The most successful small businesses have found out that there’s a decision they need to make, if they want to succeed.
The decision is about where they decide to position their business:
- You can focus on developing a quality brand.
- You can focus on developing a budget brand.
- You can’t do both, without one hurting the other.
Yes, some large companies can subdivide their overall business into separate divisions, with a quality brand and a budget brand, under 2 different operating names and with 2 totally different marketing strategies (and a hefty marketing budget). Even then, many of the big guys get it very wrong!
When it comes to small business owners, we have a decision to make. We need to position ourselves, either as a quality brand or a cheap and cheerful brand. We can’t be both.
Here’s why: The market knows that great people don’t do cheap work and that cheap people don’t do great work.
In addition, by trying to serve both ends of the market you send a mixed message, which can really hurt your business, as the following example demonstrates.
How an English pub paid the price for failing to choose
Here’s an example of what can happen, if you try and attract both ends of the market.
Around 5 years ago, a friend asked me if I would speak with his sister, who owned a village pub and restaurant in Kent, England. He said she needed help and he was right. The problem she had was immediately obvious. She was trying to position the pub simultaneously as a place that sold cheap booze AND as a family venue with great food.
Here’s what happened. The cheap booze attracted people who were, by her own admission, young, loud and prone to bad language. This stopped most families from visiting the place more than once, as most people don’t want their kids around that kind of atmosphere. Equally, it wasn’t the kind of atmosphere you would choose if you wanted to go out for a nice meal either. So, a very small percentage of diners ever returned.
There wasn’t enough profit from the cheap booze crowd to sustain the business, however, because the boozers were stopping the highly profitable diners from eating there, she said she didn’t want to lose the cheap booze income, for fear of having nothing. So, she ended up wasting thousands on advertising and promotions aimed at diners and families, which did attract some people, but very few returned. After 18 months in business, she ran out of money and then she ran out of places to borrow money.
Interestingly, the pub was then bought by someone who transformed it into a very successful country restaurant, bar and seminar / meeting venue, with a reputation for great food and a warm, welcoming atmosphere. The place has a clear identity now, as a quality venue. It attracts people who are happy to pay a premium for quality. It doesn’t attract people looking for a cheap place to get drunk.
We have to choose
I wrote recently about how we need to match our fees or prices to our promises. Well, we also need to check that our business is balanced correctly, that people know who we are and where we fit into the quality / price spectrum. For example, a designer with promotions all over their website for bargain $50 logo designs, is going to have trouble convincing us they are worth paying $5,000 for their premium design service. We know they do $50 work, that they work at the bottom end of the scale - The best designers don’t do that.
Where do you pitch your prices or fees and what messages do you think that gives people? Are you trying to attract both, premium clients and budget conscious clients? If so, are you aware this usually makes you look like poor value, for the premium clients?
Take some time to review the type of client you are attracting (premium focused or budget conscious.) If you want more premium clients, but tend to attract the fee sensitive crowd, there’s ALWAYS a reason. Start by looking at your marketing messages and pay special attention to anything that suggests you serve the cheap end of the market.
Just like the pub owner I mentioned earlier, we have a decision to make, if we want to attract the best clients and the most attractive fees.
Photo: Matt Wilson