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Creating Your Niche

Hi Team Massive Result’s Thursday’s Thoughts Creating Your Niche

“These are probably the most important words I will say to you tonight” are the words I heard myself say during my last business seminar. Picking out some individuals in the audience I went on to say “ if Dave and John sell exactly the same thing in exactly the same way. The only way they can compete for Jayne’s business is on price. The problem with that is that whoever wins, loses, because ultimately that position is unsustainable. Someone else will always come along with a lower price offer and you will get caught in a race to the bottom of the price barrel. That is a race that no one ever wins, for long. We know that in real estate the mantra is “location, location, location”. In business it is “differentiation, differentiation, differentiation”.” The longer I spend working with businesses the more true I understand these words to be. Over the Christmas break one of our parcel delivery companies, City Link, went to the wall. We live in an age where much of the traditional bricks and mortar businesses are claiming to be losing trade to online alternatives. This has given rise to a burgeoning parcel delivery industry and yet despite this one of the major players has gone bust. To try and understand why I searched for parcel delivery companies online and was shocked at the number of alternatives that appeared. I then looked at a few websites and frankly I couldn’t see anything to distinguish one from another. I looked at the City Link website and it said exactly what the rest of them said. Parcel delivery has become a commodity, and the thing about commodities is that they are almost entirely price driven. It is possible, but it is very difficult, to make a business model work when it is purely price driven. The question is “what can my business usefully and uniquely offer that no one else does or can? How can I usefully differentiate myself from the competition?” In both of these sentences I have deliberately used the word usefully. Only the customer can define that word. So in order to be able to understand what is useful to the customer we need to have an enhanced understanding of our customer. How can you usefully differentiate yourself from your competition? This is a key question and actually isn’t that difficult to work out. Imagine you were looking for a builder to do some work for you, or a roofer, or a decorator. Imagine you rang a number of them to come out and price a job for you and one of them said, “OK (your name), I will be out to see you at 5.30 on Friday evening at…(location). I will look at the work you need doing and provide you with my best advice and a fixed price to achieve what you want to achieve. If you have the kettle on, I will bring some fresh cookies and I am sure that together over a cup of tea and cookies we can work out the best way forward for you. Is that OK?” what would you think? You would probably, cynically and justifiably, think “nice patter”. What if at 5.20 you got a call to say he was en route, he had the cookies and was checking to make sure you had the kettle on. What would you think now? What if at 5.29 he arrived. On time, with the cookies, looking clean, fresh, tidy and enthusiastic; dressed for a business meeting and organised with everything he needed to understand exactly what you wanted and provide a price. What would you think now? Whatever you would be thinking I guarantee it would include “this guy is different”. You see being on time, being organised, being professional, to most customers, constitutes usefully differentiating yourself from the competition. So few people do it. It isn’t difficult, it isn’t rocket science but it does take knowledge, understanding and discipline. I define a niche as a place where there is no price competition. You can assess how successful a niche you have created by how much price competition you do or don’t experience. What was usefully different enough about City Link? Clearly not enough.

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