October 14/21, 2019: Volume 35/Issue 8
By Lisbeth Calandrino
Do you ever wonder how stores that are so much alike can stay in business? (I’m talking about home centers in particular.) Think about it; they have the same problems you have: distinguishing themselves from the competition. Not only are they the same size, but they carry very similar products as their competitors.
I bring this up because businesses are always struggling with developing a competitive advantage. How does it work? Do they get better deals on their products, do they sell substandard materials? It’s doubtful they get real deals on their products. If they’re buying tons, I’m sure they get price breaks. My hunch is they buy different products. If they sold substandard materials, they would be out of business. From my experience, I believe they know their customers.
Building a competitive advantage starts with distinguishing your perfect customer. It doesn’t start with you saying, “I have to sell more than them, or they’re taking my customers.” The Dollar Store gets every customer who wants to save money; it has nothing to do with not having enough money. They don’t advertise “Come in because you’re poor.” It’s a “price-only” offer. If you want to save money, you go to the Dollar Store. Sometimes you find an item that’s a name brand, and you feel like you’ve really won.
If the cheapest price is what your customer is after, you can’t stop them from looking and comparing. The question is, why would you want the customer seeking the lowest price? The lowest price customer won't keep you in business.
Here are some ways to determine your “best” customer and how to keep them close:
Determine your perfect customer. Look through your invoices of sold customers and pull out the ones who have purchased big-ticket items. Have they bought similar products? How did they pay for their large purchases? Check their invoices and see if there are other similar factors. Compare everything from what they bought to where they live. Put together your pro- file of the perfect customer.
Don’t be reactive, be proactive. If you’re going to compete, you will have to do something different. Note: This is not the same as doing things “differently.” Let’s say your competitor offers a one-year warranty on their installation. Your competitive strategy is to offer a five-year warranty. That’s doing the “thing differently.” If you were to say you were doing an inspection after the first year to make sure the flooring is performing properly and repairing any problems or make a recommendation, then you're different.
Train your employees to be the best, not better. Being the best would mean doing something entirely different. Welcoming your customers into your store with a cup of coffee, provide elegant furniture for them to sit on, having your television on and connecting to your website to show products and links to your suppliers. How about bringing up video testimonials and Facebook comments from happy customers. (Don't forget snacks for the dog.)
Manage the customer experience by delivering more than customer service. Customer service is basically determining a customer’s problem and then solving it. This is the basis of everyone’s business; if you can’t do this, you’ll be out of business.
Keep your customers close. Hosting events in your store, involving customers in your charity events and holding in-house focus groups will bring you closer to your customers. Find new ways to spend time with them.
Lisbeth Calandrino has been promoting retail strategies for the last 20 years. To have her speak at your business or to schedule a consultation, contact her at email@example.com.