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Let's begin with a look at what I call the hyper-competitive nature of the marketplace. If you're going to be successful, you need to start by embracing this fundamental principle: The balance of power in the marketplace has shifted dramatically and irrevocably from you (the seller) to your customer (the buyer). This is more than a change in the tide. It's a gigantic tidal wave, crashing over the entire marketplace. It's as equally true for so-called business-to-business sales as it is for consumer sales. You can try to resist it, but you're likely to have about as much success as you'd have if you stepped off the roof of a 10-story building and tried to resist gravity. As with gravity, it's going to be there whether you like it or not. And, as with gravity, you're going to have a lot more success aligning your efforts to take advantage of it than you will by ignoring it or trying to move in the opposite direction.
This shift in the balance of power began some time ago (most analysts will tell you that it started in the early 1970s), but it accelerated rapidly with the dawn of the age of the Internet. Basically, there are two factors that have caused the shift: options and information. At least one of these factors is at work in literally every market you can think of, and most markets are feeling the results of both.
Balance of Power Factor #1: Buyers Have More Options Than Ever Before.
When I was a kid, my father bought a Volvo. By today's standard, that doesn't seem like such an extraordinary thing, but at the time, it was pretty outrageous. At that time theautomobile market was dominated by four companies. General Motors was the clear and unquestioned market leader. Just one of GM's divisions at the time, Chevrolet, was selling almost as many cars as everyone else put together! Ford came next, followed by Chrysler. A now-defunct company called American Motors brought up the rear. In those days, any kind of foreign car was looked upon as exotic. In fact, the original Volkswagen Beetle was still such a novelty that Beetle owners would wave at each other if they passed on the road. A car from Sweden was so out of the ordinary that it was almost incomprehensible.
What could it possibly have been like to be an American automaker in that kind of environment? It probably isn't much of an exaggeration to say that you could almost grab a profitable share of the market just by showing up. The marketplace was eager to buy what you had to sell, and you had a finite number of competitors to sell against. I'd bet that there are more than a few General Motors executives who remember those days wistfully!
Today's competitive environment for automakers is obviously quite different. Foreign competition is no longer exotic. It's commonplace and it not only includes mainstream competitors from Germany and Sweden, but also ones from Japan, Great Britain, and Korea. Obviously, the dynamic of competition is a lot tougher with so many competitive players. Post-World War II recovery and the globalization of the marketplace helped to spawn new competitors in the automobile industry, but other industries are dealing with the same result, albeit for different reasons.
Consider the television industry, for example. I was recently visiting at a friend's house and he showed me an old newspaper that he had saved. It was an issue of The New York Post from 1963. We took the paper out of its protective wrapper and were thumbing through it, looking at the news items and the ads, when we came to the page that featured television listings. The entire television schedule for the largest market in the country, including brief program descriptions, fit on less than two thirds of a single page. I'm not talking about just the prime time listings, either; I'm talking about 24 hours of programming!
The difference between the number of options available then and today is obviously several orders of magnitude. I have no doubt that test patterns in 1963 probably garnered the kind of market share that cable channels today have to fight for.
In industry after industry, marketers are seeing the same proliferation of competitors. In some industries, it's the result of globalization and lowered trade barriers. In other industries, it's the result of technological advances that have lowered barriers to entry. Still other industries have gotten there as a result of deregulation. From a sales and marketing standpoint, the cause is less important than the result. The bottom line is that it's a great deal more difficult to deal with a marketplace that has more players against whom you've got to compete.
Balance of Power Factor #2: Buyers Have More Information Than Ever Before.
Consider the situation of a typical life insurance salesperson 10 or 15 years ago. He'd march into a prospect's home and, if he did a good job with presentation, he had a good chance of walking out with a signed policy and a check. The sale was usually made on the basis of one type of emotional appeal or another, and it was a rare prospect, indeed, who even thought about soliciting competitive bids on a similar policy.
In fact, even if a prospect was interested in doing so, there was no convenient place to go to get the information. The best alternative available for most prospects would have been to contact another agent and sit through another presentation in order to get a single additional quote. It hardly seemed worth it. When it came to balance of power based on the amount and quality of information available, the seller was clearly in the driver's seat.
Today, that same prospect has a world of information at his or her fingertips. Web sites such as Selectquote.com can scan the offerings of dozens of insurance companies in just a few minutes, allowing the prospect to quickly and easily find the cheapest policy possible. The insurance industry isn't the only one that has to contend with the widespread availability of price information. Similar sites exist for almost any other industry or marketplace you can think of.
And it's not just pricing information that's readily available. In the retail computer industry, for example, Cnet.com provides product specifications and qualitative feedback on a variety of products, including computers, printers, cameras, scanners, music players, and monitors. Today's buyer is no longer dependent on the sometimes-questionable information provided by the salesperson in a computer store. Instead, he or she often comes into the store armed with more information than the salesperson has...