An article by Donald Cooper, MBA...
How to change the game and grow your bottom line.
Last week I had dinner with a friend who complained that in his business, the wholesale distribution of safety supplies, it's all about price and they struggle to make a decent profit. He was looking for sympathy...and he didn't get any from me. What he got was a different way of looking at his business that may also be helpful to you if you're being pressured on price.
I told my friend that it's never all about price...unless you say it is. I asked him what he'd have to do in his business to make it not all about price. What additional value would he have to create and consistently deliver? What unique products, services or information would it take to set his business apart? How might he change his entire business model to raise the bar and dominate his industry?
Or, conversely, what he would have to do to proactively make it all about price...and then to win that battle, profitably?
Here are the two choices that most businesses have...
a) To add some compelling functional, emotional or long-term financial value that makes it not all about price...or,
b) To intentionally make it all about price and then become so efficient and so aggressive that you win that war,
But most businesses would rather just carry on being be mediocre, being marginally profitable...and then whine about it. So, here's what I told my friend, that may also be helpful to you...
1. First off, I told him that maybe it isn't all about price...maybe he has just convinced himself that it is.
2. Next, I reminded him that most business make the mistake of defining themselves by what they sell and by how they've always done. What they need to do is to redefine themselves, not by what they sell, but by how they HELP their target customers. It's simple and transformational. In my friend's case, they would stop defining themselves as "being distributors of workplace safety supplies" (who are constantly being beaten up on price), and redefine themselves as being in the business of helping companies keep their employees safe, healthy, alive and on-the-job.
Then, they will ask and answer two simple but powerful questions...
a) “What kind of help do our customers need in any way related to keeping their employees safe, healthy, alive and on-the-job? What products, services, information, education, increased awareness, training, coaching, reminders or encouragement do they need?"
b) “How can we actually deliver some of that help in a way that 'grabs' our target customers, clearly differentiates us from our competitors, makes us 'famous' in our industry...and grows our bottom line?"
3. Workplace safety is a very big deal. Between 800 and 1000 Canadian workers die each year in work-related incidents. Over a million workplace injuries occur in Canada each year. The cost to families, to our economy and to individual businesses is staggering. To address this tragedy we don't just need safety equipment. We need awareness and action.
So, to take the lead, we can hire one of North America's leading employee safety experts, on retainer, to do the following...
- Write a free, monthly E-Newsletter to educate our customers about safety issues and solutions, while positioning us as the knowledgeable and caring 'coach' in the field of industrial safety.
- Write articles on workplace safety, in the name of our business for industry magazines in the sectors we serve.
- Help design our 'best of class' website to deliver on-line safety info and solutions.
- Speak on our behalf at industry Conferences about the tragedy of workplace illness, injury and death...and how to get it right.
- Help us design our own Branded product line of safety supplies to give us superior, differentiated, higher margin products. Have those products produced for us overseas with our own Brand so that we are competitively priced on unique and superior products, while making a much bigger margin. Depending on our current sales volume, we may have to buy up a competitor or two to get to the critical mass required for overseas production. Of course, once we have created superior products and created our own Brand, we can then enter the USA or European markets.
- Help train our sales staff to sell safety solutions more effectively.
- Call on key accounts with our management and sales team to help them with major safety challenges. For a fee, our 'expert' can perform Safety Audits for customers.
- Offer ‘best in class’ courses (for a fee) to train "Safety Officers" for businesses. These courses can be customized to suit specific industries. As demand for these courses expand, our 'expert' will train additional instructors to meet the demand. This can become a significant profit center.
4. To promote 'workplace safety', and our own Brand, we will run small awareness ads in business and industry magazines each month showing how many people have been injured and have died on the job, in Canada, so far that year. These 'shock ads' will raise awareness of workplace safety at the senior management level while reinforcing the need for our products, services and courses. They will also get us talked about and interviewed in the media, thus positioning us as the concerned professionals.
As part of our commitment to safety, we can create an annual 'National Workplace Safety Awards' event at which companies are honoured for their success in creating safer workplaces. This, of course, attracts more national and local media exposure for our business, raising us from 'expert' to 'celebrity' status.
Because we also sell safety vests for school crossing guards, we will run an annual Award for Canada's Best Crossing Guard. Schools will support the program because it helps them get kids to respect and heed their crossing guards. School children will write in to tell why their own favorite crossing guard should receive the honour.
Once again, the media publicity for this event at the national and local level will be incredible with the winning crossing guard, the student who nominated him or her and an executive from our company being interviewed on national and local TV and in print media.
Through these kinds of activities, we elevate ourselves to being a respected national (or international) workplace safety Brand. Is this a lot more work than running a mediocre safety supply distributorship that constantly complains about price competition and low profitability? Absolutely...but creating something extraordinary is always more work than whining.
5. Going the other way. Making it all about price... and winning that battle. Perhaps it really is all about price and creating an extraordinary national or international workplace safety 'Brand' is not the most profitable way to go.
If it really is all about price, we must become the most cost-efficient, aggressive player in the industry so that we can sell competitively and profitably. Or, we actually undercut our competitors, driving their profits down to the point that they go out of business...or we buy them for cheap.
This is a very different business model that requires world-class purchasing, cost and inventory control, warehousing, order processing, picking and shipping. The business will have a transactional focus rather than a value-added relationship focus.
6. Making a clear choice...or just doing nothing. I've challenged my friend to ponder the alternatives and come up with a clear direction for his business. At the same time, I challenge you to choose a clear direction for yours. Will you choose to make it all about price and then compete efficiently and aggressively to win that battle profitably?
Or, will you redefine and differentiate your business to be truly extraordinary by delivering more help, more information, more expert advice, more value, more uplifting experiences, faster response time, higher performance, more unique products or services? And then, will you find innovative ways to communicate that value, attract media attention and achieve celebrity status in your markets?
Specifically, what will you do to move from commodity, to expert and then on to celebrity?
Whichever way you go, what expert help will you need to become remarkable...and will you commit to searching out that help and getting them on board? Or, will you just be mediocre, get beaten up on price and whine?
But remember, in this highly competitive world, mediocrity is no longer an option.