An economic climate like we are experiencing at the moment often comes with the competitive pressure to lower prices. I'm not really sure that the downturn so famously chronicled on page one has or ever will really impact the typical small business in the way that it once did, but perception can create the pressure to react to the headlines.
For most small business owners, the first place to look when facing tougher competitive challenges is value instead of price. In other words, look at your products and services and ask yourself how you can add value to the offerings before you simply cut the price to generate business. The problem with discounts is they become permanent and have the net effect of devaluing what you do. By looking for ways to add value, you will likely stumble upon enhancements that become true points of differentiation and drive the real and perceived value of what you offer up - making your business both unique and more profitable.
I saw a brilliant example of this on a recent trip to New York. Several gas stations were lined up on a busy street chipping away at each other by lowing their price, sometimes multiple times throughout the day. One of the stations decided to be low cost AND "we pump" your gas for you. Guess who got all the business?
Are there little extras, surprises and add-ons that you should be considering? Are there "standard practices" in your industry that have developed over time, but just aren't very user friendly. For instance: Fill up your rental car with gas or we charge you $10/gal. - the first rental car company that dumps that customer disservice policy wins my business!
Can you find strategic partners willing to toss in some goodies to your customers as part of a promotional package. For instance: a graphic designer goes to a print shop and works a deal to get 500 free business cards for his logo and stationary design customers. The graphic designer enhances his package and print shop gets a new customer that will likely need that logo printed on other materials. Opportunities to tap this tactic are everywhere you look.
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October 12, 2008