Competitive Positioning

Originally published: 05.01.14 by Marc Marchillo


How to define your value proposition and communicate it with employees and customers 

 Contractors should never pick up the phone if they can’t answer the following question: why should this customer do business with me? The answer to this question is what sets you apart from other contractors. It’s your competitive position in the market. 

You need to be able to differentiate your business — the products and services you offer — from others in your market. You can do this by making sure potential and current customers, as well as other businesses, know who you are and what you stand for. 

As an HVACR business owner, defining your competitive market position should be among the first steps you take when starting your business or reviewing your business plan. It should also be revisited each time you roll out a new product or service offering. 

Competitive positioning is part of your overall business plan and should include a market profile, segmented consumer groups, a competitive analysis and your value proposition. 

Market Profile 

It’s a good idea to keep your market profile

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updated by scheduling reviews at regular (perhaps quarterly) intervals. A market profile describes your market, including identification of your competitors and target customers, how many potential customers are in the market and how you see the market growing over time. 

A clear understanding of these aspects will help you position your company for growth and better understand the needs and buying behaviors of your customers. You can’t have a competitive position in a market unless you can tell your team and your customers what makes your services different from all the other HVACR businesses in the area. 

Segmented Groups 

Once you’ve described your market, you need to learn about with whom you’re trying to persuade to buy your products. Contractors often refer to customers as a single unit. You likely instruct your technicians to treat customers well, but not all customers want the same things. 

It’s a good idea to segment consumers into groups. Grouping prospects with similar wants and needs — whether they’re new homeowners in their late 20s, families with young children, empty-nesters or retirees — helps you to understand what products and services appeal to them most. 

Competitive Analysis 

Now that you have defined your target market, named your key competitors and understand the varying needs of your customers, it’s time to do a competitive, or SWOT, analysis. A SWOT (strengths, weaknesses, opportunities and threats) analysis is frequently used in planning business projects and can be carried out on just about anything from a new hire to identifying your value proposition. 

Simply make a list under each header that honestly reflects your business. Strengths and weaknesses tend to be internal in origin; these may be specific services you offer, capital you may be looking to reinvest or high caliber employees. Opportunities and threats are external, either relating to your customers or your competition. 

Contractors should pay close attention to the weaknesses and threats, as those are potential money-making areas. As business owners, it’s easy to lose sleep over the many things going — or could go — wrong. Don’t let the SWOT analysis get you down; weaknesses can be addressed and threats are often opportunities in disguise. 

Value Proposition 

The last step is defining your value proposition, and should be easy to do if you’ve thoroughly completed the previous three steps. A value proposition refers to the value your company brings to the market. As you think about what the value of doing business with your company might be, remember that price shouldn’t be the only difference between you and the competition. 

Leverage less tangible and more important differentiators such as trust, reliability and friendly service with an emphasis on relationship-building. These differentiators aren’t always cheap, but they’re worth every penny. 

Communicate Your Position 

Your competitive position won’t do much good if you glance at it once every quarter, only to file it away and forget about it for another three months. While you might not want to share all aspects of your competitive positioning with your employees or customers, it’s important for both groups to understand your position in the market. 

Employees need to know your brand identity — what you sell, to whom you sell and why you’re different than the rest — because it’s an integral aspect of their jobs. Your competitive positioning also helps technicians and salespeople understand your expectations of their performance on the jobsite. 

Sales are generally contingent on the attitude of the salesperson, not the attitude of the customer. If your technicians treat customers as disruptions to their work rather than the purpose for their work, you aren’t likely to get repeat business. 

By sharing your value proposition with your employees, you’re treating them like valued partners who share in the success and/or failure of your business. Ask them what they can do to help differentiate your company from others in the market. Are they walking over customers’ newspapers, or carrying them to the door? Do you offer useful freebies such as coupons for duct cleaning or maintenance? Do your technicians offer advice about indoor air quality, allergy prevention and energy saving opportunities? 

If you’ve hired the right technicians and trained them well, they aren’t going to simply restate your competitive position; they are your competitive position. 

Every piece of paper your customers see (pamphlets, quotes, receipts, etc.) and every instance of your logo (print ads, fleet wraps, your website, etc.), should convey your value proposition. Customers need to understand how your business is different. A good marketing campaign isn’t cheap, but it’s your competitive position that drives your customers to choose you in the first place. 

 


Articles by Marc Marchillo

Competitive Positioning

Your competitive market position should be among the first steps when starting your business or reviewing your plan.
View article.