I’d suggest you stop and figure it out right now. If you still can’t answer it even after working on if for a while, your business is likely in some serious trouble…
Here is the question: Why do your customers pick you over their other choices?
See I told you it was an easy question. Right?
It’s slightly more complicated than it looks, though. Especially if it turns out the answer you think is not the answer your customer would actually give. Getting that wrong could definitely screw up your decision-making.
Let me share an example with you and then you can see if you’ve got the answer right yourself and if not, why it’s so critical to figure it out.
It starts on a beach in Thailand…
Years ago my wife and I spent a week hanging out in Krabi, Thailand, which has beautiful beaches, great SCUBA diving and amazing rock pinnacles towering over everything.
The first three days we were there we noticed each day a vendor would come down to the beach with a food cart and he was selling chocolate crepes.
We both loved chocolate crepes and each day we bought one. These crepes were not actually that good, but they were OK and they were… there.
On the fourth day, the usual guy showed up selling crepes but then shortly after another guy showed up and he also sold crepes. His crepes were more expensive, but they looked nicer and he seemed to be a very friendly guy.
We decided to try his crepes.
Magic! The new vendor’s crepes were amazing- more chocolate filling, better overall taste and the guy seemed very happy to see us and everyone else in his line.
The next day they were both back and it wasn’t even a question- we went to the new guy and bought from him. We had to wait in line and we had to pay more, but it was worth it.
The other vendor made only a few sales and it seemed like maybe this wasn’t the first time he’d been outdone. He didn’t come back the last day we were there, but we hardly noticed.
So what does this have to do with anything?
Well, suppose we asked the first vendor: Why do you think customers pick you?
If he had said it’s because of my great product or great service or low prices, those all would have been wrong answers. The real and only reason he made sales the first few days was because he was the only choice. He actually wasn’t very good on any other metric.
The second guy, on the other hand, knew his way around a crepe and even though he charged quite a bit more, he did way more business than the other guy. If he had answered that the reason people picked him was because of his better quality product, he would have been right!
In other words, if you own a business and you’re making sales and you believe it’s because customers prefer your product over other choices, you may be tempted to think you can raise prices and keep them or you can expand to another location and have similar success.
But if the reality is they only come to you because your location is closest to home then raising prices or opening in a new location may both result in a failed business.
You failed to understand why people bought from you and you didn’t expand the business in a way that took that into account.
It’s OK to be successful just because you are the only provider AS LONG AS you recognize that and respond accordingly if conditions change.
It’s OK to be successful as the low cost provider AS LONG AS you have a true advantage that let’s you achieve good profit margins even with a lower price point and not just because you’re willing to suffer with barely getting by a little more than the next guy.
The point is you have to understand the customers you have and why they might make the choices they do and ensure that you are offering them the purchase choice that is the most desirable to them.
Otherwise, as soon as they have a better choice, they are going to take their business elsewhere.
If you are offering a luxury spa service, you better know they like warm towels, lavender essential oils and high thread count sheets on the massage tables. And then make sure you have all that.
If you are offering plumbing services, you need to answer the phone on the first ring, come on time, finish the job the first time and stand by your quoted prices. It also helps if you’re neat and clean up thoroughly after the job.
And so on. Make sure you have a deep and clear understanding of what drives your customer’s decision making and what they value most. Then cater to that.
Of course, this means you can’t be all things to all potential buyers, which is why it’s very helpful to niche down to that subset of people you can serve best and match all or nearly all of their purchase criteria with your offerings.
It’s a simple question and hopefully you know the exact answer and have it right. If you’re not sure, spending some time understanding this is going to be critical to the success and growth potential of your business.
Why do customers pick you over all their other choices? Answer this question fully and your path forward suddenly becomes as clear as the water on a Thai beach.