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Differentiating a Business Today is Harder
than it’s Ever Been.
It’s difficult for
business owners to do, and hard for buyers to discern the
differences. As a result, many entrepreneurs struggle to achieve a
sufficient level of leads and sales—the “revenue engine” for their
business. Here’s what they struggle with and why.
Marketing Wasn’t
Always Such a Challenge
Go back to before 1990
or, in some industries, before 1980. Let's call this the "days of
simple selling." The marketplace was a lot less crowded, buyers had
less information, and purchasing options were more limited. For
business buyers and consumers alike, making choices was a simpler,
easier process. Because of this, the seller had more power. Business
strategies generally focused around sales and how to sell more
effectively than the competition.
Why Everything Changed in
the 1990s
Key events occurred
that changed the nature of the marketplace forever:
-
Technology
Revolution- The widespread adoption of personal computers
enabled small businesses to operate efficiently. This lead to
the growth of millions of start-up firms as entrepreneurs broke
off from large companies to pursue their own ventures.
-
Explosion of
Businesses- The overall complexion of American business
evolved from fewer large companies to many, many smaller
businesses. This reached such a level that, in 2002, the
birthrate of new businesses finally out-paced the number of
babies born in North America - 4.76 versus 4.57 million. (US
Census and Statistics Canada)
-
Arrival of the
Internet- The advent of the web means buyers are now exposed
to thousands of potential providers across the U.S. and the
world. They have gained the ability to gather more information
than ever before to help them make better decisions.
-
Media
Proliferation- The continued diversification of media caused
a proliferation of ways to advertise. Putting this into
perspective, the average person in 1971 was exposed to 560
advertising messages daily (Media Kitchen research).
Today, the number is over 3,500. (Ad Age Magazine)
There is Now a Deafening "Noise" in the Marketplace
The result of all
these trends is that products and services have become
"commoditized," where multitudes of providers offer essentially the
same thing. Worse yet, the overwhelming clutter from so many
businesses shouting their message numbs and confuses buyers, who
tune out most of what they see and hear.
Even when they do pay attention, buyers
disbelieve the general, institutional statements most businesses use
in their advertising. Everyone's claims sound alike. Do you believe
statements like those below when you hear them? More importantly, do
these claims differentiate companies, or does it just sound like the
noise everyone else is making? You decide.
"We're the professionals"
"Our prices are lower"
"We're number one"
"The best selection"
"Quality customer service"
Yadda yadda yadda…
This Creates a
"Confidence Gap" Among Buyers
The raw number of
businesses, the overwhelming volume of commercial messages plus
business's over reliance on generalities in marketing has driven a
wedge between buyers and sellers. We call this the "Confidence Gap."
Strictly defined, it is the buyer's inability to determine whether
any of the providers are any better or any worse than any of the
others.
Faced with more
choices and mostly non-differentiated information, buyers stall,
gather more information and offer stiff resistance to sellers. The
confidence gap results in longer decision cycles and significantly
greater price competition.
In short, the power
has now shifted to the buyer. Sellers who want to succeed must learn
to narrow their prospects' confidence gap. The problem is that most
businesses don't realize this or know how to do it. They continue to
waste marketing dollars on the same old approach, even though the
returns are worse than ever. In short, their "revenue engine" isn't
performing.
Here's how to fix the problem.
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