By Tim Rooney
The essence of Business Strategy is all about differentiation.
In simple English, our business strategy should answer the question “so what makes you different from your competition?”
Once you have your business strategy figured-out your, success in executing your strategy is heavily influenced by your ability to be Focused and Disciplined.
Let’s take a closer look at why our business strategy often comes up short
Two traps seem to stand-out in my mind. What are they?
1. We lose sight of the things that our customers really care about.
What do our customers really care about?
Studies show there are probably 5 things that your customers really care about.
What are they?
- Speed and Timeliness – When I want a product or service can you deliver when I want it?
- Ease of doing business – When I want to “sign-on” with you or switch providers do you make it as easy as possible? D o you then continue to make it easy to do business on an on-going basis?
- Expertise – Do you know your stuff and understand my issues and problems?
- Effective solutions – Do you get what was promised and perhaps more & is the price/value equation balanced?
- Customer Intimacy – Do you really care about me and make me feel special or am I just a number?
In “positioning” your company we often sound too much like the competition, if we talk about such things as our “product leadership”, “great service”, “top quality” or “operational excellence.”
These are all over-used and are not specific enough, almost clichéd.
2. We think that more is better – in reality less can be better
Effective business strategy is as much about what you will not do, as it is about what you will do. A narrow focus of services and markets can often be much more effective than trying to be all things to all people.
Two Great Examples of Differentiation
I have recently been impressed with two very successful customers of mine, who are great examples of focus and giving their customers what they care about.
The highly successful recruiting company – Recognized by Profit Magazine
During the last few years, the recruiting industry has gone through significant contraction as the economy has slowed. This particular company, in marked contrast, last year enjoyed a + 50 % increase in sales, off an already impressive base. The company has been recognized by Profit Magazine as one the fastest growing entrepreneurial companies in Canada.
How come? Obviously to enjoy growth like this – you have to have all your fundamentals in good working order. But what struck me about the owner of this company was the narrow focus of customers that she targeted. In setting her company’s strategy she did not try to be a recruiting agency for all industries, but picked a very narrow niche in the distribution industry. This narrow focus has meant that her company is recognized as the “go to company” in that industry segment. This applies not only by those looking for work but also by the clients. Bottom line they have lots of candidates to choose from and a high market penetration in their chosen vertical. Another key differentiator is their commitment to the candidates they place. They refuse to do business with companies known not to treat their people well. That’s a good example of a value driven business strategy making a huge difference.
The highly successful insurance agent
In this case the highly successful insurance agent with over 500 clients again built his business by being very focused. He could have sold a full range of insurance products but chose instead to only sell liability insurance. He also targeted only one industry to service – the recruitment industry. He chose this industry because he had previously worked as a recruiter in a “former life”. He therefore had enormous credibility selling himself as an “expert”. Previously having worked as a recruiter meant he understood the liabilities specific to the industry. Selling only liability insurance meant that he had clout with the underwriter and could assure his clients his rates were as good as any. His renewals run at an unheard of 99%! How come? By good client service of course, but the real differentiator was the fact that he made it incredibly easy for his clients to renew their policies. His process was this simple. He phoned his clients 3 months before the renewal date and asked them 5 simple questions about the business. If nothing significant had changed in response to these questions – he would tell his clients that there would be a small annual increase. He would then do all the tedious renewal “paper work” for his clients – only requiring a simple signature. A great example of a “making it easy” to do business strategy.