topic, and many see this field as a path to riches. The market is immature, and customers are relatively ignorant of the differences in technology. There are lots of small suppliers and limited thinking about long-term customer and supplier relationships.

Eskom lists over 200 accredited suppliers, ranging from industry giants with national footprints to local plumbers. How do these entrepreneurs grow their new business and differentiate themselves from the horde of ‘me-too’ suppliers in this industry? Ideally how do they develop a strategy to make competition irrelevant?

Customer concerns

The first key is to identify prospective customers and understand their needs, value concepts and pain points. This sounds too simple – everybody knows about uncovering customer needs. But how many really do find out?

Not just surface needs but issues like reservations about technologies and products, affordability levels, the basis of decision making, perceived value and all the other factors of a buying decision? How many businesses promote their own idea of what the customers should need rather than listening?

Understanding customers does not have to be either particularly difficult or expensive. Using a professional market research company is ideal, but simply plugging into appropriate chat forums and monitoring consumer columns is a good start. Asking customers by way of questionnaires or talking to them is the best – train your people to do this and record results.

New opportunities

Once these issues are really understood the entrepreneurs could look for non-customers and new markets. In solar heating the traditional markets have been seen as existing residential and commercial properties and new developments.

There are probably many opportunities waiting to be uncovered by canny marketers who are able to understand why those non-customers are not in the market, and develop offers to attract them. Some of these opportunities may be relatively simple, like focusing on long-term cost of ownership rather than price, or developing systems for particular segments like flat roofed houses or washing bays. Others will be more subtle and require lots of creative thinking and a visionary approach.

This creativity does not only embrace technologies and markets. Innovative distribution channels, pricing systems and customer communications can be created to develop new opportunities. Take for instance the technology-savvy individual buying an IT product for his or her own use. He or she learns about products through magazines, discussions with peers and questions in technical forums.

Advertising (other than price and availability) is deeply mistrusted, and the role of the salesperson is to be a peer nerd and discuss the latest reviews rather than to persuade the customer to buy the product. A whole new way of selling has been created by increased customer education.

Communicating with prospects

Creativity should definitely include how the entrepreneur communicates with prospective customers. If for instance saving money by reducing escalating electricity costs is the primary need (remember to ask them), why do so many solar heating companies communicate with advertisements that show ugly technology spoiling the aesthetics of a building?

Point-of-sale displays are the same. Look around – it is difficult to tell one supplier from another. There are better ways of communicating solutions to customer needs.

If the customer need is for cost saving, then what about synergistic products? Perhaps bundling the solar heater with more efficient swimming pool pumps, electricity usage monitors or water-saving shower heads could add to the customer’s perception of the value of the offer.

And lastly, remember that Kim and Mauborgne, the authors of Blue Ocean Strategy, suggested that a blue ocean state would mean that both low cost and highly differentiated products and services would be offered to the consumer. This means running a very tight ship to keep costs down and customer satisfaction high.

There is no place for ignorant or uncaring employees or inefficient processes in this scenario. By contrast the rewards for motivated and creative employees and entrepreneurs are potentially enormous.

Ed Hatton
Ed Hatton is the owner of The Marketing Director and has consulted to and mentored SMBs in strategy, marketing and sales for almost 20 years. He co-authored an entrepreneurship textbook and is passionate about helping entrepreneurs to succeed.