Ah, they're all the same ...
That's what consumers think about most businesses. In a recent Gallup study, 58 percent of consumers said that all banks were the same. 45 percent said the same thing about airlines. Almost half the folks who buy outdoor clothing chimed in with the same sentiment and 74 percent of computer diskette buyers agreed.
That's good news and bad news. The bad news is that it could be you that the people in your market lump into that "same" category. The good news is that if you can stand out from the pack in a positive way you're on your way to long term competitive advantage and profitability.
People remember the differences, so they're more likely to remember you. And if they remember you and know something about you, they're more likely to buy what you have to sell. But the difference has to be meaningful and you can't hide your light under a bushel. You've got to tell people about it.
Start by making sure you've got a meaningful value proposition. Pick something that matters to your customer. You can pick low prices if you want, but that's a bad choice.
If you get folks to buy from you because your price is low, then you risk losing them to a lower price from someone else, or a lower price plus something else. Wal-Mart doesn't just have low prices. That's part of their value proposition, but it's mated with great selection.
The customer determines what value matters to him or to her. It's your job to pay attention and pick something to put your brand on. Hint: they buy what we call a benefit, something that makes a difference in their life.
A benefit is not a feature. That's a characteristic of your product or service. A benefit is not an application. That's how people use your product or service. A benefit is a difference in your customer's life.
Charles Revson said of his cosmetics business, "We manufacture cosmetics. What we sell is hope." That's another way of saying that people buy benefits, not products. Fred Smith of Federal Express understood that principle even though he was in an entirely different business.
FedEx doesn't sell an express service. FedEx doesn't even sell speed. From the very beginning, FedEx has sold ease and peace of mind. "Absolutely, positively overnight" means you don't have to sit up worrying. The first online tracking system meant that you could track your own package easily.
Your value proposition must matter to the customer, but it must also give you sustainable advantage. If you pick a value proposition like low price or free shipping, your competition can match it with a couple of keystrokes. Pick a value proposition rooted in product design and your competition can reverse-engineer it, knock it off, or wait for your patent to expire.
The most sustainable value propositions are anchored in the people in your company that deal directly with your customers. Those people and the culture that shapes their actions are your most powerful difference-building tools and ones that are almost impossible to copy. They matter most in a crisis.
RBC Centura is a regional bank in North Carolina that's owned by Royal Bank of Canada. Both the Canadian Bank and Centura before it was acquired by RBC, have stressed friendly and knowledgeable service. When I moved to North Carolina, I started banking there because it was the only bank where folks in the branch knew anything about online banking. The Most Beautiful Woman in the World has banked there for years and got a chance to test their service promise a couple of years ago.
It was Christmas time and we were going to rent a van and drive up to Ohio with her children to visit relatives. The Most Beautiful Woman in the World made the reservation with a major rental car company using her debit card to secure it. They didn't happen to mention that they didn't rent to folks using a debit card, but she only found that out the day we were supposed to pick up the van and hit the road.
The problem was pretty straightforward. The rental company would only rent to her if she used a credit card. But the credit cards were maxed out from Christmas shopping. There was plenty of money in the bank account to cover the debit card or to pay down the balance on the credit card but that didn't do us any good because it wouldn't take effect until the accounts were updated that night. We needed to get on the road in the morning.
The Most Beautiful Woman in the World was not especially hopeful when she called the bank but they took care of things quickly and as painlessly as possible. They temporarily raised her card limit to cover a transfer of funds that would take effect that night. Then the rental company created a couple of more problems. Another RBC Centura rep solved those problems by talking directly to the rental car company's counter person. We got the van and were on our way.
Powerfully emotional problems like that one have a big effect on loyalty. If your people handle the problem well you may get a customer for life. Handle it poorly though and that customer will take his or her business elsewhere and while loudly telling everyone within ear- or email-shot about it.
Delivering on a great proposition that matters to the customer is not enough either. If you think it is, you've probably been influenced by that line of Emerson's about "if a man build a better mousetrap" that promises that all you have to do is deliver on a great value proposition. It's about the most dangerous nonsense there is about business success.
You can have the greatest mousetrap in the world, but if you don't tell folks about it effectively you won't have a beaten path to your cabin in the woods. Instead, you'll have a cabin full of unsold mousetraps. You've got to tell your story memorably, completely and accurately.
Perdue Farms may be the only chicken producer that people recognize. Their marketing has delivered one message over and over for years: "You get the best chickens from us because we have the highest standards." The Perdue Farms way of stating that is much more memorable, though: "It takes a tough man to make a tender chicken."
The tough man was Frank Perdue. It was his company and he's appeared in a hundred and fifty or so of the ads. In most of them he tells you something he's tough about, like the grain he feeds his chickens, and why it matters to you. People remember. And they buy.
This wouldn't work if the chickens weren't good. A great ad by itself will not do the job. Piel's Beer used to have great advertising featuring two cartoon characters named Bert and Harry Piel with voices provided by Bob Elliot and Ray Goulding of radio fame. They were great ads. In fact, they were so popular that newspapers would list the times they would air.
You remembered the brand. You bought the beer. And then you drank it. That was it. At that point it didn't matter how great the advertising was because the beer was awful. I believe that all over New York there are cases of Piel's Beer with one bottle missing.
Promoting and delivering on a distinctive value proposition that matters to customers isn't all that complicated. It's just not easy.
It's easier, though, if you start with a clear idea of who your market is. That way you can keep your core value proposition the same while your specific offerings change along with your customers, the regulatory environment, technology, and competitive pressure. Consider the case of Charles Schwab.
In 1975, the Securities and Exchange Commission deregulated brokerage commissions and Schwab saw opportunity there. He borrowed some money and started his own brokerage with a very simple concept. He says, "I built a company that was for independent investors who could do their own work without traditional brokers."
That's been the key to various value propositions and differences all along. In the beginning it was a price difference, less expensive trades. As the industry has evolved there have been other products and propositions. Whether it was online trading or OneSource (for mutual funds) there was always a benefit in it for the independent investor.
Other brokerages copied all the features, but no one has ever gotten that core value about making things better for the independent investor. Look at the ads you see for brokerages today.
There are "old reliable" ads where serious men and women of a certain age stare into the camera and tell you that they work hard for their clients. There are actors representing clients who are portrayed as doing such things as giving up a lucrative neurosurgery practice to solve problems of hunger in distant lands. They can do that, we're told because their account rep made it all possible.
Then there are the "trade for less" ads. We see someone trading, usually with the latest technology at their fingertips. They tell you it costs less to trade with them.
The problem with most of these ads is that you can't tell who the company is without looking at the name. The "old reliable" ads all pretty much look alike. So do the "trade for less" ads.
Schwab's ads are different. They feature folks who represent independent investors and look a whole lot more like most folks who do their own trading. They talk about the quality of tools and how they can trust Schwab. They're talking about the benefits, the value, they get from Schwab.
Schwab's marketing expresses powerfully and memorably benefits that matter to the independent investors Schwab serves. Perdue's marketing expresses distinctive benefits that matter to people who buy chicken they will cook and eat. FedEx's marketing expresses benefits that matter to people whose performance depends on the delivery service they choose.
All three of those companies have a distinctive value proposition that matters to their customers. They deliver on it. And they tell you about it powerfully and memorably. They're different from the competition. What about you?
