Browsing through almost any business book and you’ve likely become intimately familiar with the SWOT analysis. This tried and true tool does cover your own strengths and weaknesses, but the latter half predominantly focuses on the external environment. While it is imperative for any business owner to understand the competitive landscape, it’s critical to be keenly aware of what’s going on inside your company, and from all possible angles.
So much so, that after years of working closely with hundreds of businesses in different industries and locations, it prompted me to develop a complementary analysis tool: SMARP. I’ve come to define 5 key areas, that if excelled in, create the ideal conditions for business success and stability.
Understanding the SMARP keys
To understand how the tool works, you must first understand the core components that make up the SMARP acronym.
This alludes to how satisfied your customers are with the way you service them. Areas of service include everything from answering the phone and returning emails to helpfulness, final delivery, and meeting or exceeding expectations. This is what keeps your clients feeling good about and loyal to you.
“When the customer comes first, the customer will last.” -Robert Half
Ask yourself how people find you and understand what you do. Your marketing mix is made up of your branding, marketing campaigns, evangelists, and advertising. It’s the sign on your door, the monthly newsletter you send out, your website, promotions, and everything in between. Simply put, it’s what’s bringing people through your door.
“The man who stops advertising to save money, is like the man who stops his watch to save time” -Thomas Jefferson
Pricing strategies and financial management comprise the accounts component. This includes negotiating supplier deals, keeping an eye on cash flow, maintaining balance sheets, identifying your highest-profit products, stock management, as well as paying taxes and suppliers in a timely fashion. Ultimately, this is everything that affects your bottom line.
“Not raising your price would seem like a competitive advantage, but it might knock the hell out of your ability to compete in other ways.” -Gallup News
Despite each business demanding different resources, they collectively have a few needs in common. Depending on the nature of your business and requirements, they might include your leadership skills, team strength, your location, capital funding, your tools and network connections. They are essential for business operation and effectively act as your lifeline.
“Three components make an entrepreneur: the person, the idea, and the resources to make it happen.” -Anita Roddick
Reflect on quality and choice of your product or service. How many alternative options compete with you? How happy are your customers with the actual product and its quality? How unique is your offer, and what is the level of your service? Essentially, this is why people need and want what you offer.
“It’s easier to make things people want, than it is to make people want things.” -Des Traynor
Using the SMARP analytic tool
Now that you understand the elements of SMARP, you can apply each as coordinates within the grid. As illustrated above, the closer each point gets to the outer perimeter, otherwise known as the “Excellence Zone,” the stronger the business is in that area. Ideally, you want your entire business in the green zone, which creates a stronger market hold for you and a much greater barrier to entry for competitors to come into your space.
Contrarily, when one of your SMARP keys fall into the black Void, you set yourself up for serious risk, and make your business vulnerable to the slightest market shake-ups. For instance, you may have a great product, but if your customer service is awful, people are only buying because they have no other choice. As soon as the opportunity arrives, their lack of loyalty means they’ll jump on the chance to leave you. Or maybe your finances or margins aren’t as aligned as they should be. One run-in or unexpected cost could send you belly-up.
The vast majority of businesses hit the “Excellence Zone” in two key areas and wander in the mid-zone for the remaining points. As the business owner, this presents an opportunity for a competitor to hit you in your weak side. However, as someone looking to start a business, this represents key insights into where you should strike.
When analyzing the market and you spot a gap in excellence, you can figure out a way to fill that gap and springboard your chances for success. You can then use SMARP to gauge where the opening is and how to steer your service or products towards profitability. It starts with offering better service (S), reach out to more clients (M), offer more value and price accordingly (A), build a network, design a great shop, get an investment, put together a strong team (R), and offer a better service or product (P).
As seen above in the plotted points, here are the most common business scenarios, and the stories they tell about the companies they represent:
- Ex 1. With great customer service and awareness, competitors will have a hard time breaking that customer loyalty. However, if an alternative option comes to the table with a superior product and management, it’s only a matter of time before word will get out.
- Ex 2. Business is in relatively good shape, as no areas are ranked poorly. However, there is always room for improvement, especially if someone tries to give them a run for their money.
- Ex 3. Most areas are promising, however, if the service gets much closer to the void, customers will soon grow so resentful. Then, they’ll start leaving regardless of an alternate option being available.
- Ex 4. In this case, no amount of advertising and lovability can compensate for such a poor product. People will always have one foot out the door, and customer acquisition will out-price profitability, making sustainability next to impossible. The end is near.
- Ex 5. This is a situation where top product and service makes them a force to be reckoned with. The biggest threat to this business is a large competitor with the resources to take advantage of quantity discounts and/or throw a lot of money at advertising.
- Ex 6. This is the effectual promise land. With all key areas close to the excellence zone, you’re doing everything right and are much less likely to be challenged. However, if someone does step up to the plate, a boost in marketing should put them back in their place.
Improving your SMARP keys
On a positive note, none of these details have to be the demise of your business. SMARP spells out exactly what to pay attention to, and acts as a checks and balances system all along the way. Develop a product that differentiates, and weave the right story about it into your brand. Then, use your resources to build a dynamic team, and create a network that works for you. Price your product or service to sell, and keep tabs on all financials to keep costs low, productivity efficient, take advantage of quantity discounts, and maximize your bottom line. Once you’re ready to launch, make sure everyone in your target knows you exist through consistent and cohesive marketing. And finally, from the first call to the first email, make sure you’re servicing your client at every turn. That is the recipe to build brand affinity, and keep your customers loyal for life.