In my last post, Five Ways to Make More Money in Business I talked about ways that building a strong brand will help your business thrive. There are also three ways that your brand can prevent you from losing business.
The Leaky Bucket.
While your marketing is working hard to put new customers in your bucket, existing customers may be leaking out – the leaky bucket. The objective is to increase the rate of fill, and stop all the leaks.
Building a strong brand is the most powerful way to keep customers from leaving you. Another way to think about your brand is as the relationship you have with each customer. Has the unique value you’ve provided made them loyalto you? If you continue to build the relationship by providing a product or service that provides a greater value than your competitors, your brand and relationship will be strong. They’ll stick with you. A strong brand will help you keep customers in three ways.
Preventing Leaks #1
Protect from competitors. Building a strong brand will help keep your customers from taking their business elsewhere. Just as you are focused on filling your bucket with new customers, so is your competition. They want to steal your customers. Customers become loyal when you provide something that is different from your competition that your customers value. This could be a rational benefit like a special feature, or could be an emotional benefit like the way your product or service makes them feel.
Do you provide something different or better than your competition? Do you clearly state this at every communication point? Customers have many options to choose from, so what makes you the one that stands out from the pack? Is your difference valued by customers?
Preventing Leaks #2
Protect from new businesses. Building a strong brand will help protect you from new businesses who become your competition. Let’s say that you own the local appliance dealership in a small but growing community. The appliance business has been in your family for decades, and you’re the third generation to run the business. You find out that The Home Depot is opening in a town just 30 minutes away. This is new competition that you’ve never had to contend with. You know that The Home Depot is going to have lower prices than you currently offer. Is your brand strong enough to protect you from this new competitor? Will your customers be loyal?
If you have built powerful points of difference, it will help you defend against this new competitor. Price isn’t always customers’ first priority. You’ll have some customers that will value what you offer even if the price is a little higher. If you’ve given them good service, been honest and treated them fairly you’ve put some goodwill in the bank. If your brand is “honest, fair, good service, small, family run” then how can you use this to your advantage and provide something that Home Depot just can’t copy?
Preventing Leaks #3
Protect from substitutes. What are substitutes? They’re competitors that you can’t even see. This is what happens when customers decide not to purchase from either you or your competitor and fills their need a different way.
A simple example if this is the brown bag lunch. Since the economy has gone downhill, many workers who used to eat out for lunch every day have started to bring their lunch from home every day. Instead of spending $6 to $8 for a sandwich, they bring one in a bag for just a dollar or two.
If your product or service is a commodity, and isn’t really different from other options, it’s easy for customers to trade down to a cheaper substitute. If you’re a sandwich restaurant, does your sandwich really provide three to four times as much value as the brown bag lunch? Well, it depends on lots of factors such as taste, convenience, experience, health, relationship and many more. Have you built your brand on the factors that your customers value the most? Is your price premium in line with the extra value you provide?
As a marketing speaker and business coach, I meet with thousands of business owners every year. Many small business owners (and even billion dollar brands) are very focused on filling the bucket, but spend less time on keeping their current customers coming back. Working to strengthen your brand with your current customers can be one of the most profitable things you can do to grow and maintain your business.