Competitive Advantage: Is Yours a Hit or Myth?
“If you don’t have a competitive advantage, don’t compete!”
Jaynie Smith, author of Creating Competitive Advantage: Give Customers a Reason to Choose You Over Your Competitors and Relevant Selling: Research Proves Customers Value More Than Just Pricerecently spoke to my groups. Here are the highlights of her books and presentation:
Competitive advantage is content that effectively differentiates one business from another, removing it from commodity status and conveying a unique and relevant value proposition. It goes by other names as well: unique selling position, distinguishing features, competitive edge, discriminators, or differentiators. It answers the customer’s key questions: “Why should I do business with you?” and, “What are you offering that the other guy doesn’t?” If you can articulate a clear, specific reply to those questions, then you have a competitive advantage that will build your customers’ confidence in your company and reduce perceived risk to them. More importantly to you, it minimizes price as an issue to them.
To qualify as a competitive advantage, it must meet these criteria:
- Be objective, not subjective.
- Not be claimed by your competition.
- Be true and provable.
- Be quantifiable, not arbitrary.
- Not be a gimmick or cliché.
- Be past tense or fact.
- Be relevant to your customer.
Here is an example of a relevant competitive advantage statement:
“In 2014, more than 80% of our business was from repeat clients (twice the industry average), who retained us for more than 350 transactions.”
Some common mistakes that companies make concerning their competitive advantage include:
- Thinking that they have a competitive advantage when they really don’t.
- Having one and not even realizing it.
- Knowing that they have a strong competitive advantage, but failing to inform the rest of their organization. It is leadership’s responsibility to arm their sales team with the value proposition and related metrics so that they can promote it to their customers and prospects.
- Not knowing what is relevant to their customers or prospects.
- Thinking that identifying their competitive advantage is a one-time exercise. It is not! CEO’s should review their advantages with their staff at least once each quarter and make them the basis for all strategic planning exercises.
- Using the opinions of leadership or sales people to identify their competitive advantage. It must actually come from customers, ideally by conducting a double blind survey of the marketplace.
- Not knowing what unique advantages that they bring to their customers. If you don’t value it yourself, your customers won’t either! Often, competitive advantages are things that you take for granted.
If you make these mistakes, then you won’t have a competitive advantage! Without a competitive advantage, price becomes your sole differentiator. Once you’re seen as a commodity supplier rather than a marketer, your margins will begin to shrink, and, soon you could find your business either being absorbed or disappearing completely.
- defining a competitive advantage starts with unbiased market research. “Dangerous disparity” is the gap between what you think the customer values and what they actually do. 90% of all companies actually have it wrong, and then they develop plans, messaging, training and branding around these faulty assumptions.
- Your competitive advantage must be the foundation of all your strategic and operational decisions. Companies that fail to adequately invest in their competitive advantage ultimately cause their customers to leave.
- Once you have a strong competitive advantage it is important to get the relevant message to your prospects and customers. These messages may be different because prospects and current customers may not buy for the same reasons.
© Smart Advantage, Show with Permission.
Check your website and marketing/sales material. Is your message significantly different than your competition? What relevant metrics do you have that prove it? Make sure that your customers know about your competitive advantage!
(Visited 131 times, 1 visits today)
Ready for more? Browse additional articles in Customer Experience, Leadership Skills, Vistage Expert Speakers!