What makes a company different from any other? Its product? Its service? Its monopoly? Whatever it is, it’s probably the reason why your customers come to you rather than going elsewhere. Yet such distinctions are seldom static. Your rivals will see that what you do sells and will try to encroach on your speciality. Points of difference become competitive. To retain its uniqueness, an SME needs constantly to reassess what its customers want and re-evaluate what it can offer to meet those requirements.
The one and only
In many small companies customers and clients change radically as the company grows. To start with, the business is highly targeted on just a few clients who may also be partners in another sense; for example venture capitalists. For SMEs, points of difference usually form part of the reason why they were set up in the first place; an entrepreneur spotted a gap in the market and set up a company to fill it.
Dr Robin Jackson, innovation manager of research and enterprise development at the University of Exeter, says: “In the early stages SMEs usually only target people in three sorts of company: those from whom the SME is trying to attract investment, those with whom it’s forming joint alliances plus companies who are early advocates for their products and services.”
SMEs also face a challenge not experienced by their larger rivals as customers often consider an established company a safer option. Kerry Hallard, managing director of Buffalo Communications says: “SMEs must plan their marketing strategy to focus on one of the three key options: cost (you’re the cheapest); focus (you’re the specialist), or differentiator (you’re the only one that…).”
Add value not reduce cost
Relying on cost to maintain a point of difference is risky for small businesses. David Molian, co-director of Credo, the Cranfield Centre for Small Business Growth and Development, says: “There is only room for one or two price leaders in each sector. If you’re relying on price to gain business you could end up fighting price wars, which small firms don’t have the resources to win.”
Price wars also distract customers from any value you are adding to your service/product. Customers will always be looking for a bargain so prices should certainly be realistic, but SMEs need to concentrate on adding value, as businesses will pay for something they perceive as better or different.
It’s a name game
Branding – whether as simple as having a professional letterhead and polite staff, through to websites and marketing collateral – is an integral part of marketing a business. If a company has a product, process or service it’s trying to sell then it needs a way of identifying its proprietary right to that product, process or service.
Branding doesn’t have to mean multi-million pound expenditure, as Molian of Credo says: “Branding is cheaper than ever before. Anybody can have a web presence – which costs about a quarter of the price it was four years ago – and it’s easy to create a visual identity using computer tools.” Budgets are always tight for SMEs but there are a lot of very good freelance graphic designers around. If you don’t create a strong visual identity you may lose out to competitors who do.
An identifiable brand is more than merely a visible, recognisable logo. It is how a company presents itself. The company’s points of difference become inextricably linked with its brand and people know where to look within a crowded marketplace. Hallard of Buffalo says: “A brand includes a company’s ethos/corporate charter, its image/reputation and its message.”
Getting in touch
Points of difference are certainly supported by the way firms get in touch with their customers but cannot rely solely on good communication. Molian of Credo comments: “Good communication works best for firms selling services. It works less well for firms selling products. If the product is not as good as the rival firm’s then excellent customer communication won’t persuade people to buy.”
Hallard of Buffalo adds: “whatever the form of communication, the personal touch, politeness and professionalism (correct spelling, grammar, pleasantness, etc.) really impress.”
Responses when your customers contact you are equally important. Answering the phone politely and quickly, dealing with enquiries promptly, pleasantly and without mistakes makes your company memorable.
People power
With only a small staff, personalities inevitably become very important in SMEs. Duncan Cheatle, founder of the Supper Club, says: “Particularly in the B2B arena businesses tend to be as much about the founders as their company; the service/product is associated with key individuals.” Nevertheless SMEs should not rely on personalities to distinguish themselves from their rivals.
Molian of Credo is emphatic: “Absolutely not. If you rely on the personalities of your sales staff, when they move on they take your customers with them – your business is hostage to your sales staff.”
Hallard of Buffalo agrees: “The personality of salespeople is essential to success. However that is a sales and not a marketing issue and should not be relied on to ‘market’ the business.”
She adds: “The sales department’s job is to sell and not to identify and attract prospects; marketing brings in the interest, sales staff convert that into profit.”
Do it yourself
Any business needs to understand exactly what it is about what they do which makes them special. They must then emphasise those differences to their customers. At first SMEs shouldn’t need any help with self-analysis; they can use their own common sense and internal resources to achieve this.
One of the best ways of identifying points of difference is to ask customers what they think they are. Anna Fraser, director of Tatonka Research, says: “Asking even a small sample of carefully-targeted customers what they believe your differentiators are can be a real eye-opener. The research can be conducted by sales staff or via a questionnaire.”
One cost-effective way for SMEs to identify points of difference is to use students on an MBA course; most universities with a business school are receptive to their students being used in this way as it provides them with experience of solving real problems.
Once the initial analysis is done, a third party can provide an impartial view. Hallard of Buffalo comments: “A fresh view is always beneficial. It’s often helpful to bring someone in – even just a friend or associate – who does not live and breathe your sector to give a new perspective on what’s interesting about your company.” A specialist research agency can carry out a ‘perception study’ which provides expert feedback on how your customers view your business.
Molian of Credo agrees but adds: “A good agency can make the best of what’s there but can’t necessarily make seminal changes. Owners/managers shouldn’t abdicate responsibility. Too many of them spend too much time working in the business rather than on the business.”
Work at it
Identifying points of difference can also be the kind of exercise which builds staff motivation and loyalty. Senior managers decide what they see as the company’s ‘personality’ which can then be turned into a brief for branding to be designed and implemented.
Company rules can then be drawn up for customer service, brand guidelines (use of logo, etc.) and the company’s conduct. As Hallard of Buffalo says: “Points of difference must work from the top down. Without senior buy-in there is no point in starting.”
The main problem with maintaining points of difference is that it’s a constant and unremitting struggle, rather like weeding the garden. Distinctions need to be included within the culture of the organisation and then cemented there through training.
Once a cultural sea change has occurred, there will be incremental changes needed to uphold the differences. Whatever the points of difference are they must be ingrained into the business or they won’t be maintained.
Businesses are always looking for added value. They question on a regular basis why they are using a particular product or service. To retain their customer-base, companies constantly have to re-evaluate and try to improve and enhance their offering.
Fail to do this and a competitor will muscle in. If you do not maintain points of differences you remain average and in a competitive marketplace average is just not good enough.
Sweet results
At the end of 2003, Hotel Chocolat featured in the Sunday Times list of the UK’s fastest growing companies. The firm sells to businesses wishing to reward clients, customers and staff, as well as direct to consumers. Its speciality is delivering top-quality chocolates by post. The firm undertook an extensive mapping exercise of their customers’ experience and paid particular attention to delivering the chocolate intact, to the right address and on the right day. Angus Thirlwell, co-founder of Hotel Chocolat, recognised that regardless of the quality of the chocolate, if it was delivered late or damaged then the gift was spoiled for both the sender and the receiver. By becoming an expert in the logistics of delivery, Hotel Chocolat under the Choc Express brand evolved into the UK’s leading specialist in direct mail chocolate gifts.
