Can You Use Target’s 4-Word Strategy to Grow Your Business?

In this video, Matt is back going over an article. This article is about Target’s strategy to outperform Walmart and Amazon. Matt has some thoughts on if this will work for all businesses. 

There are tons of people out on social media giving business advice. Some of it is good advice, but most of it isn’t good. In this series watch CapForge’s owner react to different advice videos. He’s an expert in all things business and has 20+ years of experience under his belt. Some of the things he reacts to might even surprise you!

Video Transcript: 

And this one we’ve got an Ink magazine article with Target’s four-word strategy to beat Walmart and Amazon. So let’s see what their four-word strategy is and if it’s something you could use in your business. Starts off saying a general theory of business is always easy to make money off your existing customers than it is to find new customers. Generally, that’s true because your existing customers already know you. You’re already talking to them. They already trust you. hopefully, they already like you. And so if you got more to offer them they’re gonna be much more receptive than trying to drag somebody else in off the street who doesn’t know you, doesn’t know what you do, doesn’t normally work with you, doesn’t talk to you. It also says it’s also easier just to sell more things for existing customers or charge them more for whatever they’re already buying. Yes, also true. It’s easier to raise prices for existing customers than go out and find new ones, just because generally as long as the price raise is moderate there’s a switching cost for them to quit doing business with you and go find someone else to do what you were doing. That doesn’t mean you can get away with it indefinitely or that you can also not provide great service and a great experience. If you’re raising prices but also making it harder to work with you or less beneficial, they’re gonna find the switching cost isn’t that bad after all. And they’re gonna go find someone else to work with.

But it says Target’s taking a different approach, it’s lowered prices on 5,000 items. And it says – okay so here’s their four-word strategy that supposedly they’re using to beat Amazon and Walmart. Which is their slogan “Expect more, pay less”. So that’s not necessarily something I would say is gonna work for every business because you don’t necessarily wanna be the pay less version of whatever you’re offering. You might wanna be the premium version. There’s a lot of money in being the premium version. If you can get people to convert and pay you more on average than what they’re paying someone else for these services. If you can provide it about the same cost but just make the experience better. If you can do it for less, you can charge less and offer this and have them have a great experience even at a lower price. But this isn’t necessarily gonna work for everyone. The expect more part if you can deliver more than your competition, then telling your customers and potential customers to expect more may work in your favor. Because if they’re expecting more from your competition and they can’t deliver and then they come to you expecting more and getting more then they’re gonna be much happier with you. But you have to fundamentally make sure you can deliver on that promise before you start making it. Otherwise, you’re gonna potentially get converts but those converts are then gonna leave pretty quickly when they find out it was all talk and no action.

Target’s four-word strategy expect more pay less may help them capture more customers but the paying less part may not do much for their margins. And just doing more business without more profit is not necessarily the place you wanna be. You can turn through a lot of money and have not much to show for it. You’re better off having fewer customers paying more and having a nice profit than having a ton of customers and almost no profit. So okay, Ink sucked us in with their four-word strategy but I think it only applies in limited cases. And for a lot of small businesses, it may not expect more part may be great but the pay less part may be something you wanna stay away from.