Here I'll tell a story from one of my businesses to articulate the (Market Dominating Positions) MDP's that helped us thrive through market shifts.
Success and resiliency come from relevant positioning, and a message that is heard by your customers. Businesses who have not developed a MDP are relegated to competing on price alone, overspending on marketing, and at risk of new competitors entering their market.
This is a story of three market transitions, and how we found ways to add new value positions that were relevant to our market.
Rewind back to the mid 90's, my tech business had grown slowly but consistently. We were mid-way between Vancouver Canada and Seattle Washington, but our sleepy little town of fifty-thousand was too distant from either to benefit from their thriving economies.
Bellingham was a far cry from Silicon Valley where I had originally cut my teeth in business and tech. Our small computer manufacturing company sold to farmers, welding shops, and diesel repair companies. Sprinkled in were accountants, lawyers, and real estate agents.
Our competition was name brand computers and a sprinkling of tech enthusiasts who built computers in their garages. We focused on providing top level quality and reliability in every way. The unique skills I had acquired from my previous tech and manufacturing experience gave us a strong foundation for our MDP.
We messaged our standard of quality in every customer touch through our words and actions. The subtext "we won't let you down" brought referral customers through our doors on a daily basis.
All was good until...
The exponential growth of the computer industry brought Circuit City, Best Buy, and Future Shop to our small town. We called them the "big box stores" due to their large footprint. All but a few of the small shops soon went out of business, those who survived had found an MDP to separate them from the big box stores.
Our regular customers stayed loyal, and supported us by sending more referrals our way. Though we were weathering the changes well enough, it was clear our existing market position would not hold for long.
Finding the opportunity in the shift...
By listening to our customers we recognized an opportunity. The big box stores sold cheap computers, but gouged their customers on the cables needed to connect them up. Customers were being charged twenty-five dollars for a cable we were selling for seven. This practice angered customers.
Our idea was for a new MDP that would address this frustration and augment our strengths. Cables had become critical to many small business computer installations, and they were rarely included. There was little standardization between manufacturers, so having a wide range of cables would strengthen our position as a problem solver.
By being a destination for all things cable we could dominate that business in four counties. We covered a wall in our retail area with every imaginable cable a computer user would need. It worked!
The cable sales increased foot traffic by four hundred percent, we recovered lost revenue and quickly grew beyond where we were before. Here's how...
- Becoming a destination for cables increased foot traffic, brand recognition and cross-selling.
- The cable business was new high margin revenue.
- By stocking unusual cables we appealed to the local experts who responded by sending us more referral customers.
- Enhanced our reputation as customer focused, fairly priced, and problem solvers.
Helped differentiate us from the "big box stores".
A maturing market...
Market evolution continued and computers became more reliable. We struggled to differentiate on quality and service. Computer sales dipped and again we started losing our dominance.
We needed to upgrade, to find a new MDP and dominate the market again. Computer networking had reached small businesses and was recognized as a way to get ahead of the competition. Leveraging our manufacturing skills, we started building top-level servers and supporting business networks.
We regained the lost revenue with new revenue from servers, business workstations, and networking. Once again we grew through the market shift. We addressed the problems these businesses had; unreliable networks and networking projects that went off the rails causing days of business interruption. There were even a few stories of businesses that had failed because of botched installations.
We addressed the solution they wanted but didn't have; reliable networks and projects that ended as planned. We provided accurate project plans allowing us to offer fixed price projects and predict project impact. Our strong estimating process and disciplined execution resulted in projects completing as planned with minimal disruption.
The assurances of our MDP backed by our reputation allowed us to charge a twenty-percent premium above our competition. We gained a reputation as the only place in the market to get a networking project done well. Close rate on project sales was eighty-percent.
Change is the only constant...
Once again the market shifted, networks had become reliable and service providers more successful at network installation. Our close rate dropped and it came time to ask "what's next". A new service model called "Managed Services" had entered the small business market with the potential to resolve network problems remotely and avoid emergency calls. It could lower our operating costs while improving our delivery.
We learned from customers who were early adopters that their service providers had been "monitoring" their networks but had failed to reduce emergency events. They felt they had been sold a "bill of goods".
We found the problem. The early systems had a hard time handling errors from the broad range of computers and servers in use. Managed Services had been built for large organizations and didn't scale well to small business networks.
We saw the next MDP, we found a Managed Services system we could modify to report all relevant errors. It was a lot of work, but we were able to build the only reliable monitoring product in our market. By nearly eliminating emergencies for our clients, we became the premier Managed Services provider in our area.
For thirty years our MDP's helped us thrive through market transitions, economic shifts, and changes in the competitive landscape. Dozens of competitors came into our market, and failed. Those who survived had an MDP that was recognized by the market. Even Future Shop and Circuit City failed.
If you want help with your MDP, reach out, I'd love to do some brainstorming with you...Dave
