July 27, 2012
To be successful, your startup needs to offer a benefit to people that they need or want. In every case the benefit you want to deliver to people has been met by some other product or service before you came along.
Before the cell phone there was the land line, before the land line there was the telegraph, before the telegraph there were letters. If you develop a new brand of laundry detergent you are competing with every existing brand on the market, plus all the laundry services in the region, and to some degree every shop that sells new clothes.
Every business delivering any benefit to customers has competitors.
That means that in order for your business to stay in business, it must offer your customers some advantage over their current solution.
Sometimes Advantages Are Hard to Perceive
Sometimes the advantage one business has over another is very difficult to find. I remember going to Bali, walking through customs and seeing thirty money changing stalls, all apparently identical. I was stunned. How on earth could all these identical businesses survive? What could the advantage of the fourth stall on the third row be?
Then I saw a plane load of people land and watched its passengers disgorge into this collection of stalls.
Suddenly the advantage one stall had over another was clear. Each stall could handle only one customer at a time, so a stall that didn’t have a customer had every advantage over one that did.
Sometimes the Advantage You Think You Have is Merely a Distraction
I once ran a business that sought to connect startups to investors. My team created a database of more than 15,000 startups that we updated every 24 hours. While we were building this business we ran events where carefully selected startups were allowed to pitch their businesses to groups of investors in real time. I thought the events were a stop-gap measure until the database was online and investors could just search for the kind of opportunity they wanted. But, as it turned out, when I started talking to investors…the database mattered less to them than the events. That made no sense initially, and then upon further questioning, the investors revealed that they liked meeting with their peers.
You Must Determine Your Startup’s Advantage if You Want To Thrive
Finding out what advantage you offer customers, or potential customers, always requires talking to them. There is no other way to get the data you need. If you have a business, its easy to ask your best customers why they work with you. In some cases the answer may be quite upsetting. One company I mentored in the US thought they had an exceptionally good solution for customers, but talking to their customers revealed that their key advantage was they were listed almost first in a directory.
Initially they fought that finding, but finally embraced it and changed their business name so they were always listed first.
If you do not have customers who can tell you what advantage you offer them, then you must tell people about your business and ask them what advantages they perceive in what you describe.
You have to know what your advantage is, and in fact you almost always have to bundle many advantages together, in order to get your startup off to a good start.
Where Are Advantages Found?
Advantages may be found in your product design, your pricing model, how your product is delivered, the channels through which it is sold, the partners you work with to market it, and even the customers you elect to serve. For example, if you run a trendy night club, much of your value is derived from the customers you draw to the club.
Strong startups offer a bundle of advantages to customers. Although startups must strive to keep their offering simple, straight forward, tightly targeted and clearly defined…that offering may well deliver many advantages to their customers.
Twitter is a very simple product. It provides group-based opt-in text messaging delivered online and via cell phones. But using the tool delivers many advantages. People can add and subtract themselves from twitter feeds, they can reply and retweet messages, they can find new twitterers, and use the tool to network. A simple product product that delivers many advantages.
You can never tilt the playing field enough…
One of the best things you can do for your business, whether it is an enterprise you are just starting or one you have been running for years, is to determine what benefit customers perceive in your offering and what advantages you offer over the competition.
Acquiring this information will help you invest your time, money and resources efficiently. You will end up with lower costs, higher profits and happier customers.