'Good enough' doesn't cut it anymore
Entrepreneurs trying to ease past customer wariness need to show that their products or services are noticeably better than anything else out there.
Whether your customers are other businesses or individual consumers, creating a true value proposition for a product has never been more difficult or more important.Skip to next paragraph
Jeff is the Jack C. Massey Chair in Entrepreneurship and Director of the Center for Entrepreneurship at Belmont University in Nashville, Tenn.
Subscribe Today to the Monitor
Entrepreneurs face the daunting challenge of persuading increasingly cautious customers to buy their products. Remember that everyone is watching his money right now. Economic insecurity means customers take a much harder look at their options before they buy. The option of not making that purchase and saving that money for an uncertain future is becoming much more common.
Customers are more likely to scrutinize the key factors that drive their decision to purchase from one business versus another. And they are less likely to settle on "good enough" when making a purchase.
Since they are protecting their cash, they will choose to delay purchases until they find one that truly meets their needs.
There is also a growing fear that deflation is becoming a real risk. What this does is slow down the customer's decision making on a purchase by waiting to see if the price might not come down in a few weeks. This is particularly true for larger-priced items and for long-term commitments to buy products and services.
For a new business, getting the business model right before you enter the market is a first step. The foundation of a sound business model is offering the right product to customers who really want it and need it. While that sounds simple enough, many startups fail at this.
How to develop right model
In developing your business model you will need to answer some fundamental questions.
First, why is your new business really an opportunity? What has changed in the market that gives your product value to the customer? When looking at what the competition is offering, what is missing that customers really want? That is, what is the "pain" in the market that your product takes care of for potential customers?
If you offer a new product that is even just a slightly different option from the competition, recognize that customers are not as willing today to take risks on new things. You will need to prove your value to a much more skeptical market. The customer may want proof that what you are offering has value.
This may require you to give it away to your first few customers to demonstrate its worth to other potential buyers.
Even established businesses are being challenged by their customers to prove their value. In addition to a growing sense of consumer caution, competition has gotten more intense.
Those businesses that have survived are the stronger ones. So, beating out the competition has become much more difficult.
Pay attention to the little things, as these may be the only means you have to differentiate your shop from your competitors.
The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on the link above.