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I’d better make it clear what I mean by small business design. It has little to do with website design or graphic design.

What I mean by small business design is carefully planning out:

  • Who the business will serve.
  • Why the business exists.
  • What benefits the key stakeholders of the business will get – how customers will benefit, how employees will benefit, how suppliers will benefit (including finance providers) and how the owner will benefit.
  • What the business will do.
  • Where the business will operate.

And then building a business that turns the design into reality.

Perhaps less obviously business involves a similar group of negative answers:

  • Who the business won’t serve.
  • What pains and penalties you won’t allow the key stakeholders to suffer.
  • What the business won’t do.
  • Where the business won’t operate.

Business design is about focus and clarity and that’s particularly appropriate in a small business.

Nearly all small businesses have limited resources and like sunlight through a magnifying glass, great power comes from concentrating energy in one small area.

Quoted failure rates for small businesses are terrible and while I feel these are often exaggerated by business advisers and consultants to sell their services, the fact remains that many small businesses fail in one of two ways:

  • A public failure when the business goes bankrupt and creditors and investors lose money.
  • A private failure when the business is closed by the owner after an unprofitable struggle. Third parties don’t lose money but a business owner often loses his or her life’s savings, suffers a huge blow to their pride and is forced into a job they don’t want.

Why does this happen?

Often because the business is managed in a haphazard manner.

There’s no clear business design which focuses attention on the right things and avoids distractions that don’t fit.

Without a clear small business design, the owner is likely to jump from one nice sounding initiative to another, either at their own whim or that of marketers with a new shiny money-making button.

If you’re an email inbox victim and you find your agenda set by what you read first thing in the morning, you’ll know exactly what I mean.

It’s the difference between one housebuilder working to a clear set of architect plans and another who makes it up as he goes along, on a whim and influenced by what he saw each morning on his way to work.

The second is pretty scary if you’ve got a financial interest in that house. It may turn into a masterpiece but the odds are that it won’t and it will take much longer to finish since the builder keeps knocking down what he’s done and starting again.

It’s the same with a small business.

As the business owner, you have a huge financial stake in its success but if you don’t have a clear business design, you’ll keep undoing the progress that you made yesterday because you’ve changed your mind.

My advice is to get clear on the business design you want and what it takes to build it. Be intentional.

When should you start working on your small business design?

First choice, yesterday, second choice today.

Not tomorrow… because there’s a danger that tomorrow never comes and your business design is much too important to leave as one of those “nice to do when I can find the time” activities.

Business design is easiest when you’ve got a blank page to work with – when you’re thinking about starting a business and all the options are in front of you.

It’s harder – but still essential – when your business is up and running.

Yes change has to be managed and yes some people involved in the business may not like the change but many more will love it because their jobs are more secure and enjoyable if your business is well managed.

A business designed to fill the needs of a particular group of customers will be able to develop special expertise, skills, products and services which raise it out of the ordinary and into the extraordinary.

I asked at the start, “is small business design necessary?”

I believe it is critical if your business is going to be as successful as you want it to be.

I’m shocked when I talk to business owners who are under the mistaken belief that only big businesses can have a competitive advantage.

It’s not true – you can have a small business with a strong and compelling competitive advantage and in many ways I think it’s much easier to develop a competitive edge in a small business.

Why Business Owners Think Competitive Advantage Belongs To Big Business

First I think there’s “the grass is greener on the other side” problem.

If you believe that you need a big business with a big bank balance to create a strong competitive advantage then it absolves you of the responsibility to develop one. Superficially it makes life easier although I believe it actually makes things much tougher. You get stuck as a commodity seller with low prices and that usually means that profits are low and hours worked are high.

The grass is greener problem usually comes because you see the advantages that come from being a big business but not the disadvantages. You may be surprised to know that the CEO of the big business you envy is probably very aware of the advantages that you have and hopes that you never apply them in the market.

Second there are some advantages that do come with size.

Economies of scale from purchasing, marketing and product development usually create significant cost savings when spread over a large volume. Big businesses often have well known brands precisely because they are big businesses, even if the brand doesn’t come with a clear positioning or meaning.

Economies of scale for production and administration fall as volume increases and then start to rise as dis-economies set in. A large production plant is more likely to have a strong union presence. Administration is replaced with bureaucracy and endless meetings about whether you should change the rules and if so, how.

Big businesses often create a lot of their own problems because they are big businesses.

The Competitive Advantages Of Small Businesses

  1. The ability to niche and differentiate.
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  2. The ability to move with speed.
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  3. The closer relationship, trust and intimacy with customers.
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  4. The closer, relationship, trust and involvement of the team of employees.

Let’s take a look at each.

The Competitive Advantage For A Small Business In Niching

Niching or bullseye marketing lets you develop a particular solution for a particular group of customers with a tightly defined problem to solve. The closer to the customer’s bullseye solution your offering is, the more likely the customer will be convinced to buy.

This is much easier to do in a small business which can prosper in a small niche while a bigger business may need volume that only comes from several market niches.

While bigger businesses can operate in multiple niches, it increases the complexity of the business, reduces focus and increases costs. Competing across several niches may force larger businesses to make compromises in what they offer, forcing their products away from the bullseye.

There are only two main ways to create a competitive advantage and that’s by either having a cost advantage or by differentiating your products and services in ways that are meaningful to your target customers.

The diagram above is the summary of the generic strategies from Michael Porter and his classic strategy book Competitive Strategy. Businesses that fail to choose risk being “stuck in the middle.”

Niche marketing and differentiation are related concepts and rely on you accurately matching the key success factors of suppliers and customers.

The Competitive Advantage That Comes From Speed

Speed is good in business for a number of reasons.

Speed in supplying customers and helping customers to get the benefits of what you sell is a major advantage which is often of vital importance for buyers. We live in the age of “I want it now”. This is why faster is one of the main dimensions in my ABCDEF Model for advantages.

Speed of decision is also vital. I used to work with corporates but there always seemed to be somebody with a reason to delay taking action – another approval stage, another presentation to a committee, the wait to do it out of next year’s budget… Much of it was nonsense and involved people playing with office politics.

This has been a tough year and all indications are that they are going to get tougher as a recession bites. The huge increase in personal and public debt that has been the underlying growth for the last 20 years needs to first be stopped and then repaid. Austerity is likely to be the theme for many years as we see the effects of the artificial bubble.

In these situations the speed to start, to stop, to do more or to do less will make a huge difference in performance. These are management judgements where facts and decisions have to be closely interlinked. Big businesses with long chains of command and company policies will struggle to adapt quickly to what is happening.

The Competitive Advantage For A Small Business In Closer Customer Relationships

Work with a small business and you’re talking directly to the owner and chief decision maker or someone who is close to them.

You can have more faith that they will do what they promise and if they don’t, you have an easy channel to follow to get things fixed.

But deal with big businesses and it’s very different. I hate it when I have to deal with my bank or any utility and go through call centre hell, explaining the problem to person after person. It’s extremely frustrating and time-consuming and where possible, I will choose to work with a small business.

The Competitive Advantage For A Small Business In Closer Employee Relationships

Unless you work as a one man band – like I do – you will rely on your staff to attract, convert and keep customers.

Small businesses have a huge advantage in being able to create a strong connection between the business owner and the employees and with a clear focus on the purpose of the business. In a small business, staff feel more involved in what is happening but in a big business, they normally feel isolated.

This makes it much easier to develop themes and high customer service standards in a small business. The staff feel happier, customers feel happier and you feel happier.

Most Big Businesses Used To Be Small Businesses

Getting bigger is usually the reward for success.

If a small business performs well, then it will usually grow but as it gets bigger, it may be losing the very factors that made it successful.

That’s why I like business owners to focus on profit rather than turnover.

There’s an old saying – sales is vanity, profit is sanity – and it’s very true. You just have to look at the dreadful results of many acquisitions to see that getting bigger is often an illusion for getting better.

There are traps to business growth but, forearmed is forewarned.

I’m often approached by start-up entrepreneurs and asked to write their business plan.

I won’t do it.

I think it’s a rotten idea.

So does Dragons Den entrepreneur Duncan Bannatyne. I read his book Wake Up And Change Your Life – it’s very good for any aspiring entrepreneur.

In Chapter 4 he says “You’ll find several people offering to write your business plan for you – and charge you an arm and a leg for it.”

Duncan then gives two exceptionally important reasons why you should never get someone else to write your business plan for you:

  1. The first is about the money. He argues that it is poor judgement paying someone else to do something that you can easily do for yourself.
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  2. The second is that you’ll understand your business much better if you write your business plan yourself.

I’d add a third reason.

You’ll be much more committed to putting the plan into action if you’ve done it yourself. You’ll have thought through your actions and whether you really intend to do the things you need to do to succeed.

Let’s dig deeper into each.

Spending Money You Don’t Need To On Having A Business Plan Written For You

Very few business start-ups are done with a big pot of cash which lets the entrepreneur splurge and even if there is plenty of money, I recommend you are very careful.

It’s much easier spending money than it is earning it.

Researching and writing a business plan takes a significant amount of time and professional time is expensive. It’s also an area where price and quality are closely related so if you penny pinch and find the cheapest source, you can expect the quality to be poor.

Paying to have your business plan critically reviewed and to get feedback on it is different. You’ll find that family and friends are either very encouraging (you can do anything you want) or very discouraging (you’ll never make it work, it’s much better to stay in your safe job). A professional will tell you what you need to hear and challenge your thoughts and assumptions. You may not like it but it will help you to develop a stronger, more robust plan.

You’ll Understand Your Business Better If You Write The Business Plan Yourself

As a general rule, the more you think, the better prepared you will be for action. You can go too far, and spend all your time thinking and planning but often people leap into action with little thought and hit major problems which were all too predictable.

This thinking and planning is invaluable and it can be very useful to work through a structured thinking process.

If you’ve picked a market that ignites your passion, you should find the research interesting and if you don’t, it may be a warning that the business isn’t right for you.

You’ll Be More Committed To A Business Plan You’ve Written Yourself

Do you work better when you’re told what to do or when you are clear on your objectives and decide what you need to do yourself?

If you want to be told, you may not be cut out for life as an entrepreneur.

If you decide on your own actions, then you’re not going to stick to a plan written by someone else. It’s just words on paper with no meaning.

But if you decide you need to do A, B and C and you commit to it in writing and promise other people (like a bank or investor) then you’re likely to follow through unless you get a better idea. If you don’t, you lose credibility with your financial backers and even more importantly, with yourself.

If you can’t trust yourself to deliver on promises, then who can you trust and why should anyone trust you?

Writing A Business Plan Is Easy

Perhaps easy is the wrong word. It does take time and effort but it’s not complicated. This isn’t brain surgery.

You can do it, words and numbers.

There is business planning software to help you that you can get for a low cost or even free.

What Help Should You Get With Your Business Plan?

I don’t believe you should pay anyone to write your business plan for you but I do think there are services which will help you to get a better business plan. Generally I think it’s a good idea to have a mentor or coach for your business start-up.

  1. Helping you to think better – start-up entrepreneurs can feel overwhelmed by how much could be done so it can be useful to get advice and help on how to focus your thinking on the critical issues. There will be plenty of distractions and people selling bright shiny buttons which promise a lot.
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  2. Reviewing your business plan – you’ll be very lucky if you get constructive criticism of your ideas from family and friends unless they own their own small businesses. Even then, they may struggle to take what they know and apply it to your business idea.
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  3. Help with the numbers – the profit and cash flow forecasts are particularly important if you need to raise finance and you don’t want to make errors which show your inexperience. The business planning software certainly helps because trying to model your business in a spreadsheet is complicated.
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  4. Polishing up your plan – if your plan is going to third parties to raise finance, it needs to sell your business idea realistically. If your plan is poor quality because you struggle to express your ideas in writing, then it is useful to get someone to tighten up your language and make your business case more persuasive.

Each of these are likely to cost money, but they should be working from a business plan you’ve drafted. You’ve done your thinking and tried to produce a business plan and you recognise that it could be better.

That’s very different from saying to a professional business plan writer, “Can you write my business plan for me please?”

As an entrepreneur, you probably suffer from what Michael Gerber calls “busy, busy, busy”.

There’s always much more you which you could do…, should do.

But what really matters?

What is the main thing that is stopping your business from making more money?It’s an interesting question and it explains why I’m attracted to using the theory of constraints in my strategy coaching.

There are two techniques in particular from the Theory of Constraints Thinking Processes that we should talk about.

The first is the Prerequisite Tree.

This focuses your attention on the necessary conditions to meet your goal.

It’s particularly important for start-up businesses or those that have never performed well.

The idea is to focus on the individual things necessary for your success which together become sufficient.

It’s a bit like a jigsaw puzzle – you don’t get to see the full effect until every piece is in place.

But the jigsaw has been mixed in with other sets of pieces.

There are many things competing for your attention, but they don’t fit.

They don’t complete the picture.

The 1,001 other things you could do in your business take your time, attention and money but because they are nice to haves rather than must haves, they move you forward.

The Prerequisite Tree identifies the most important things to focus on and turns them into intermediate objectives.

We can find the items by asking “What’s stopping you from achieving your goal? Why haven’t you already done it?

The second important aspect of the Theory of Constraints Thinking Processes I want to focus on in this blog is the Current Reality Tree.

This works from the symptoms of your problems – perhaps not making enough money – and working back helps us to identify the core problem which will have maximum impact.

This is identifying the constraint.

And when you can see it, you can follow the Theory of Constraints principles and do something about it.

The constraint may be inside the business.

It may genuinely be a physical constraint – you could sell much more if only you could make it.

Or it could be a policy constraint. Unfortunately it is easy to get trapped by conventional thinking and do things because “that’s the way we’ve always done them” without appreciating the consequences.

Or the constraint could be out there in the market.

You could make more money if only you could sell more.

The Theory of Constraints has an answer for that too by developing what’s called an unrefusable offer or even a Mafia offer (think Marlon Brando saying “I’m going to make you an offer you called refuse” in The Godfather”).

This is the purpose of differentiating your business and explains my interest in the Theory of Constraints and the work of Eli Goldratt.

I recommend you take a look at this excellent book

The Logical Thinking Processes by William Dettmer

It’s many years ago since I last had to buy transport services but I was sad to hear of the death of Eddie Stobart on Thursday March 31, 2011.

Eddie Stobart (the company) has become an iconic firm for one simple reason – every cab was given a women’s name.

I guess this is an unusual twist on “differentiation by who”.

The company has its own  fan club with 25,000 members and spotters collect the names of the cabs they’ve seen. The first truck was named after the sixties model Twiggy.

There were other differences too – the trucks were clean and the drivers wear ties. Eddie Stobart‘s is a company to be proud of.

From the outside, it doesn’t seem much to give each cab a name but it was a bit of magic that created the public’s attention – and built up probably the UK’s only nationally known transport company.  It would be an interesting exercise to stop people in the street and ask them to name a transport company and see how many people say Eddie Stobart.

Did this create buyer preference?

Maybe not but I bet it got the Eddie Stobart company into a lot of buying situations when it would otherwise have been treated as just another transport company.

And to win the game, you have to be in it in the first place.

Here’s an interesting article from the BBC – How Did Eddie Stobart Become So Famous

The challenge is how you can take such a simple idea as girls names on a truck and use it to give your business personality in a way that makes it memorable.

Be Distinct or Extinct

It was Tom Peters, the management/leadership guru who co-wrote In Search of Excellence and many other books who came up with the phrase “be distinct… or extinct!”

I really wish I’d thought of it and it conveys the same message as Jack Trout’s Differentiate Or Die.

It puts over the differentiation/branding issue very well although I don’t believe it is black and white.

If you don’t differentiate I don’t think you’ll die or become extinct.

At least not quickly.

It’s more like the death of one thousand cuts.

Your profit will disappear…

… one price cut at a time.

… one lost customer at a time.

… yet another interesting prospective customer you didn’t manage to convert.

Tom Peters was talking about personal branding when he say be distinct or extinct in the book The Brand You.

The same idea applies to businesses.

If you’re not distinct and memorable, you’ll create no impression on your target audience. Your touch points will be forgotten or even ignored.

In the book, Tom Peters gives five ideas to be distinct…

  • Ask yourself: What do I want to be known for? What do I want to stand for?
  • Perform a Personal Brand Equity Inventory – ask people you know to tell you three or four words or phrases they associate with you. Do you like what they say?
  • “Inc.” Yourself – see yourself as an independent contractor who only gets paid for work of value.
  • Develop a competence – be excellent at something
  • Develop a one-eighth page Yellow Pages advertisement for your personal brand.

Moving those ideas over to your business, you can ignore point 3 since you’re already in the world where you only eat what you kill.

The first two present an interesting comparison. You may never have stopped to think about the words you want others to think about you.

You may be shocked at how different what you want people to think and what they do think. It’s a clear indication of a positioning/branding problem. I was brought up on this when someone I liked said to me “Paul I don’t really know what you do” when I was promoting myself as a generalist business coach.

I’d prefer you to think of capability rather than competence when you think about your business. To me competence sounds such an ordinary word. The idea remains the same, your business needs to be superb at something.

For the second time today, I’m referring to the value disciplines – is your core strength in operational excellence, customer intimacy or product leadership?

Finally, I like the Yellow Pages test. Can you create a short, succinct marketing message which would be up to the job of attracting customers when all your competitors have the same opportunity? This is very much a return to the idea of the Unique Selling Proposition.

Are you ready to be distinct or face the risk of becoming extinct?

If marketing is everything you do in the business to attract, convert and keep customers and clients then what happens if your marketing doesn’t work?

It may have become anti-marketing.

What is Anti-Marketing?

Anti-marketing provides a reason for your marketing messages to be ignored and for potential customers to leave you and for existing customers to look elsewhere..

This isn’t a new idea. Rosser Reeves (the man who invented the Unique Selling Proposition) in his classic book Reality In Advertising says “The people who read and remember your advertising may buy less of your product than people who are not aware of your advertising at all. Your advertising, in other words, may, literally, be driving away customers.”

This is very bad news and shows that while marketing messages may be creating awareness, they may also build up resistance.

Anti-Marketing Is All Around Us

I see anti-marketing every day and so do you.

My email inbox fills up with marketers who are actively practising anti-marketing.

They train me to ignore their messages and to eventually unsubscribe.

How do they do that?

  1. By sending me stuff that is irrelevant and no possible interest to me.
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  2. By constantly pitching me. I want value from my relationships and not constant “buy me” messages. Yes there has to be a balance because if you don’t make an offer, then you won’t get much action.
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  3. By sending me fluff that sounds interesting before I click but has no real value. It just wastes my time and makes me angry when I realise I could have been doing something much more productive.
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  4. By sending me stuff that is the same as everyone else is sending. This is the big drawback of affiliate marketing for product launches. The constant barrage of emails may break down resistance for some but it builds up resistance for others – both for the product being promoted and for the sender of the email.

Why Ant-Marketing Works Against The Business

Every time you ignore a marketing message, you increase your chances of ignoring it again unless you think “That’s sounds interesting but it’s not quite the right time for me.”

Persuasion expert Robert Cialdini, identified the need to be consistent with what we’ve said and done in the past as one of the six factors of influence.

The more we do something, the more it becomes a habit. Something we want to do and believe is the right thing to do.

The less we do something, the more we think it’s a bad idea.

You see this with social media and why some people love Facebook and Twitter and use them all the time and many others try it once or twice, don’t get the point and then give up.

It’s the same with anti-marketing.

Ignore the contacts or marketing touches and instead of feeling bad that you’re missing out, you start to feel good. You’ve resisted temptation. You’ve taken back control of your life. You decide what you do and how you spend your time.

And when you feel good about ignoring marketing, you’ll do it more.

The Latest Example Of Anti-Marketing

Google Plus is the latest big thing in social media and I’ve become very aware of the impact of anti-marketing and I’m probably suffering from it as well.

When somebody who is a big name connects, I look through who they follow to fill in the gaps of who I’d like to have in my circles. I see plenty of names I’m familiar with and I ignore them.

Some I don’t know what they do – they’ve failed the 3 word branding test. They’ve had my attention in the past but it hasn’t been a strong enough connection for me to find a position in my mind.

Others I know what they do, but I haven’t been impressed. They’ve got a place in my mind but it’s not a good place.

Both are victims of anti-marketing.

Marketing Isn’t About Appealing To Everyone

Sometimes it’s right.

Perhaps I’m not their sort of person and vice-versa.

I was talking to a branding expert yesterday and I said that some people thought my Profit Tipping Point video was unprofessional. To me it’s a bit of fun and presents important parts of my marketing message in a light-hearted way. Those who think it’s silly are probably not my type of person, and we wouldn’t work well together.

It’s fine to polarise. In fact, I think you need to because attracting some means repelling others.

Since I’ve been self-employed and particularly since I stopped working with corporates, I’ve been very keen to take away any thought of the “stuffy, boring, patronising consultant” image.

I want you to succeed, I know my stuff and I want us both to have fun.

Perhaps that should be my tag-line.

Anti-marketing is happening when people you want to have a closer relationship with don’t connect with you, either because they don’t accept that you’re special or unique or they don’t think you’re authentic and genuine in your dealings.

What To Do If You’re A Victim Of Anti-Marketing

First you need to make sure that you stand for something. The three word test is powerful for you to define what you want people to think about you and to then check what they do think about you.

Then, once you’re clear on what you want to say – your main marketing message or theme – you need to carry out a  marketing audit.

If marketing is everything you do in the business to attract, convert and keep customers and clients then what is it that you are saying (verbally, in writing, impressions) and doing.

Does it support the message you want to send or does it contradict or confuse it?

Everything that presents your main message well, is likely to strengthen your brand and relationships. Everything that doesn’t is anti-marketing.

Do You Have Some Anti-Marketing Stories?

Have you experienced anti-marketing and be turned off somebody who you should like?

Or have you been guilty of anti-marketing yourself. I’ve already confessed that it took me a long time to specialise so people didn’t really know what I did.

Please let me know by leaving a comment.

SEO expert Nikki Pilkington reminded me recently of the three words test.

The idea is simple and works for business branding and personal branding.

What three words do you want customers and clients to think of when they hear your name or think of you?

Three Word Branding Examples

When I challenged Nikki, her answer was “SEO, social media, helpful” – OK that’s four words including one acronym but you get the idea.

When I thought about it for me, I want you to think “profit from differentiation” or something similar – in particular I want you to think of profit and differentiation as a united concept.

If I think of Maserati, I think of “fast, stylish Italian car”. Lamborghini is similar with “fast, flamboyant Italian car”. Ferraris are “red Italian racing cars” to me because of their grand prix heritage.

Aston Martins are “luxurious British grand tourers”

Mercedes means “prestigious, German engineering” to me.

Or for Kylie Minogue I think “Australian singer with a nice bottom.”

Applying The Brand Concept To Your Business

This simple test shows how clearly your brand is positioned in the mind of your customers.

I suggest you stop for a few minutes and ask yourself what you want your customers to think about you in three words.

Then ask a few of them.

If what they say echoes what you want them to say, then you can be reassured that you’ve done a fine job of branding yourself.

But if what they say is radically different, then you have a problem.

You don’t see yourself in the same way that your market sees you.

What To Do If Your Branding Isn’t What You Want It To Be

You have a choice.

Either you adapt your self-image to match what the market thinks and focus on using that to its best advantage.

Or you have to try to change the perceptions of the market to match what you want.

If the market doesn’t have a clear view, then you need to reinforce your brand through constant repetition of a few key ideas. Branding expert Ben Mack calls these “verbatim vitamins” because they pep up your brand.

But if the market has a clear view and it is wrong, then you’ve got a tough time ahead.

Look at Skoda cars as an example.

They used to have a terrible brand image and were the butt of jokes like

“What do you call a Skoda with a sun-roof?”

“Answer: A skip”

Since the takeover by the Volkswagen group, quality is much improved and the brand is strengthening.

But I bet there are people who don’t buy Skoda cars because of the old image.And others who buy despite reservations about the image.

Alfa Romeos have a similar problem. I can’t justify buying a Maserati, Lamborghini or Ferrari but I can afford an Alfa Romeo. I’m drawn to the brand because they are “Italian fine driving cars” but I can’t shake the old “unreliable rust-buckets” out of my mind that was the reputation the brand earned from the 1970s. I think I might need a second car if/when the Alfa breaks down and that makes buying an Alfa prohibitively expensive in my mind.

Why is this clarity so important?

Because it works the other way around as well.

When I think of Nikki, I think of an SEO expert.

And when I am asked about experts in SEO, I think of Nikki and a few others.

That top of mind awareness is powerful.

It’s where the money is.

Any other SEO expert who contacts me faces a big challenge.

He or she has to show me in great detail that they are worthy of being ranked alongside Nikki, Dan Thies, Leslie Rohde and Jerry West.

And it’s an even bigger challenge to create a preference because the space as SEO expert is filled in my mind. It would take a lot of time and it’s time I’m not ready to give willingly because I don’t feel any need to.

You have a simple choice.

You either stand for something and get remembered.

Or you stand for nothing and get forgotten and ignored.

What three words do you want customers to think about you?

It’s Your Turn

You’ve got the chance for a little self-promotion by leaving a short comment for your three words or phrase you want customers and clients to think when they hear your name.

No comment spam around keywords – it won’t be published.

You will know that you need to have a competitive advantage or competitive edge as the basis for your unique selling proposition.

Are you clear on the dimensions?

For years, I talked about this as the ABCD Rule.

Your Advantage needs to be Better, Cheaper or Different.

Then I came across an article I wrote on the difference between vertical differentiation and horizontal differentiation where I went further.

I said your Advantage needs to be Better, Cheaper, Different, Easier or Faster.

This became the ABCDEF Rule.

This gives you five broad directions to think about when you are considering your customer value strategy and your customer value attribute map (also known as the strategy canvas in Blue Ocean Strategy). These will help you to be clear on which factors are your order winners and which are order qualifiers.

 

 

The Purchase Tipping Point refers to the buying decision and how it tips from uncertainty about which is the best choice to certainty that you have made the right decision.

It’s not to be confused with the Profit Tipping Point, the name of my free report to help business owners make more profit.

You’ll have experienced the purchase tipping point yourself many times and there are two different decisions.

  1. The decision to buy something.
  2. The decision to buy the particular item.

Your internal dialogue will go something like this…

“That’s nice.

So is that.

I can’t afford both and I probably shouldn’t buy either.

But I deserve a treat.

Then one of

  • I’ve done very well recently
  • I’ve worked hard this week
  • I have resisted temptation and not bought anything for ages
  • I’m feeling down and I need cheering up
  • I really need it – my current one is old, shabby, broken or worn out

Which should I buy?

[Notice the first purchase tipping point decision has been passed because you’ve gone from not buying to deciding to buy something]

I really like both.

That one’s more practical but the other is so stylish.

I wish I could buy both.

But I can’t. I mustn’t.

Come on which do you want most?

That one.

[This is the second purchase tipping point as you move from a generic purchase decision to a specific one.

How Do You Influence The Purchase Decision?

I’m planning to write a lot more in my blog about how you influence the purchase tipping points:

  • The decision to buy a generic product or service
  • The decision to buy a specific product or service

I believe not looking through the customer’s eyes is a common failing in many marketing and sales books and courses. I’ve argued for a long time that your job is to make it easy for a customer to buy.

It may seem obvious but when you look back at your own buying, you’ll see how often businesses stand in the way of you buying and stop you from tipping positively at either or both of these purchase tipping points.

The Purchase Tipping Point & Mistakes In Communication

One thing businesses are very bad at is not understanding where you are in your buying cycle as a potential customer. This means you get a mismatch in communication.

There are only four combinations – two right and two wrong.

  • Before purchase tipping point 1 (deciding to buy generic)
    The right way – to explain why a generic purchase is right and lay the groundwork for why you should make a specific choice.
    The wrong way is to concentrate on why the customer should buy from you. The customer isn’t ready to be sold, just helped to make the initial tipping point decision.
  • After purchase tipping point 1 but before tipping point 2 (deciding to buy a specific item.)
    The right way is to explain why your specific product is right for them and is different and better than those products available from competitors.
    The wrong way is to explain why buying the generic product is the sensible thing to do.

The Purchase Tipping Point & Emotional & Logical Reasons To Buy

The idea of the purchase tipping point can also be applied to the emotional and logical reasons for buying. You can see this in my sample of internal dialogue above.

To make the purchasing decision, you want ticks for both logic and emotion.

You can know you need something and not want it.

You can want something and not need it.

Either way, you can find that you can’t justify buying.

The Purchase Tipping Point & The Pain Of the Problem Versus The Pain & Gain Of The Solution

Pain and the desire to reduce or avoid pain motivates you to make decisions but there is also pain involved with buying solutions to the underlying problems.

I don’t smoke but it’s well established that smoking is bad for you so the logical thing is to give up. But there is pain involved in quitting (withdrawal symptoms, increased tension and irritability, gaining weight). People who continue to smoke haven’t been able to reach the decision tipping point and to stay on the right side. In this case not smoking is considered more painful than smoking and suffering the high risk of serious health problems in the long term future.

I am overweight and, after losing a few kgs, it seems to be creeping back up. Not as high as it was before I was ill, so I still have plenty of clothes to wear. I’d like to lose weight but I haven’t hit the decision tipping point where my exercise goes up and my calorie consumption goes down. Just like in the internal dialogue above, I find myself thinking “I’ve been a good boy. I deserve a treat” and I have another chocolate bar.

Two Questions

Have you noticed that you have this internal dialogue as you work your way through the two tipping point decisions involved in buying? Have you noticed how some companies and sales people help you “tip positively” towards making the buying decision whilst others seem to do their best to get in the way?

Secondly, if you’re selling a product or service, have you identified ways that you can;

  • Help your customers to tip towards making a buying decision?
  • Identified ways that you might get in the way and then put together an action plan to stop these things happening?

In particular, pay attention to the understanding where the customer is in his or her buying journey and make sure that you are selling the generic product when you need and educating the customer on choosing their appropriate buying criteria and then selling your specific product as different and better than your competitors.