- March 25, 2021
- Posted by: Paul Foster
- Categories: Coaching and Mentoring Services for Business Owners, Differentiation, Pricing Advice for Small Businesses
Sometimes we stare down a business problem for so long that we lose sight of it as a problem – it becomes accepted as just a fact of business life. And because it happens slowly over time, we might not even realize what is happening.
That’s the value in a fresh set of eyes. As a business coach, I can look in from outside the business and see things different. I haven’t been living with your business problems day in and day out.
One of the common situations I look for are “compromise solutions”. This situation will hide from view within the business. This is because as time goes by, the compromise solution becomes the acceptable solution. Once it’s accepted as a solution, nobody thinks about the problem anymore. Now the people in the business start accepting the compromise to the problem as an unchangeable fact of life.
Let me give you an example around the often-painful challenge of price competition.
Let’s say a competitor shows up in your market with a lower price than you. The compromise solution is to meet them on price in order to keep the customers. The business compromises on profits in order to keep the business. Over time this becomes the accepted compromise solution – always match the competitors’ prices in order to stay in business. But if the people in the business will allow me to bring a fresh set of eyes and ask them some questions around this compromise solution, we uncover deeper issues. I will start by asking them to define the core problem. (The first and biggest barrier is the open mindedness required to let a coach ask you some important questions – but let’s assume the business people are willing to go there.)
This typically uncovers what they think is the problem is not the core problem. This example is not usually a pricing problem, this a perception of value problem. I will ask the question, what is the scenario that causes the price problem to disappear? The scenario is to be different. When the business offers a product or service that is different in benefits that are more valuable to the customers the price problem disappears.
Once the problem is well defined, we are halfway to a solution! Well defined means a little more detail. The perception of value problem could be one of the following more detailed descriptions:
1) The business actually has a better offer and the higher value is already perceived by customers but the business matches the competitors’ price anyway. Have you ever been offered a discounted price by a business even though you would have happily paid more? Knowing this is the specific problem really helps find an immediate and uncompromising solution – stop discounting the price!
2) The business actually has a better offer but the problem is customers do not understand or are educated about the differences. The solution to this problem is right where the problem exists – within the business.
3) The business needs to work on delivering more value and positioning that value better to its customers. This may require a more involved solution but knowing the core problem still puts you on a path away from the less profitable compromise solution of competing on price.
Once I get permission to bring a fresh set of eyes to a business, discovering the opportunities doesn’t take long at all. The biggest barrier to break through is convincing a business owner they might have some of these “facts of life” compromised solutions. I suppose as long as the business is surviving, it’s easier to just compromise. Or maybe the competitors will read this, decide to firm up their prices and then everyone else can follow along?
The best solution is for you to share this content with your competitors then! Do you mind?