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Differentiating Your Machine Shop: Why Making Parts Is No Longer Enough (Part 2)

Making Parts is no longer enough



Published on

Jan 3, 2023

Without a point of difference and a strategic advantage for your machine shop, your customers make their decision based on price. That is a race to the bottom where everyone loses.

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Key Takeaway: Without a point of difference and a strategic advantage for your machine shop, your customers decide based on price. That is a race to the bottom where everyone loses.

In this three-part blog post, we explore how the machine shop market is changing and what to do about it. In the first post, we explored why being different matters today. In this (the second) post, we explore why being different matters. Whether you have our robots or are planning on adding them, in the third post, we explain how to position that robot as a part of your point of difference.

Here is an example of an American company that, 100 years ago, understood the importance of product and company differentiation.

General Motors

Alfred P. Sloan ran GM from 1923 to 1943. He then became Chairman of the Board, serving from 1937 to 1956. When Alfred P. Sloan ran GM, the six brands, Buick, Cadillac, Chevrolet, Oldsmobile, and Pontiac, were all separate and distinct. GM added GMC (Grabowski Motor Company) in 1943. They were different products, and each brand had different features and a different price point.

While the geographic segments were largely the same, the market segments were different. Nearly everything was different.

The chassis was different; the water pump was different. The bolts that held the thermostat to the engine block were different. There was no overlap in products. That wasn’t by accident; that was by design. There was real pride in craftsmanship. That edict came down directly from Sloan.

General Motors started with Buick as its only brand. As they added brands, they were careful not to overlap target markets. The last thing you want to do is cannibalize your customer base.

The brands did not encroach into other brand segments' price points. Pontiac was at the lowest price point. Cadillac was at the top. A Buick cost more than a Chevy but less than a Cadillac.

Pontiac changed to be about performance on the road. Chevrolet was the grocery-getter; it was basic transportation. Cadillac was all about luxury. When the Corvette was created, it was all about sportiness and speed. Every element of each brand was carefully crafted and curated.

Even the advertising was different because the way someone responds to a Cadillac ad is different from the way someone responds to a Chevrolet ad.

The advertising reflected the status and cost. If you bought a Pontiac, you knew what you were getting. You weren’t confused about what car you bought, and your neighbors weren’t confused either.

The cars were different. The cars looked different even at a distance. Year to year the cars continued to look different. That is because Sloan understood that difference matters.

When Sloan retired, the product differentiation went away. For a while, the cars retained distinctive looks. But underneath, the cars started to be more and more alike. Cost-cutting drove some of the impetus behind the homogenizing the cars. The American car market was being taken by the lower-priced Japanese cars.

At the time, America was suffering from rampant inflation. The cost of gasoline seemed out of control. Sound familiar?

The Japanese moved the American market with better gas mileage as the point of difference. And they also had a lower price. Today, you won’t find Japanese cars to have a price advantage over American cars. The Japanese shifted their strategy long ago.

As the Japanese car segment grew, GM doubled down on their no point of difference strategy. GM made their cars more and more alike.

Cars that looked remarkably different in the 1950s all seemed to look the same fifty years later.

You couldn’t tell a Cadillac Cimmaron from a Chevy Cavalier. You couldn’t tell a Saturn SUV from Cadillac SUV until the Escalade came along.. You had to get close enough to see the brand badge to understand which brand it was.

The cars were built on the same platforms. The performance differences dwindled. The customer no longer had a particular reason to buy a specific GM brand because the customer could get much of what the other brands had at a lower price.

What was the cost of that? The lack of difference in the cars led to a decline in sales, and GM had to rescue itself from bankruptcy. With no product differentiation, price became the decision lever.

The last Pontiac rolled off the line in 2010. With that, 84 years of a highly cherished brand went away. The last Oldsmobile rolled off the line on April 29, 2004, and a once highly valued, 106-year-old brand was gone. You can still buy a Pontiac or an Oldsmobile, and some of the older models are collector’s items.

Cadillac almost went out of business and was saved by the Escalade. If the Escalade had not been the success that it was, it too would be gone. Saturn was a GM brand that is gone as well. That different kind of car company is no longer a car company.

When there is no point of difference, then price becomes the determining factor. That is a race to the bottom. No one wins. Even your customers don’t win because, in a race to the bottom, you won’t be around to serve them.

To set yourself apart from the rest of your competitors, you’ve got to create and amplify your points of difference. Not having a clearly laid out point of difference is a recipe for disaster.

Better Is NOT Better

Better and best are two concepts that are defined in the eye of the beholder. To try and market your machine shop as being better and your potential customers will push back. If you do try and take the “better” position, you’ve got to have an exceptionally strong use case to show and document why that claim can stand up.

Otherwise, your customer base will dismiss you.

When was the last time you took a tour of 15 competitors’ websites? You don’t need to spend more than 5 minutes on a site to know what they are good at and what they see as their point of difference.

If you can’t find that out in less than 3 minutes, you won’t find it in 5 hours. It simply isn’t there.

That is a problem. If you put yourself in your customer's point of view, why would they want to do business with you? If you struggle to answer that question, your potential customer will struggle too. You can’t afford that struggle.

Why is it so important for your customer to quickly find what problems you solve and how you can help them? The average website visit is 54 seconds.

You also need to consider that search has dramatically changed in the last five years. Five years ago, it was easier for your customers to find your website. Today, 67% of web searches DO NOT end with a click on a website. Google is providing the content instead.

The key point here is that it is harder than ever to be found, and when you do get web traffic, you must make the most of it. Your website has to speak for you, and the best message that your website can convey is we solve your problems, and this is how. You have to make those points clearly and quickly.

I make it a practice to look at machine shop websites regularly. I can tell you that very few machine shop websites clearly call out their point of difference. Some know that they need to do it and try but aren’t effective at it.

Others simply miss the point and only talk about their equipment. They don’t tell their customer why that equipment is important to the customer. They don’t tell their customer what problems they solve and how they can help. Your customer is in the manufacturing business, not the mind-reading business.

Ironically, your existing and potential customers are looking at your website to see if you are the one to solve their problem. They want to determine if it is worth contacting you and getting a quote.

You probably have a “Get In Touch” or “Get a Quote” button on your website. It may even be prominently displayed on your site. Great place to start!

Those buttons typically get used by less than 3% of your total web traffic. When someone clicks on that button and completes the form, it is called a conversion. The metric is the conversion rate. You may want to look at your conversion rate to see how you are doing.

Some websites get a conversion rate of over 5%, and some even higher. You don’t need to do back-of-the-envelope math to understand the impact of doubling your conversion rate. Would have the same close rate on those quotes, or could you improve that too?

If your point of difference is clearly stated on your website and it resonates with your potential customer, your chances of closing that quote are better. That customer is already predisposed to

Your point of difference on your website is part of what drives your conversion rate. There are other factors, but the point of difference is one of the big factors impacting your conversion rate. If you don’t have a clear point of difference, people will never find a reason to click on the quote button.

Looking at other machine shop websites and grasping their point of difference is a good place to start. But getting to that point requires some work on your end.

So how do you set yourself apart from the others in your market? We’ll explore that in the next blog post.

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