By Bryan Orr
Differentiation is a key part to creating a business that is profitable, growing, and maintains a positive reputation. If you aren’t intentional about where you fit in the ecosystem you may find that your business stagnates, or worse.
Let’s use the example of four fictitious tree farms to illustrate four differentiated business models.
This farm is a family run business with only a few full time employees and quite a few seasonal and contract workers. They NEVER sell to the public and instead they focus on volume and efficient systems to provide quality trees at low prices to local developers, landscapers and a few large commercial customers. They only sell a limited number of different trees to maintain maximum simplicity and efficiency. Don’t bother calling wholesale oaks unless you are an existing customer or were referred to them.
Model – Wholesale (Low price small customer base)
Strengths – Simplicity and zero customer acquisition cost
Weakness – Requires a large volume and a lot of work to maintain profitability
This tree farm advertises the LOWEST prices to the general population and they deliver on that promise. Sure, their trees may not be the healthiest or the most beautiful but that’s just because they keep overhead low and they buy wholesale in bulk from all over the country wherever they can find a bargain (including from wholesale oaks). Sometimes their customers wait a while to get served and their phones go to voicemail during really busy times.
Model – Low Price Retail
Strengths – Clear Differentiation that EVERYONE understands
Weakness – Reputation for poor customer service, requires high volume and cheap labor to survive
This farm grows the highest quality, disease resistant elm and hickory trees in the country. The founders have a degree in botany and horticulture between them and they only employ certified arborists. Their trees cost twice what you will pay anywhere else and they usually have a 3 month waiting list unless you happen to golf with one of the founders.
Model – Premium Product Quality
Strengths – Huge gross profits on every tree, high quality workforce
Weaknesses – Hard to get to that level of quality differentiation, requires constant work to maintain the reputation of being the best, difficult value proposition to communicate convincingly
Tree Systems Inc.
This farm serves as a full service tree solutions company. They grow their own trees, they deliver them, install them and care for them over time. Tree systems has their own line of products for tree care as well as a YouTube channel and a podcast with tips for proper care. They employ a full staff of botanists and arborists as well as a room full of customer service representatives to answer all customer questions 24/7. They offer a 24 hr installation guarantee on any tree in stock as well as a 100% satisfaction guarantee.
Model – Customer Service
Strengths – Steady profit growth over time, best customer service reputation
Weaknesses – Complex business model, high overhead, takes time to build
All of these farms represent a valid business model; there are other types as well and there isn’t a right or wrong model, but you will do better if you have clarity on what type of business you have and then function within that model.