May 18, 2000
Added value works when you tell clients they're getting it
Dr. Lynda Falkenstein
A: I think a few things. First, I know that it's not enough to simply give value to a customer or client. Today we must give added-value. We must give people a reason to do business with us beyond the specific widget or service they are paying for. The reason is obvious. They can nearly always get that widget or service from someone else who is equally competent and smart.
Secondly, the question I ask is, do your clients even know that what they are getting is added value? Have you actually told them that whatever that 13th donut is you're serving up is beyond standard-operating procedure? My guess is that the only people who know that you are extending added-value are you and your partners. If you haven't been explicit with your clients, saying something such as "Because you have been a client of ours for 5 years," or "Because you are a new client," we are extending this special set of services for "x" amount of time, it's logical your efforts will all be taken for granted. In other words, "added value" works only when you tell your clients they're getting it!
And finally, if you are still doubting if adding value really makes a difference in people's choices of one supplier over another, think about the last time you booked an airline flight. My hunch is, one of the major factors influencing your choice of carrier was that frequent flyer card in your wallet. For many of us, racking up those free miles aka value-add is the linchpin in our decision about which airline to call or click through to on the internet.
Since value-add is not an option in today's world, and since savvy business owners and managers know it must be an integral part of their niche plan, what's your business's 13th donut?
Q: We're a small business, and while we know it's fashionable to say you've got a niche, frankly we doubt that it's even a good idea for us. The question is, can you be too small to niche?
A: No. In fact, the smaller you are, the more critical it is to be obsessively niched. The reason I say this is because the smaller you are the more you have to lose. While the fate of huge companies also rests on their commitment to a clear and tightly focused direction, when they stray away from it, they've got more cash to fall back on. For example, when Sony went wild in the mid 90s buying Paramount and other companies outside its niche, the resulting punishment of $4.5 billion in red-ink was absorbed by lots of stockholders. When a smaller company does the same thing, it goes out of business.
My hunch is, the act of keeping tightly focused would be less fearful if people realized that narrow can be very deep. If you doubt this for one minute, think about Starbucks. Although they have recently ventured into sandwiches, the company's core is coffee. Lots of it. And not just any coffee, but beans for the affluent.
The beauty of niche for the small business is that when you're really well niched, you have taken all the junk off your plate. You're not trying to be all things to all people. Your resources are going in the same direction, saving money and energies.
Moral of this story? While every business needs a powerful niche, if you're a small business, don't just walk, race to the niche store now!
Q: My wife has a niche but won't do anything about it. Our children are grown and she has time now to turn this thing into a real business, but I can't get her to move. Everyone comes to her for this particular product. (If I said what her product is, she might read this and know I wrote to you). My question is, "How do I get her off the dime and take advantage of the opportunity in front of her?" If it were me, I'd have done this thing years ago and we'd be sitting pretty by now.
A: Probably you don't. Harnessing a niche is a very personal thing. I don't know why your wife is sitting on hers. Maybe it's a rational, sound reason. Maybe she doesn't want to commercialize something she enjoys. But, maybe she's scared. Maybe she doesn't want to be pushed. Maybe her confidence and self-esteem levels are low. Maybe she's afraid of failure. Whatever "maybe" fits, it's unlikely you can do anything about it, other than at an appropriate time discuss the subject with her, trying to understand the genuine, most underlying reason for her inaction, which obviously is an action. Beyond that point, you're going to have to simply accept her decision. The fact is, it's not you and she doesn't seem to have asked your opinion. Difficult though it may be to digest, this niche (for better, for worse, or not at all) is hers, not yours.