Attract your ideal clients by Building a Unique Value Proposition

Pricing of my service and wrong clients

Before starting to describe how to differentiate from the competition, it is important to emphasize some key ideas:

Price is not an acceptable differentiator. Only a few companies (especially those with high-volume production and economies of scale) can afford to compete solely on price.

Not everyone is your potential customer. Not everyone is willing to pay what your service is worth, and not everyone cares about it. You need to focus on delighting those customers for whom your business was designed, rather than attracting customers solely based on low prices.

We won't build lasting relationships if we attract customers with "50% off," "take advantage of the promotion," "product clearance," "come and buy, low prices." If you only offer promotions, you only generate transactional relationships.

If you communicate discounts or advertise good prices, you are attracting customers solely based on price. Remember that a sale is a mutually beneficial commercial relationship.

Customers don't buy from the best, they buy from the one they believe is the best. In other words, it's not just about being the best, but about appearing to be the best.

You may have the best service, the best attention, the best quality, but if the customer doesn't perceive it that way, it will be of little value.

Focus on differentiating your products, adding value, and serving customer segments with specially designed proposals for them.

If you want to offer a lower-cost service, it is often preferable to have a second brand, also known as a fighting brand. It is an additional and more economical brand launched by a company to protect its main brand.

If a customer doesn't perceive a difference, they will decide based on price

When a customer objects to the price, it's not because they don't have the money to pay, but because they simply don't understand why they should pay more for something that doesn't seem like a better alternative than other options.

To stop competing on price, understand that not everyone is a potential customer. Make sure you have something different that is relevant, and communicate it with brutal clarity.

It's surprising how prepared we are to lower the price rather than argue the benefits.

Reasons why we lower the price

1. Lack of solid arguments: Not knowing the reasons and benefits why a customer should prefer you over the competition. This is not the same as not knowing the features or functionalities of your product/service.
2. Insufficient information about the competition: Only when we know the competition and what we do that they don't, can we justify our price. Often, the customer knows more, which puts them in the driver's seat during negotiations.
3. Lack of customer knowledge: If there is no understanding of the customer, there are no relevant arguments to justify the price. The more the arguments are adapted to the customers' expectations, the more relevant they will be.

If you must compromise on price, do it without destroying value

When it's unavoidable to offer a discount, consider some ideas to obtain something in return:

• Early payment
• Higher volumes: If they buy more, you can offer a discount.
• Reduce the scope of the service
• Request referrals: Offer a percentage or value of discount for each referred customer.
• Promote cross-selling: For example, offer a 10% discount on service A if they hire service B.
• Free advertising: Conditional discount in exchange for brand visibility on the customer's channels.
• Document a success case: Ask for a video testimonial, letter of recommendation, etc., from the customer.

Regardless of the type of negotiation used, the golden rule is that every price reduction must be conditioned on a counter-performance. We are accustomed to giving, but not to asking. If we lower the price without justification, we are destroying value.

Mistakes a Salesperson Should Avoid

The following are the most common mistakes that are made and devalue our brand:

• Feeling the need to sell: Confidence should always be reflected.
• Lack of a clear value proposition: When the customer says it's too expensive and there is no clear response.
• Lack of knowledge about what is being sold: Avoid telling the customer things they could have found on their own on the internet or that could be said in an email.
• Lack of knowledge about who you're talking to: Understand key aspects of the company (projects, competition...) and the person you will be interacting with (education, hobbies...).
• Pressuring the sale: Sales are the result of engaging with the right people with the right argument. Stop trying to sell something to a customer that they don't need.

High Price

Take pride in the cost of your service. Having a higher price in the majority of cases is synonymous with quality, better support, and greater benefits.

It's not about charging more without reason (as some companies have misunderstood).

Of course, nobody wants to pay more for something they consider to have no additional perceived value compared to the competition (the essence of differentiation). It's about creating greater value, which usually costs more.

People want brands and companies that make their lives easier, that care about them, that are honest, that tell the complete truth in their advertising, and that are committed to serving. As consumers, we're not looking for simple transactions (giving money in exchange for something), we're seeking experiences, stories to tell, and moments to remember.

You're probably not effectively communicating these aspects. And they are not always directly related to the product's performance itself; they can be collateral benefits such as warranties, control systems, or ongoing training that make your offer different.

Here are some aspects that make your service proudly expensive:

• Professional profile of the salespeople: This allows access to more effective solutions in less time.
• Information systems: Even if they are internal, they indirectly help the customer.
• Backup in case of contingencies: Good providers are known in difficult situations, so communicate this to your customers.
• Technical support
• Certifications: Let the customer see that there are no improvisations in your service.
• Proven experience
• Personalization
• Legality

You just need to be brave for a moment. When a customer asks for a discount, kindly say no and immediately explain why. Remind them of your differentiating factors and everything that makes you a better choice than other options in the market.

Stop Chasing the Wrong Customer

Specialization or diversification? Many times, it is believed that offering more services will attract more potential customers, but the truth is quite the opposite. This makes you a easily replaceable generalist. Customers distrust companies that claim to do everything.

Specialization is appreciated because it assumes a greater understanding of needs. It is assumed that specialized companies have better structured and approved processes, which customers value and are willing to pay for.

Starting with a very low price to win a customer, thinking that you can raise it later, is a utopia.

Most of them will not be your ideal customers. Our value proposition is not as important to many of those whom we believed would be loyal consumers. The problem is not that there are not enough potential customers; the problem is that we are trying to convince groups of people who are so diverse that the majority will never become actual customers.

A large part of your target market are not truly potential customers for the following reasons:

• They don't know it: No matter how much you increase your advertising budget, there will be a group that is simply unreachable.
• They don't have the money: There are people who may want it, but they don't have the resources to acquire it.
• It's not relevant or urgent: They have lived without you and can continue to live without you.
• They are satisfied with their current service: They prefer to maintain the inertia of sticking with what they know; it works well enough for their needs.

Specializing means dominating market segments with little competition. If there are other companies serving the segment you intend to specialize in very well, the probability of becoming the dominant player is very low.

Market niche: A group of people with similar interests and tastes for which your proposal will be relevant. Niche doesn't mean a small market, but a specialized one.

Characteristics of a bad customer:

• They don't comply with agreed-upon conditions.
• They are not profitable, and there is no way to make them profitable. Gaining a new customer with significant concessions in the hope of future profitability is unlikely.
• They don't pay on time consistently. When they commit to payment dates but fail to meet them.
• They ask for unreasonable discounts.
• They don't contribute their part. When they don't do their homework, it becomes impossible to provide them with adequate service, which affects the company's reputation.
• They remind you that there are other options. It's a pressure negotiation tool that is not a good sign.

It's okay to let go of a customer. A bad customer destroys and wears down.

Ideal Customer

Think about those current customers from whom you would like to have more.

The key is to discover who that customer resembles as closely as possible and then build your marketing strategy around them to attract more like them.

If you're not clear about your ideal customer, create a hypothesis of your target customer. This will be just a hypothesis toward which you will direct all your marketing efforts.

The profile of your ideal target customer will evolve over time.

Differentiating from the Competition

Offering more of what already exists, with minimal or imperceptible differentiation, is a "chronicle of an announced death."

Doing things well is simply not enough. There are many companies doing things well, nothing new in that.

There are several aspects that benefit a brand that has a clear differential:

• Creates value.
• Avoids competing on price.
• Generates brand loyalty.
• Makes the competition irrelevant.
• Grabs attention.
• Generates affinity and empathy.
• Justifies the purchase.
• Generates word-of-mouth.

Characteristics and Myths of a Differential

A differential can be found in the small details, well-executed and masterfully communicated, that make customers choose us.

They don't have to be grand and ultra-innovative things.

The differential is something that evolves over time. The first version will never be definitive. Start exploring, playing with hypotheses, putting options on the table, sharing them with your customers, and comparing them to what exists in the market. The differential will be created and take shape; you just have to start the process.

False differentials:

Lack of knowledge about what competitors are doing makes us believe that we offer surprising products and services when they are actually standard.

These are what we call false differentials. Things we believe distinguish us from others, but in the eyes of the customer, they are very similar to what already exists. Some false differentials include:

• Good quality. Quality is an expectation that most of your competitors also meet.
• Good service. Service could be a differential when it exceeds any expectation.
• Comprehensive solution. Unless it represents additional perceived value for the customer.
• Tradition and support.
• Wide variety and assortment.
• Personalized advice.
• Low prices.

Being better than the industry average doesn't make us different.

Being the solution that the customer dreams of, one that nobody has created yet and that would redefine the industry (as terrifying and risky as it sounds), that is a differential.

Designing and Testing Your Differential

Asking Your Customers

Conduct interviews with your top 10 customers. It's better if the interview is conducted by someone who hasn't had much contact with the customer. Ask the following questions:

• Do you remember why you chose to hire us in the first place?
• Knowing that there are other options in the market, is there any particular reason why you continue to work with us?
• Do you think there's anything that sets us apart from other market options?
• Have you ever recommended us? If so, any specific reason?

We are looking for common elements that are mentioned repeatedly and not in isolation. After the interviews, analyze and look for common factors in the responses.

Differentials are often small details perceived by the customer that allow us to build a whole story around them.

10 Differentiation Alternatives

1. Positioning differently: Claim a special attribute. It may also be possessed by your competitors, but by consistently and solidly communicating it across all touchpoints, the market will assign it to you. Example: Hard Rock Café.
2. Product feature: Promote something that no one else has. Something that your competitors don't have, whether it's a component, certification, methodology, or exclusive representation. Example: Google and its efficient search engine / Xtreme3 razor made with recycled plastic.
3. Level of service: Provide extreme and surprising service. Good service is the norm; here, we're talking about a level of service that the customer hasn't even dreamed of, beyond any known standard. Example: Disney. Customers can copy technology, supplies, and advertising campaigns, but it will be more difficult to replicate your level of service.
4. Storytelling: Tell an inspiring story. A purely emotional differential that appeals to the meaning that companies represent to us, our beliefs, and principles. A story can inspire, excite, or captivate, but it will never go unnoticed.
5. Market niche: Focus on a specific segment. Develop a comprehensive value proposition for a segment of people who share very specific characteristics.
6. Customer experience: Make the customer feel unique and special. It's not just about the essence of what you sell; it's about everything that surrounds and complements the experience.
7. Specialization: Do something much better than the rest. When you focus on communicating something specific, the message becomes much clearer and more effective. It should be consistent in your advertising, sales brochures, and sales arguments. Example: Atlas, a piano transportation company.
8. Distribution: Be present in more convenient locations. Among the many alternatives to strengthen or increase distribution are cross-selling with business partners, direct sales through catalogs, online stores, and franchises.
9. Design: Express aesthetics and functionality that captivate. Design understood as the attraction generated by aesthetics and functionality. It's about how products and services look and function. We buy brands that, despite costing more and not being technically superior to the competition, appeal to and attract us. Example: Apple's iPod (2001).
10. Processes: Communicate your different way of doing things. Processes refer to how you do things, which ultimately generates a final result. Processes create preference because they make the product special and give it a story to tell. Think of a "handmade" product.

Not all differentiation alternatives have the same impact on the market, cost the same to develop, or involve the same level of risk.

The goal of differentiation is to be more attractive than your competitors, so that customers prefer you over them, even if it costs more. A good differential should translate into increased sales.

Differentiation is not just another strategy to implement in the next marketing plan. Differentiation is a business philosophy that helps you grow profitably and sustainably.

If differentiation doesn't help us achieve customer preference and sell more, it doesn't make much sense.

Make sure that any additional investment you make to improve the perception of value makes sense and is appreciated by the customer; otherwise, you'll be wasting money, and it doesn't matter if you stop offering it. Not everything we think is relevant truly is. And not everything we do well is a differential. If we do it well, and others do it too, it's not a differential.

Strengths are not differentials

This is a common mistake we make. We advertise strengths as if they were reasons for preference. It's not surprising that these aspects end up being irrelevant to customers. Differentials are the things you

have that your competition doesn't have and that are relevant to your customers.

3 characteristics of a good differential

1. Unique in the market's perception: Perception is reality. No matter how different you consider your service to be, if it is seen by the market as just another offering the same benefits as competitors, it's not a differential. It's something you do well, but not a differential.
2. Valued by customers: Just because something is new or different doesn't mean the market appreciates it and is willing to pay a higher price. A good differential delivers something that is not only different but also relevant, representative, and desired by the customer.
3. Specific and easy to communicate: Be very concrete, specific, and easy to communicate. The best advertising is the one that people understand.

Testing your differential

We can never be 100% certain that the differential we have chosen will be successful.

Test your differential on a small scale:

• Limit it to a specific area.
• Select a few customers.
• Start with a product line.
• Create a new brand.
• Launch special editions.

If it works, prepare quickly to scale it.

Failures don't exist. We only learn new things that don't work. We eliminate options, perfect the process, and move towards the final outcome.

Communicating your differential

Many good companies end up competing on price and struggling to attract customers because they fail to effectively communicate what they do. They lose the battle to other companies that, without being better, promote themselves better.

Customers want real, authentic, genuine brands that speak to them as someone they trust would. Not with sophisticated messages that say nothing and are exactly the same as those of the competition.

Communicate your differential at every touchpoint. Your advertising promise must be consistent with the reality of the service. Creating a customer journey helps identify all the customer touchpoints and how they may be positively or negatively influencing the purchasing decision.

Examples of touchpoints:

• ‍Before the purchase:‍
• ~Website, social media, customer ratings, advertising, brand logo and slogan, promotional material, testimonials, email marketing, FAQs, history, trade show booth, business cards.‍

• During the purchase:‍
• ~Website, phone contact, salesperson, reception, offices, demonstrations, security personnel, sales presentation, payment process, webinars, company vehicles, catalog, invoice, parking, employee uniforms.‍

• After the purchase:‍
• ~Technical support, warranties, training programs, special events, community/forums, troubleshooting, phone hold messages, mail, loyalty programs, informative reports, gifts, user manuals, satisfaction surveys.

Components of an effective advertising message:

• Clear: Be clear in what you want to convey, and you'll need fewer words to say it.
• Concise: Brevity and conciseness make it easier and quicker for consumers to understand what you're trying to say.
• Focused: Focus on one thing. One ad, one idea. It's tempting to use a communication piece to mention all the great things your service can do. By trying to communicate everything, you end up communicating nothing.
• Direct: Get straight to the point, provide a concrete reason, and convey a benefit that invites action.
• Credible: Consumers know that there are many deceptive advertisements. Credibility generates trust and encourages the customer to take the next step.

Differentiating is a continuous process of envisioning new demands and surprising your customers.

Conclusions

1. There will always be someone willing to lower prices more than you.
2. Not everyone wants to buy cheap.
3. If the customer doesn't perceive a difference, they will decide based on price.
4. Not everyone is a potential customer.
5. Not everything different is a differential.
6. A good differential is unique, valued, and specific.
7. Your differential is not what you say, it's what you do.
8. Communicate your differential strongly.
9. No differential lasts forever.

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Disclaimer

The following information is a limited excerpt from the book "Bueno, Bonito y Carito" by David Gómez. Readers are strongly advised to purchase and read the complete book (link to book on Amazon here) to gain a comprehensive understanding of the valuable insights found within its pages. This excerpt provides only a small sample of the wide range of information addressed in the book. We assume no responsibility for any decision or action taken based on this excerpt.

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