October 14, 2005

Is Being A "We're A Better Small Business" The Worst Positioning Statement in the World?

Small companies that take time to develop their "Unique Selling Propositon" (USP) benefit from having a clearly defined target market for their products and services. Without a USP small companies have no defined purpose, positioning or uniqueness.

Here's a trick question: What's better - chopped liver or filet mignon?

Most people answer "filet mignon." But filet mignon isn't better than chopped liver. Nor is chopped liver better than filet mignon.

If you picked "filet mignon," what you SHOULD have said is "I LIKE filet mignon better" ... not "filet mignon IS better."

One is not inherently superior to the other. It's a matter of taste. You like filet mignon. So to you, filet mignon is better. But I like chopped liver ... so to me, it's not.

What does this have to do with your business? Plenty.

Every business needs to have a Unique Selling Proposition, or "USP" ... a reason why customers should buy from YOU instead of from your competitors.

Do you know what the weakest USP is? It's "We're better."

"Better," you see, is nonspecific ... and it's difficult to prove. You say you're better. I say I'm better. Just SAYING it - without being able to prove it - makes prospects disbelieve you.

Also, "better" is such a general term that it has little meaning.

Same thing with the overused word "quality."

So how do you create a Unique Selling Proposition that actually makes people want to buy your product instead of the competition's? There are many methods, but let me describe just three of them here.

1. The first is to focus on a feature of your product - one that is not only different or unique but also delivers an important benefit to the user.

Examples:

Crispix cereal. They didn't say it "tastes better." They said Crispix "stays crisp in milk" ... a benefit consumers want.

Wonder Bread "helps build strong bodies 12 ways." They didn't say it's better tasting or more nutritious. They just said that Wonder Bread builds strong bodies in 12 ways.

2. The second way to create a USP with selling power is to narrow your target market - that is, to focus on a specific market niche.

For example, there are thousands of business consultants out there, all fighting for clients. But my old high school chum, Gary Gerber, is a consultant who doesn't fight for clients. He has all he can handle ... and potential clients waiting in line to hire him.

Why?

Because Gary is not just a business consultant. He is a business-development consultant specializing in eye doctors. And it doesn't hurt that he once owned the largest and most successful optometry practice in New Jersey.

If you were an eye doctor looking to build your practice, who would you want to work with? Gary ... or a consultant who says he can help you but has never worked with an eye doctor before?

3. The third way to create a winning USP is with branding. The branding approach usually takes a massive, costly advertising campaign that small businesses cannot afford.

A great example is the George Foreman grill.

This is clearly not the world's best grill, nor do I recall the manufacturer ever claiming that it is in their commercials. But it is the ONLY grill you can buy with the name "George Foreman" on it.

So if you want a grill that cooks good food, you can get one in lots of places. But if you want a "George Foreman" grill, you can ONLY get it from the George Foreman grill company.

You can't confidently promote and sell yourself without a strong USP. After all, if you don't have the reason why someone should buy your product on the tip of your tongue ... how will you persuade prospects to buy what you're selling instead of going to your competitors?

When formulating a USP, start by asking yourself these questions:

What is different about my product that delivers an important benefit to the user?

Is there an industry, application, or other niche I can specialize in?

Is there a way to brand my company or product in a unique fashion with appeal to consumers?

Bob Bly

Posted by David at 2:23 PM | Comments (0)

September 20, 2005

"Street-Smart" Advertising for Small Businesses

When it comes to small business advertising small business owners don't have fat bank accounts - so they shouldn't gamble.

Bill started a new tile-installation business. To increase sales, he decided to place a display ad in the local metropolitan paper. The cost was $1,200 a week. That was a lot of money for Bill, so he was reluctant to commit to running the ad for more than one week. But the sales representative - we'll call him "Fast Freddy" - was adamant. If Bill wanted his marketing campaign to work, he needed to run the ad repeatedly. He convinced Bill that advertising results don't always come in right away. First, "awareness" has to be built. So Bill agreed to give it a try. And here's what happened ...

Week One: Bill received two calls and set up two "free estimate" appointments - but, unfortunately, didn't book either job. Fast Freddy assured Bill that he didn't have to worry. The more the ad was repeated, the more aware customers would be of his business. It would be only a matter of time before Bill's phone was ringing off the hook.

Week Two: Bill received only one call - and when he tried to set up a "free estimate" appointment, the customer said he would call back. Fast Freddy reminded Bill that if he wanted to be successful in business, he had to build an image. If Coca-Cola, Burger King, and all the other Fortune 500 companies spend so much on advertising just to build an image, it must be a strategy that works.

Week Three: Bill paid the fee for the first two weeks of the ad with his personal credit card, as all of his cash had vaporized. But there were no calls at all this week. And he didn't have the money to run the advertisement again. However, he had an idea. He asked Fast Freddy if the paper could run the ad on a "CPA" (cost per action) basis. Fast Freddy was aghast, insisting that the paper couldn't run its advertising business that way. It had to know that it was going to get paid.

The end of this story is that Bill had to let his small business fold. He went back to working for a larger company that had the capital and position in the marketplace to ensure a continuous flow of new customers.

It's been my experience that if an ad is going to work, it works right away ... period. For example, I used to market electric stun guns in martial arts magazines. The very first time I ran my ad, it sold enough product to earn a profit after paying for all of the expenses, including the cost of the ad. And it earned a profit every time I ran the same ad. But when I made the mistake of buying into the "image-building" approach with an ad promoting an automobile oil additive in local shopper publications, I continually lost money.

Yes, there are exceptions ... rare instances when an image ad that didn't work right away begins to produce after repeated insertions. But if you're a small-business person with limited capital, you simply can't afford to take that kind of risk. As acclaimed marketing guru Jay Abraham said in Message #1486 .

"'Image' advertising (another name for institutional advertising) seeks to create an image about your product or your company in the hope that people will remember you when they're ready to buy. Most image ads say, in effect, 'Buy from us. We're wonderful.'

"As far as I'm concerned, with image advertising you have to spend a fortune over a long period of time before you get any results at all. And even then, the results are virtually impossible to measure."

My Street-Smart Business Principle No. 1:

Always use the "Break-Even Probability Formula" when considering an advertising expenditure.

When you're considering spending money on advertising, calculate how much of your product or service you will need to sell in order to break even, what the probability of reaching that break-even point is, and if there is a high enough profitability level.

In the example of Bill's tile-installation business, he was a one-man shop that profited by an average of about $600 per job. That means he would've needed to secure two paying jobs from each of those $1,200-per-week ads just to break even.

So Bill should've first determined if there was a strong probability that he would make that number of sales from such an advertisement.

And there's something else he should have considered. As a one-man shop, Bill only had enough time to complete two jobs a week. In other words, even if he did get the two jobs he needed to break even on the advertising cost, he wouldn't be able to bring in any additional income to contribute to his overhead or living expenses.

Clearly, making this advertising expenditure was a bad idea.

In an article titled "How to Develop a Successful Advertising Campaign" , Tom Egelhoff astutely notes, "In order for advertising to be successful it must be an investment, not an expense. That simply means that advertising must produce more potential customers who buy something than the advertising costs the company. Advertising cannot create a financial drain on your business."

As a small-business person, it's critical for you to remember that the only kind of advertising you can afford to do is the kind that generates at least enough cash flow to pay for the campaign and still contribute additional profits.

My Street-Smart Business Principle No. 2:

Never risk substantial capital on untried advertising

Another way to make sure you make the best possible use of your limited advertising funds is to avoid making large expenditures on ads that you've never tried before. In Jay Abraham's book Getting Everything You Can Out of Everything You've Got , he wisely advises: "Never test big if you can test small." This sounds obvious, yet too many small businesses don't do it. As a "street-smart" small-business person, you need to be very cautious with your advertising dollars. If you try one large ad and it fails, it could put you out of business.

Be patient when you're trying to grow your small business. It's better to grow slowly rather than taking a risk on gambling it all for one big hit.

By Larry Fredericks

[Ed. Note: Larry Fredericks is an acclaimed entrepreneur with a history of successful business dealings in retail, direct mail, the Internet, and real estate. In addition, he is a nationally published business author and speaker who has recently released his "Street Smart" Business program. For more information on the program, follow this link.]

Posted by David at 1:29 PM | Comments (0)