Just being 10%-15% better or cheaper is not going to cut it.
Again: make them an offer they can’t refuse to grow your business
I’m sure you can recall the famous line uttered in the classic movie, The Godfather, where Don Vito Corleone played by Marlon Brando tells his godson, the once famous but aging singer Johnny Fontane, that when he talks to the movie director who is refusing to cast Johnny: “I’m gonna make him an offer he can’t refuse.”
It turns out that your business should use a similar approach–what we call making a “mafia offer”–when it comes to your customers. But let’s be clear: we’re not talking about sending in a hit man or putting a horse’s head in someone’s bed like they did in The Godfather!
For our purposes, we define a mafia offer as when you can provide something that is at least twice as good as everyone else–or available at half the price.
The point is that if you want to gain a true competitive edge in your market, it’s not good enough to be incrementally better than your competition. Just being 10%-15% better or cheaper is not going to cut it. Again: make them an offer they can’t refuse because it’s either twice as good or half the price.
Consider the example of Blockbuster video. For years, Blockbuster dominated the market for videotape and, later, DVD rentals. The Blockbuster sign became just about ubiquitous in neighborhoods around the country where people flocked to rent movies for the weekend.
But then Netflix came along. Not only did they have a more expansive inventory to choose from, they also made it convenient where you didn’t have to go into the store anymore to get your movie. You could do it all from your computer and the movie would show up in the mail (that’s obviously now evolved into online streaming as well). And, oh yeah, they made it a lot cheaper to rent movies as well.
In other words, Netflix made movie watchers a mafia offer where they were twice as good AND half the price. Not surprisingly, Blockbuster went out of business just a few years later. They just couldn’t compete.
How do you know if you have a mafia offer in your business? One area to focus in on is the closing rate among your sales staff: how well are they able to turn qualified prospects into customers? If that rate is low, then it’s a clear sign that you need to work on making your customers a better offer. Realize this is for the average salesperson, because every firm has a superstar that can make lots of sales without a Mafia offer.
And to do that, consider either the strength of your product/service offering or the risk of changing to you and how you can blow your competition out of the water when it comes to the thing that matters most to your customers. Some of your customers might care more about the risk of the decision, for example, while others really want more advanced features or services.
Don’t overlook the fact that you might also be losing customers to indirect competitors as well–businesses that might not be in your exact sector but that overlap with the wallet-share of the same customers.
A mafia offer serves as a powerful barrier to losing customers to new competitors. It takes much of the risk out of the equation for them–which is needed to help make things as painful and expensive switch as possible to keep them switching from you to someone else.
Finding your Mafia offer involves going into player mode and seeing some customers to deeply understand what makes them tick. You’ll probably also try a few different offers on fir size with clients before you find that magic offer that makes sales easy.
So make some time to consider what kind of offer you can make your customers that they will have no choice but to accept. If you can come up with your own mafia offer, your business will thrive as a result.