Small Business Financial Article
Rich Best has spent 28 years in the financial services industry, as an advisor, a managing partner, directors of training and marketing, and now as a consultant to the industry. Rich has written extensively on a broad range of personal finance topics and is published on several top financial sites. Recent books include The American Family Survival Bible and Annuity Facts Revealed: What You MUST Know Before You Invest.

You Must Choose Your Customers, Narrow Your Focus and Dominate Your Market

You Must Choose Your Customers, Narrow Your Focus and Dominate Your Market

The title of this article is paraphrased from the title of great book that should be read by anyone with aspirations of achieving uncommon success in their business. The book is, The Discipline of Market Leaders: Choose Your Customers, Narrow Your Focus and Dominate Your Market, by Michael Treacy and Fred Wiersema. It was written more than two decades ago so it might be slightly outdated, but its premise is as valid today, if not more so, than it was then; and that is that successful businesses – those which become the market leaders – are exceptional at delivering one type of value to their chosen customers. By focusing their energy and resources on a single discipline and increasing its value to their customers year after year, they can remain exceptional in the eyes of their customers, which will ensure sustained growth and profitability.

The book focuses on three value disciplines that all businesses must be able to master; but they must choose one at which to become exceptional:

Product Innovation: Be able to keep their products relevant, if not cutting edge, in a dynamic and evolving marketplace. Think Apple.

Operational Excellence: Offer the lowest prices in the most convenient way. Think Amazon.

Customer Intimacy: Offer tailored, customer-focused solutions that meet the specific needs of a targeted group of customers. Think Nordstrom.

So, the question becomes, which value discipline should your business pursue? The book’s fundamental premise is that if you try to pursue all three, you will risk being exceptional at none, which will render you to the lower tier of your market. Of course, to some extent, you have to pursue all three to exist in the market. But there must be just one on which you will stake your brand and your future, around which you will organize your business, focus your energy and resources, and build your culture.

Becoming exceptional at any one of the three value disciplines will lead to the same outcome expected by market leaders – to create stark raving fans out of your customers. Think of any market leader, and you can usually identify what it is that they do better than anyone else. There is a unique value they provide that sets them apart from the competition. And they constantly strive to increase that value year after year.

By choosing your customers and narrowing your focus, you can better position your business to overcome the common mistakes made by many businesses that prevent them from becoming market leaders:

Not having a clearly defined "ideal" customer

When starting a business, there is a great temptation to try to be all things to all people and cater to any warm body to create as much opportunity for customer growth as possible. This strategy can have the opposite effect and prevent the business from establishing a true growth pattern:

  1. It almost guarantees inefficiency as energy and resources are spread across less productive or profitable business lines.
  2. It perpetuates business-wide mediocrity as the opportunity to excel in any market segment is diluted by inefficiency.
  3. And most importantly, the customers you really want to attract won’t see how your business offers any unique value that warrants their patronage.

You must choose your ideal customer and narrow your focus to offer unique value, even if it means gaining one customer at a time. Done right, you will create one stark raving fan at a time, which will quickly blossom into a base of ideal customers.

Not having a clear and concise message

The adage, "You don’t get a second chance to make a first impression," is no truer than for a business trying to establish itself in a particular market, much less trying to become a market leader. If you can’t answer the one question on the mind of any potential customer – "Why should I do business with you when there are dozens of other companies offering the same product or service? – concisely and compellingly, it probably means you don’t clearly understand your target buyer, the problem your product or service is supposed to solve, or how it can solve it better than anyone else. These three key issues go to the heart of a value proposition which is a very brief (one to two sentences) summary of the most persuasive reasons people should notice you and answer your call to action.

Quite simply, people won’t buy from you if they don’t understand why they should even consider you. Whether it’s a single sentence at the top of your website’s home page or from your lips as you ride an elevator with a potential customer, if you can’t clearly describe the promise of value you can deliver, you will lose opportunities.

Not really and deeply connecting with to your customers

When you consider today’s market leaders, they may offer the best product, the least cost, the best customer experience. Still, any of those advantages may only be fleeting as competitors rise up with better alternatives. The market leaders that perennially dominate their markets offer something that most of their competitors can’t match – a real and deep connection with their customers. Even if you have clearly defined your target customer and crafted the clearest and most compelling value proposition to attract them, if you fail to find ways to increase the value of your relationship with them, they will eventually slip away.

You need to know your customer and narrow your focus to a value discipline that not only differentiates you in the marketplace but must also be constantly refined, improved, and communicated so your customer knows you know them.

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