Right now a lot of UK businesses are having a battle to maintain their GP margins, amidst supplier price increases and exchange rate changes.
While there’s some immediate things you can do (and probably have done) like putting prices up, negotiating with suppliers – they probably won’t give your business the long term strategic boost it needs to improve profitability for the next 2 or 3 years.
The key principle we want to focus on here dives right down into the heart of your marketing strategy. And it will make a difference to your GP margin.
Unless you’re lucky enough to be the only player in your industry, if you don’t differentiate yourself from the competition, I’m afraid the buyer’s decision will probably come down to price. Then margins get squeezed. Not where you want to be!
On the other hand, if you successfully differentiate yourself and clearly set out exactly how you uniquely solve your customer’s needs, the decision is going to be about the positive things you can do, rather than just the price. And this in turn means higher margins for you.
Define who your target customer is.
This is a critical first step in the process - you must be clear who your target customer is before you can do much else.
- Geographics (location)
- Demographics (what type of people are they, what age, what income level)
- Psychographics (their personality, values, attitudes, interests, goals, biggest challenge in their job)
How do you solve their problems for them?
Then you need to articulate clearly how you solve their problems for them. It’s easy to get bogged down in the technical detail of your products, but it’s actually solutions that customers buy.
Take a moment to write down what problems you solve for your customer. Do you:
- Help save them time (and therefore cost)?
- Help them increase profitability by 15%?
- Save them space?
- Save them money?
- Make it easier for them to do their job?
Create an elevator pitch.
An elevator pitch is a short, succinct statement of exactly what differentiates you from your competitors.
Here’s what one looks like, taking an example of a plant hire company - Excavator Hire Ltd. You can replace the wording in square brackets with your own.
We work with [construction companies in London with over 100 employees]
Who [need to hire excavators]
[Excavator Hire Ltd]
Is [London's only hire company]
That [delivers within 1 hour of booking]
So our approach means [we can help construction companies keep their projects on track and profitable by giving them the equipment they need when they need it]
Another thing to try...
A great way to check how unique you really are, is to cross out your business name and put your competitors name in there. Does the elevator pitch still make sense? If so, you haven’t differentiated yourself enough! The goal is to make it so unique, that it only makes sense with your business name in there.
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