The Australian Small Business Blog

Thursday, March 16, 2017

Points of Difference - A Lesson from Big Business for Small Business

by Dr. Greg Chapman

Normally when I write on lessons from big business, it’s to give small business owners some strategies developed by people with much more money and resources that could benefit those who aren’t similarly advantaged. However, in this case, I have an example you don’t want to copy.

Recently I changed energy providers. I was cold called by a competitor to my current supplier. Normally, I don’t respond to such calls, but I had just paid my quarterly bill, and was thinking about how expensive it was. Perhaps the competitor knew my billing cycle, which was a clever move if so, or else they just call all the time, knowing at some point they would get me at the right time. Also smart. Persistence. Particularly when they knew they had a better offer.

Long story short, they showed how I could reduce my costs by 20%. Wasn’t a very hard sell. I had been lazy and not checked out the competition for a long time, and my current company was happy to take the profit.

After I made the change, I received a begging letter from my old supplier asking me to think again.

“The truth is we’d love you to stay”

Of course they would. They were raking it in at my expense. So next I looked in their letter, for a reason why I should stay. Did they offer to match or beat the price? No. Did they emphasized their superb (ha) customer service? No. Did they offer some other reason? Well… yes. Sort of. They referred me to their website where they had some energy saving savings ideas, you know, fluorescent light bulbs, and turning off the power when you don’t need it. Gee thanks. Also, I could buy some other stuff from their retail stores. Thanks again. All designed to provide me some savings, things I could still do, if I hadn’t already done so, with their competitor.

So I suspect they knew they couldn’t (or wouldn’t) compete on price. The letter was just ticking a marketing box. The thing is, they had no points of difference. They are one of the biggest suppliers in the state, so are probably relying on customer inertia combined with higher margins, and so probably won’t do anything until there is a significant erosion of their customer base. And then it will be too late.

What points of difference are you using to defend your prices?

May You Business Be - As You Plan It!

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Dr Greg Chapman is the Director of Empower Business Solutions and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success and Price: How You Can Charge More Without Losing Sales.

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Dr. Greg Chapman is also the author of
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