A good business strategy helps you differentiate yourself in the market. When I work with clients on strategy, I help them figure out their sweet spot. A sweet spot is the intersection of two things:
1) What your customer SHOULD want.
2) What you’re uniquely qualified to provide.
Why do I use the word should in the first point? Simple: because customers may not know what they want. Here’s why this is important. Whether you’re asking current or prospective customers what they want, you’ll hear about price. “I’d like the same thing you’re providing, but cheaper,” or, “I currently buy this product, but I’d buy it from you if you could offer it cheaper.”
Some companies hear these answers from customers and immediately jump into what they consider a “strategy” to meet these needs. In reality, this approach (which I call “me too” product development) merely puts you on a path toward commoditization, which is a race to the bottom.
Why is that? Say a “me too” product takes a year to produce and go-to-market. The result is you introduce your product just a little bit behind the curve, at a quality that’s probably not as good as your competitor (because they've been working to improve and innovate while you've spent 12 months trying to get to status quo), at a price point that’s probably not compelling enough to turn anyone’s head.
Customers don’t know what’s possible. They probably don’t understand what you’re capable of developing. Henry Ford really brought this point home when he said, “If I had asked people what they wanted, they would have said faster horses.” Instead of leveraging your talent to meet targets that your customers think they need, think about what they should be considering. That will allow you to offer what you’re uniquely qualified to provide, which will lead to differentiation rather than commoditization.
Developing an objective view of what your customers should want requires an informed perspective on their underlying needs – what are the business issues they struggle with and what is it worth to solve them? A simple but often overlooked truth of B2B marketing is that if you can make your customer more profitable, they can pay you more.
Are you confident in your ability to differentiate and avoid commoditization? Do you know enough to describe your customers’ underlying needs, or are you stuck in reacting to their requests? Share your thoughts in the comments section.