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How Your Three Competitive Levers Define You
How Your Three Competitive Levers Define You

How Your Three Competitive Levers Define You

Cross posted from Torben Photography.

There are any number of ways we can choose to compete.  However there are only three primary ‘levers’ you can pull to steer your product or service competitively.  If yours is a service business, these levers are Cost, Offerings (your services), and Customer Service.  This is true whether your business is cutting hair; being a clown; or, making real estate photography images.

imageThese three levers are often used to define the three corners of the Iron Triangle.

The iron in the triangle comes from the fact that you cannot change any one point without impacting the rest of the triangle.  For instance, if you price your offerings lower, you cannot afford to deliver the same level of service.  Similarly, if you offer lower (customer) service, they will be less willing to pay the same price (Cost) for your offerings.

As a new startup, your financial limitations may limit the overall size of the triangle.

No matter what you do, a change to one corner, effects the other two.

What I particularly like about how these relationships are depicted, is that Quality is defined by all three together. This also underlines the notion that Quality is not a competitive differentiator: Everyone, Every Product, Every Service, is expected to have Quality. That said, what your customers perceive of as Quality (or Value) is an intangible you get to determine based on those three levers.

Collectively, how you elect to position the levers (how you choose to invest) defines the quality, or value proposition, that is uniquely yours.

As a professional photographer there are, of course, many ways to differentiate yourself. However the individual details collectively come together as one of the levers.  For instance, one way to grow your value proposition, is to increase the number of Offerings you have.  What do you do beyond show up and click your shutter? Do you do video; have a distinctive style; or, provide virtual tours? How about your pricing?

Do you know your business model well enough to truly understand your cost of doing business? Understanding your cost of business empowers your being flexible when negotiating pricing with customers. At this point I should point out something that escapes many people: Your price is part of your customers cost in their own iron triangle.

Within the photography space it can be hard to stand out, to differentiate yourself, purely on the basis of unique Offerings or Cost (price). Spend an afternoon doing competitive research and you find the offerings are all incredibly similar.  The result is that photographers can readily be perceived as offering a commodity service.  As a commodity provider the only place you can compete is on Price!

Competing on basis of price is often a startup’s point of entry, since they’re not able to fund significant investment elsewhere.

It is incredibly important to stand out from your surrounding market.  The unique value you offer is why a customer decides to call you rather than the other guy or gal.  If you struggle to deliver a service that is significantly different than your competitors, consider focusing on the Service you provide.  This can come down to being easy to do business with (is your phone on, do you answer it, or let it go to voice mail?), availability (are you available tomorrow, or next week?), and positive people skills (are you pleasant to deal with, effective, or a pain in the buttocks?).

My current favorite examples is my local Volkswagen dealer. The VW dealer offers a full-synthetic oil change for $89.  In the U.S. a common quick-oil-change shop can get you in and out for as little as $25.  My local GM dealer offers $10 oil changes…clearly a loss leader to get me in the building.  So, why did I pay $89 (actually, $78 as a Christmas Eve courtesy) for their oil change, when I could get a commodity offering for as little as $10?

There are a number of reasons. For one, the service bay is shared with Porsche (I can dream). But the real deal is service. While they have my car, they offer me a new demo unit as a loaner.  I get to test drive a new car as I head off to a nearby Starbucks.  I’d much rather sit in just about any Starbucks waiting for an oil change, than in a dealer’s waiting room.  When I got the call my car was ready, I was told, “No rush, come back whenever you want…enjoy the new car.”

When was the last time, if ever, you heard that?  There are some other minor details, such as the included car wash, being told I could come by ‘anytime’ for another wash, and including the pleasant chat with the service manager (relationship building). And, all the other fluids had been topped off too.  Ok, many places do that, but I’ve noticed now-a-days its an up-sell in some places. And the $10 visit? The other dealer doesn’t top off the other fluids let alone wash anything.

Recognize that Price isn’t everything!

My goal in putting this post together is not to provide a definitive answer to market competitiveness. Rather, provide a core structure for discussion and contemplation.  I encourage you to add your own thoughts as comments below.

Image credit(s):

Pumpkin Patch – Source Unknown
Sydney Harbour Bridge – flickr Commons
Iron Triangle – Torben Photography


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