Running a small to mid-sized business requires an owner to wear many different hats. Leading a strong team that effectively drives Sales, Marketing, Production, Operations, Finance, Customer Service, Administration and Human Resources can keep a business owner running in what might seem a dozen different directions on any given day.
While all these functions are important, it has been our experience that there are three key things every business owner should know about their business to ensure they are focused on sales growth.
1. Who is your ideal customer?
Have you heard of the 80/20 rule? “In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth.
As a result. . . the principle that 20 percent of something always are responsible for 80 percent of the results, became known as Pareto’s Principle or the 80/20 Rule.” – F. John Reh.
Chances are you are spending a disproportionate amount of time on wrong customer segments. Your ideal customers are the small group of people who are driving 80% of your business results.
The other 80% of your customers are important, but your primary focus should be on delighting these ideal customers and finding more like them. What is your strategy for identifying, cultivating and creating ideal customers?
2. What is your unique value proposition?
Too often companies strive to be everything to everyone.
When their top competitor puts products on sale, they rush to match them on price.
When a competitor introduces a new feature or widget, they scramble to match or exceed this new development.
Instead of being proactive, these companies are reactive and in the process they lose focus on creating a unique competitive advantage.
Your unique competitive advantage should be the center point of your business and drive your branding, sales, marketing, and operations. To define your unique value proposition ask your team and your customers four simple questions:
- What is your customer or client’s biggest challenge?
- How does your product and service UNIQUELY help solve this challenge?
- How is your company organized to effectively deliver a solution to this challenge?
- How do you clearly and concisely communicate your company’s ability to solve for this challenge?
We aren’t big fans of fast food, but sometimes our team needs to grab something on the go. A company that has really nailed the unique value proposition is Jimmy Johns.
They promise “Freaky Fast Subs” and they deliver. When you order a sub at Jimmy John’s you might find the sandwich in your hand before you get your change back. Their team is standing by to start making your sandwich as you order it.
Their operations are aligned to deliver on their marketing promise and they are unique to any other sandwich shop in town.
3. Where is the “White Space” in your market?
Once you understand your ideal customer and your unique value proposition, it’s important that you have a clear understanding of your competitive landscape.
In any given market, there can be dozens, if not hundreds of companies competing for customers.
You can imagine your market place as a big “White Space” with an X and Y axis. Take two criteria on which a customer evaluates your product and service. In the example below, we choose price and number of features.
You can use whichever criteria you think is most important in your industry and you might even want to do this exercise with several different sets of criteria. For the sandwich shop, you might use “speed of service” and “menu options” to compare different businesses.
One you have your “White Space” set up, add in your competitors.
You can represent them with different sized circles to show their market share. A given company might have 2 or 3 circles to represent their different product or service offerings.
While the company with the purple circle is dominating the mid priced market with a broad range of services, the company with the blue circles is offering a few different options to meet different customer niches.
The point is, understand where your competition is focused and where you are focused.
In this hypothetical market, it looks like there is some room for a premium niche product or service, plus a value priced product or service with a moderate amount of features.
Taken together, understanding your ideal customer, your unique value proposition and the white space in your market can help you focus on real opportunities.
Don’t make the mistake of trying to serve everyone. Build your business around an under served niche market and watch your business grow!