The Danger in Occupying the Middle

There are only two real business strategies, and businesses in the middle are being sucked into the gravitational pull of one of these strategies.

The first strategy is lowest price, or transactional. To operate this strategy you have to drive costs out of the business. These businesses focus on the efficiency of the transaction with the buyer. They make things fast and cheap. They don’t worry about being better.

The second strategy is caring, or consultative. It’s the polar opposite of the first strategy. To operate this strategy, you can’t drive costs out of the business; this strategy requires a greater investment in time, energy, and resources. You might be better and faster, but you can’t be cheaper. Being cheap destroys the strategy.

Your clients have to care about whatever it is you sell enough to pay more to obtain it. The Internet makes this easier by allowing you to have direct access to the people who value what you do.

The dangerous place to occupy is in the middle.

In the middle, you might be a little better than the low price competitors, but you’re not “better” enough to make you worth paying more to obtain. This is how you lose to lower priced competitors. The gravitational pull here is to compete on price, and by doing so, giving up what makes you a little better.

You might be a little faster and a little cheaper than the higher-priced, caring, consultative competitors, but not enough to make it worth saving a few bucks to miss out on the better outcomes they produce. It’s difficult to be better. You have try harder.

It’s tougher to sell “better” in a world that is increasingly transactional. You have to spend your time with people who value “better” enough to pay for it.

If you believe it’s tough selling at a higher price than your competitors, try winning a race to the bottom.

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