How Small Business David’s Can Slay Large Competitor Goliaths.
Leverage Your Small Business Advantages For Competitive Advantage.
While many of my entrepreneur, start up, and small business clients bemoan the fact that they face competition from much larger players in their industry, I always coach them on how to use their size to achieve small business success.
There are many significant benefits that much smaller firms can leverage than their larger, hierarchical, bureaucratic competition.
Following are a handful of immediately actionable tips that you can apply right now to take advantage of your smaller size:
– Be more responsive in your customer CARING: One way to build customer loyalty is to develop a culture where you focus on the needs of your most profitable (valuable) accounts. Follow the Pareto Principal and focus on your top 20% of your customer base who contribute 80% of your revenues.
– Develop Referral, Loyalty and Retention Strategies: Since a majority of your business will come from referrals, plan and launch a program to solicit referrals from your most loyal customers, reward them through loyalty programs that gives them meaningful gifts as a sign of your appreciation for their loyalty, and focus aggressively on developing and implementing a retention program to keep those top accounts (apostles) happy.
– CONSTANTLY solicit your employees’ BEST ideas: Your employees are your greatest asset…PERIOD! It is your job as their leader to determine the core competencies each employee possesses and re-design their job description to allow them to use their greatest strengths for your competitive advantage.
– Leverage Social Media the RIGHT Way: Too many small businesses are NOT using interactive marketing and social media for maximum impact. Now is the time to find strong internet marketing folks who can help you build a solid online brand and marketing foundation to supplement your more traditional offline marketing using FaceBook, LinkedIn, Twitter, MeetUp, Youtube, FourSquare, Tumblr, Pinterest Google Drive, etc.
– Communicate, Communicate, COMMUNICATE for SUCCESS: Another small business advantage is a much flatter, leaner organization with little hierarchy so expedite the decision-making in your firm by empowering all of your people to make decisions independently. Stop trying to consolidate power by having everyone receive your approval. Once you spread autonomous decision-making you will see a tremendous increase in overall productivity. The single largest downfall of any organization is a failure to communicate.
– Not ALL Customers Matter, so Focus On Your TOP 20% FIRST: Since 1906, Pareto’s research into income distribution in Switzerland through Dr. Joe Juron’s work after WWII proves that in any data set 20% of the data is statistically significant, and 80% is irrelevant. So, 20% of your customers generate 80% of your sales, revenues, profits.
You need to understand who your most profitable customers are and empower all your people to have a direct impact on positively impacting those most loyal,valuable, Apostle clients. Small businesses can accomplish this more quickly given their relatively small client portfolios.
– Brand..Brand…BRAND: In the 21st Century global economy, only your BRAND delivers lasting competitive differentiation. A brand is something your small business does/offers that is unique, invaluable and memorable. Once you define/determine your brand as an organization unique selling proposition all your marketing must reflect that brand AND you must convey your brand not only to your external stakeholders (clients, vendors, partners, suppliers) but your employees first and foremost.
– Be ETHICAL: Chart a course to success with a “MORAL COMPASS.” So, it now turns out that the most ethical organizations (those that practice the highest degree of overall integrity) are the most profitable. Sorry Halliburton, Monsanto, Phillip Morris, Enron…being ethical leads to higher profitability.
– Unleash Your Employee’s UNTAPPED Talents: Research shows that most organizations WASTE$.75 of EVERY $1 they spend on their people. The entire process of hiring people to fill positions is so 20th century. Now, it make more sense to be able to define in advance of your hiring efforts what your organization’s vision and mission are, and define your values.
Then, as you grow rather than creating job descriptions based on random job requirements for functional roles (sales marketing, HR, accounting) it is in your firm’s best interest to find people who match your values and possess a divergent set of skills that are one part functional but also possess leadership, teamwork, critical thinking, creative problem solving, and other “soft” skills.
– Ferrari Marketing on a Hyundai Budget: World class organizations of all sizes spend 5-15% of their annual sales on marketing. MOST companies spend 1-2%. In these trying economic times, those organizations that invest more in marketing to support their sales efforts will have their voices heard as their larger direct competitors are cutting back their messaging. At the end of the day it doesn’t matter how much or little you spend, if every program is NOT focused directly on supporting your sales effort.
– Bring Sales, Marketing, and Product People Together: In most large organizations their are discreet functional areas that are managed by different teams and work independently of one another. Given that the role of marketing is to support the sales process and they do that by promoting product and service benefits, now is the time to make sure that your marketing, sales, product development/management (R&D) and even your customer care are working together. you can accomplish this by having these functional areas work together in cross-functional management teams, having job rotations to move people between departments, and foster greater teamwork by building relationships amongst these functional areas.
Here’s to your continued success in 2012!