Bph~Profit Nov2008 (Web)

8/9/2019 Bph~Profit Nov2008 (Web)

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+ TOP 100 WOMEN ENTREPRENEURS pSO


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TRUTH AND CONSEQUENCESDetermining the real reasons customersbuy from his company helped RogerHardy make Coastal Contacts aS102-million-a-year business


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you over your competitors. Unless you' ve gonethrough a disciplined exercise to identify yourtrue advantage, the odds are that you're off base.You might be promoting a benefit that customerscare little about, or that isn't decisive in their bu y-ing decision You might be promising somethingyour firm doesn't consistently deliver. Or you

might be right about th e general terrain on whichyou have an edge over your rivals, but you're com-municating it with empty cliches. (The others inSmith's top 10 are good results, our employees,consistent management, responsiveness, innova-liveness an d trust.)

It's far harder than it looks to state conciselyhow }'ou're better than rour rivals, so it's tempt-Ing to sUck with a stale platitude and go back torunning your business. Yet if your marketing ma-terials don 't distinguish your product from tha t ofyour rivals, you'll struggle to fill the sales funnel.If you don' t supply your salespeople with a mean -ingful answer to the question UWhy should I buyfrom yo u? " they'll be forced to compete on price.And if y ou r existing clients aren't crystal clearwhy they' re doing business with you, they couldbail.the minute they get a better offer.

On the other hand , i f you're one of the fewfirms to get this right, you' ll protect yourselffrom stiffening competition, sectoral slumpsand, to th e greatest degree pOSSible, a full-blownrecession. Should you decide to sell your firmdown th e road, you' ll fetch a better price frominvestors prepared to reward a business that's la-se r-focused on its true advantage. Your staff willreward you, too, because working for an employ-er that knows what it delive rs better than anyoneelse creates a sense of pride and excitement thatenergizes th e entire organization.

The best news is that your rivals are probablyhopeless at this task, leaving a market vacuumyo u can fill. Roger Hard y, president and CEO ofCoastalcontacts.com, a Vancouver-based onlineseller of eyewear whose revenue climbed from $9million in 2002 to $ 102 million in 2007, says i fyou get It right and your competitors don 't, "youbecome th e gorilla, a company that gets a dispro-

portionate share of the sales and, most impor-tantl y, th e profits."

Hard y, who has founded seven companies, ad-

COURTING THE CLUELESS CUSTOMERAddress the unarticulated needs of everydayclients, and your business will boom

You can't define your competitive advantage until you figure out the roleyour firm plays in your customers' lives from their point of view, notyours. That can be tough if you're meeting an emotional need even theydon't reatize they have.

This is where a competitive-advantage specialist's probing questions canget to the heart of the matter. Blueprint Business Architecture recentlydid so for financial Intelligence Inc., an operator of money-managementcamps that plans to expand nationwide by 2010. Last summer, the firmsold out its debut offering of 16 five-day camps in th e Toronto area atwhich kids aged nine to 14 learn how to make, manage and multiply theirmoney. Blueprint, which helps answer th e question "Why do business withus?" with an Inspiring Proposition (IP) of seven or fewer words, worked

with Financial InteUigence president Jorge Ramos to suss out the realreason a parent would pick Camp MiUionaire for their child over so manyother camps. It's not, he says, to try to turn their kids into mini-Trumps,but to give them the skills and self-assurance needed to manage anythingin their life that relates to money-in other words. almost everything.Give your kids that, and you'll feel like a parenting pro.

That insight led to this IP; "The confidence and ability to do anything. '"

As soon as he heard this phrase, Ramos knew "it was exactly what I hadwanted to express, but wasn't able to so dearly. It's not something Blue-print created for me; it's something they were able to pull out of me ."

An IP aims to intrigue prospects into wanting to know more. Blueprint

equips its dients with a Brand Dialogue of crisp one- to four-sentenceanswers to seven to 10 questions a skeptical prospect might pose. Ramos,for instance, can explain his IP this way: "Everything in life is linked inone way or another to money. Money creates and limits what people cando and have. Expertise around money expands the possibilities peoplecan have in their lives. Financial Intelligence gives people the confidenceand ability to do anything they want." Other answers detail how the campdelivers on this promise.

Ramos says parents have told him the IP resonates with them, and it hashelped him to quickly and passionately explain his mission in media in-terviews. Next on th e agenda: his IP will be central in marketing his nextventure of weekend money-management camps for adults, - J H

mits he was " no t great" at identifying th e true differentiatorat his previous firms, mostly Web-based businesses that com-peted on price. But without th e economies of scale to con-sistently undercut his rivals, competing on price alone madehim vulnerable to market downturns: OIl was left without achair when th e music stopped." Yet Hardy was so caught upin th e price game he didn't question his assumption tha t costwas all his c lients cared about. " Back then , I was much lessengaged with my customers," he says. "W hen you're havingsuccess, you think , 'I must be dOing what customers want. '"

Price remains a key advantage for Coastal. But its true differ-entiator Is continuous innovation to make it ever more conve-nient for customers. The company streamlined th e orderingprocess so it takes four minutes or less to purchase a pair oflenses. I t eliminated any perceived risk in buying from an un-known, vir tual vendor by inVOicing customers onl y after theyhad received and tried the lense s, rather than requiring pay-ment up front. It took th e worry out of waiting for product byusing Fed Ex for next-day delivery. And it hammered home itsadvantage in convenience on its website, in a million e-mailsper month to its customers, video ads on Facebook, an d TV,newspaper and other advertising.ardy got religion a few years ago about th e need to culti-

vate advantages bey ond price when he read In si r/e ti l e Tomar/a,Geoffrey Moore's book on surviving in hypergrowth markets.

Hardy sa)'s Coastal never stops working to deepen Its ad-vantage. His mana ge rs take turns phoning 20 customers per

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quality regardless of lighting conditions. Withits superior organization, VRX can, for example,move fast to reshoot Images that need updatingbecause facilities have been renovated.

Yet Maclaren was loath to capitalize on his trueadvantage, because margins for photography were30%, versus 80% for virtual tours. '" thought,

'Nah, I don't really want to do it,n he recalls. Butwith his firm running out of cash and his sectorin recession, he had little choice but to give th enew market a tr y. That move yielded th is secondinsight: his highly scalable production process al-lowed him to generate 10 times as much revenueas he could in his original niche. That's par tly be-cause hotels renovate frequently and hate havingstale visuals on their websites, requiring 20 % ofimages to be replaced annually.

Since identifying its true advantage, V RX hasbuilt its business ar ound enha nCing it. In 2006,it launched a guarantee that no rival has theproduction process to match: to reshoot within30 days any images needing an update. It be-gan date-stamping its images as part of its "Al-ways Fresh" brand positioning. saysthis was a key to l anding big accounts such asBest \Vestern International and Fairmont Hotelsand Resorts. Reinventing the business also savedit . While demand has exploded for hotel im-ages, it has stagnated for virtual tours. "If I hadstuck with just that, we wouldn't be alive, '" saysMaclar en. "In hindsight, expanding into hotelwork was the best dec ision, but at the time it wasa reluctant decision."

If you ' re no t as lucky as VRX, you' ll need a S}'S-tem for pinpointing your true advantage. For afew tens of thousands of dollars, yo u ca n bring ina competitive-advantage specialist to lead brain-storming sessions, resolve conflicts and keeppressing until you reach yo ur ah a ! moment. Butfirst you' ll need to ask three questions about th eapproach }'ou wish to take. The first is about th enumber and scope of the competitive-advantagestatements you'll make. Would y ou rather pres-ent s eve ral tactical benefit statements, replacingthem as necessar}' as your customers' preferences

and riva ls' offerings shift? Or would you pTeferto sum up yo ur overa ll promise to customers in asingle statement designed for indefinite use?

A PROMISE YOU CANKEEPHow one company wows customers bydelivering on a simple pledge

Beitville International (BRI) demonstrates how to avoid twocommon blunders in defining your company's competitive advantage:promising something you can't always deliver, or promising so manybenefits you lose credibility.

The Mississauga, Ont.-based freight forwarding and logistics firm workedwith competitive-advantage consultant Harish Chauhan to sum up in justa few words where BRI excels over the competition: "Building Reliabili-ty." This Unifying Philosophy (UPh) was far more focused and substantivethan BRI's previous tag line of "Bold. Reliable. Innovative." Chauhan, CEOof Toronto-based Business by PhHosophy, says "they chose 'reliability'because it was the biggest thing they were best at, passionate about andcould consistently execute on." However, they considered but rejected a

bolder promise, "Breakthrough Reliability," because it might have createdthe unrealistic expectation of groundbreaking service every time.

Narrowing BRI's value proposition to a single benefit helped the firm's 300staff in 12 countries put meat on the bones of its promise. Jeff Cutten,CEO of SRI's North American division, says the word "Building" sets a goathis team must ne ver stop pursuing. "Reliability is like happiness," he says."It's never completely attainable, so you're always striving to get there."

BRI also worked with Chauhan to develop five "bridges" to it s UPh-com-munication, accuracy, awareness, imagination and enjoyment-and hasemployees work for two months at a time on how to execute each. Inthe awareness bridge, for instance. staff in each of BRI's 23 offices did

in-depth research on that office's top five clients -includ ing touring cus-tomers' production plants-"to understand how we fit into their worldand why we're important to them,'" says CuHen. Wowed clients said noneof BRI's rivals had ever shown such interest in their business.

Cutlen says the awareness bridge also made SRI see that it wasn't prop-erly marketing its edge in the key niches of high-end autos and fashion.Reliability is an appealing promise for a firm shipping pricey suits thatrequire the sort of exceptional care general shippers such as FedEx aren'tse t up to deliver. BRI therefore se t up branded product groups for eachniche. That helped it land new business, including from luxury automak-ers reassured to learn that Aston Martin entrusted BRI to ship a 1.4-mH-lion model for the James Bond film Casino Roya{e. - JM

Smart Advantage takes the first tack. Its clients ty picallytake to market three to five statements highlighting particu-lar attributes of their competitive advantage. Most havc num-bers attached, such as "Our engineers have a minimum of15 yea rs of expe rience, twice that of our nearest competitor."Statements like this stand out in a sea of "blah blah blah" bystating or strongly implying reasons to bu y from you. Still,thcy have a finite lifespan. Smith says you need to keep iden-tifyin g new advantages as rivals copy your exis ting ones. Sheadvises SMEs to devote on e day per quarter discussing th e .sta te of their advantages and spend 58, 00 0 to 510, 00 0 peryear on market research that tests which statements cu rrentlyresonate with customers and prospects.

Some consultants take the second approach, working to-ward a snappy positioning statement with no exp iry date.Chauhan says his unif ying phiJosophies- which are tighll)'written to allow customers an d staff to grasp y ou r firm's. mis-Sion easily- crystallize your compan y's D NA . B;\-fW has builtbillions in equity by maintaining its positioning as "TheUltimate Driving Experience" for more than 30 yea rs whilecontinuously evolving how it executes on that. " What was ul-timate 10 years ago Is no t what will be ultimate 20 rears fr omnow," says Chauhan. " But th e statement s ta ys th e same."

Th e second question y ou must ask is who determines whereyou r true advantage lie s. Can your customers tell you, or doonly you know?

It appears to be a point of contention among competitive-

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WHICH COMPANY WOULD BUY FROM?

"WE'RE RESPONSIVE"

O R

"WE GUARANTEE TO SHIP YOURORDER WITHIN AN HOUR"advantage specialists. " Your customer s' perspective is th eonly one that matters ," says Smith Datly. Her process startsinternall y, with clients brainstormi ng 50 to 100 potential at-tributes of competitive advantage. Next, th e y cull th i s longlist to 20. Th en a market-research firm calls a mix of custom-ers and prospects to ask them to score each attribute on ho wmuch it matters in their pu rchasing decision. C ompani es taketo market th e attrib utes scorin g in th e top three to five.

Smith says no clie nt of hers h as ever guessed right on th etop three. That happened again this June , when Smart Ad-va ntage wo rked with Calgary-based Telcan We ll Se rvices Ltd.,wh ich helps o il and gas producers extract more from th ei rweUs. Dale Dusterho ft, Tr ican's vice-presid en t of technical se r-vices, says that although th e company knew that its stock ofequipment- the largest in th e indus tr y- allows i't to respondfaster to clients, it was surpri sed w hen customers rank ed thisbenefit No. I. Next Glme a high le\'el of expe rtise of technicalsta rr, which Trican expec ted. But it d idn 't expect a high safetyrating to crack th e top th r C

Bph~Profit Nov2008 (Web)

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