I want to delve into a concept called Inside Reality and Outside Perception.
I was listening to a recording by Rich Harshaw of Monopolize Your Marketing and he used the expression (or it may have been Internal Reality and External Perception) and I thought that’s a neat way to express an idea I’ve been trying to explain.
What Is Inside Reality & Outside Perception?
The inside reality of your business is what it’s really like, warts and all. Good things, great things and the bad things too that cause efficiency problems inside the business and frustrate and perhaps disappoint customers.
The outside perception of your business is what customers, perspective customers, suppliers and everyone else thinks about your business.
Doing the comparison between the internal and external perspectives helps to focus on where you most need to focus your improvement efforts.
I’ve talked before about this difference in an article about how deep is your differentiation.
Is your uniqueness based on a promise or claim made in your marketing or does it run through the fabric of your business into your systems and processes, your employees and the overall culture of your business?
For me, Outside Perception is about the concept of value for money which naturally splits into two factors:
- The perceived customer value before purchase (which motivates the buying decision) and after purchase (which motivates satisfaction, repurchases and recommendations).
- The perceived price of purchase and ownership.
Inside Reality is about the strength of the capabilities the business (the processes, the people, the suppliers) has to fulfil its main purpose combined with the level of cost needed to deliver the performance.
Comparing Your Inside Reality & Outside Perception
Let’s take a step into “consultant-world” and use a 2 x 2 matrix to highlight the four main possibilities.
Inside Bad, Outside Bad
Everything needs to be fixed before the business can really be competitive.
Increasing the marketing activity without changing the marketing message is likely to be very expensive in terms of cost per new lead generated and converted.
Improving the marketing message on its own is a problem because the business is struggling to meet its current commitments. A stronger message is likely to lead to customer service problems as the business could be accused of “over-promising and under-delivering.” The growing power of social media to allow the voice of dissatisfied customers to be heard by potential buyers makes this a risky strategy.
Strengthening the internal capabilities and perhaps driving down internal costs is needed before there can be a big push on marketing. That’s probably going to be a gamble and needs a thorough review of strategy and the future opportunities and threats to reduce the risks. In a turnaround situation there may not be time so the leader is going to have to use gut instinct and intuition to find the right make or break decision.
Inside Good, Outside Good
This should be the ideal position, a good inside reality and a strong outside perception. They should be aligned to fit together although it is worth checking to make sure that the factors that driver customer preference are what the managers believe them to be.
Continuous improvement techniques should be used to strengthen the internal and external views of the business.
The biggest opportunity may be to increase the reach of the marketing message by getting it in front of more potential customers more often.
Inside Good, Outside Bad
This is typical of a business that has under-developed marketing and customer relationships.
Sometimes customers may love the business but it falls into the “best kept secret” categories. Perhaps you’ve been to a restaurant and while you were the only people there, you had a great meal. Or you go to a back street clothes shop that has a great range of clothes, terrific service and very reasonable prices but few people either know about it or can be bothered to go out of their way to visit it.
Sometimes people know the name but haven’t got to grips with what you do. They don’t understand how your business can help them.
This outside perception problem may arise because of weakness in any of the 5 Fundamentals of Marketing.
It’s most likely to happen because the marketing message isn’t crisp and sharp enough or because the business isn’t using enough variety of marketing media often enough to make a strong impression on potential customers.
Fortunately these problems are easy to solve.
Inside Bad, Outside Good
This business may not be aware of how much trouble it is in.
Because the external perception of the company and its offers is still strong, the leads that the marketing attracts and the sales that are converted may give impressive top line revenue performance.
If the business is charging high prices, it is likely to be over-promising and under-delivering. Customer satisfaction will be low. Returns and claims for refunds could be high. There may be increasing accusations on the Internet that the business is a scam and the external perception could be approach the tipping point where it plummets sharply.
If the business is charging a low price for its low quality product or service, the outside perception may be sustainable. However if the internal reality is that costs are high, profit margins are low and despite healthy revenue, the bottom line could show the business is trading at a loss.
The priority is to resolve the internal issues and manage any customer service problems. A company that handles complaints very well can improve its outside perception because it has proven its integrity and guarantee.
Getting The Balance Right Isn’t Easy
Managing inside reality (cost and capabilities) and outside perceptions (customer value and price) isn’t easy.
You need a performance measurement system in place to give you early warning.
Paul Simister is a business strategy coach who helps business owners to differentiate their businesses and develop winning strategies.
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