Competitive advantage – is yours a hit or a myth?

10/2/2019

Competitive advantage – is yours a hit or a myth

Jack Welch once said: “If you don’t have competitive advantage…don’t compete.” This might sound harsh, but the famously successful former General Electric president and CEO’s opinion has stood the test of time.

Someone who has seen the value of taking this viewpoint seriously is Jaynie Smith. An expert management and marketing consultant and regular Vistage speaker, Jaynie found that 95% of all companies do not know what their competitive advantages are. Even more are unable to communicate a compelling reason why customers should choose their product or service. How can sales teams compete without this information, she wonders?

“Competitive advantage is a discipline that is missed by most organisations, and it can have a profound effect on margins and top-line revenues. More get it wrong than get it right – and it’s not just small and medium enterprises. I see Fortune 100 and Fortune 500 companies getting this wrong every day.”

Jaynie is on a mission to give organisations a new way of thinking about competitive advantage. She often starts by asking managers three questions. So let’s reflect for a moment…

  1. How well you can answer the question: Why us?  Why should I buy from you and not your competition?
  2. Are you truly relevant to what your customers need?
  3. What is a value proposition and how can you build it with sustainable competitive advantages?

Now we’ll dive into how you can uncover the value in your organisation and consider what metrics can improve how you sell your company's products and services.

Competitive advantage – let’s agree what it is

Do you want price to be the differentiator in your business? That’s an easy one (absolutely not), but it can get to be that way for lack of a solid value proposition defined by relative competitive advantage.

Whether you call it ‘unique selling position’, ‘distinguishing features, or ‘competitive edge’, they’re all names for the same thing. Actually, where many companies first come unstuck is getting internal agreement as to what your competitive advantage is. Because if you don’t know the answer to that question, there’s no way the external marketplace going to know what you stand for.

Another common stumbling point comes when we develop our messaging. Trick question: Out of 3 perspectives: yours, your employees and your customers, which is the only one that counts?

We’re clearly talking about customers here, but it is so easy to default to our own perspective when we create our market messaging. No wonder there’s a disconnect.

“That’s your opportunity”, explains Jaynie. “What are your customers’ perceptions? Are we being relevant to what they need?”

Value your service – or your customer won’t

If you don’t value what you bring and do for your customer, they won’t value it either. So you have to monetize it to give it value. Make this your mantra, suggests Jaynie.

So, if on-time delivery is the single most important thing for your customers, that’s what you need to be good at, and what you need to measure, so you can tout it. If you’ve seen 98% on-time delivery for past three years and that’s your customers’ top buying criteria, you’d best be talking about it.

if on-time delivery is the single most important thing for your customers, that’s what you need to be good at

Differentiators such as this are potential competitive advantages and they need to be objective not subjective to help build a value proposition. Unfortunately, it’s so easy to slip into the trap of speaking in subjective clichés rather than objective facts.

Take a look at your marketing materials or website. If your company is offering ‘world class quality’, is ‘the company you can trust’, or talks about ‘exceeding expectations’ with your ‘customer oriented’ service – take a place in line! These subjective clichés are meaningless and no one likes to be talked to in this way.

In business past performance is the best indicator of future performance, so talking in specifics to prove our track record is important. Jaynie suggests that if we want to talk about our customer service objectively, we could say something along the lines of: “We respond to all calls within an hour and we have a technician there within 3 hours, 90% of the time.”

When we talk about the three or four things that matter most to our customers, using specific metrics, we build their trust.

Building a value proposition

Now we know some of the traps to avoid, how do we go about building our value proposition? This is a description of the value that your offering will provide to a customer segment, customer or individual that is relevant, measurable and relative to their alternative choices. Getting this right will help close more business and justify a premium in the marketplace.

Let’s consider three interconnected levers that can drive our sales:

1)     Brand / awareness

Most SMEs are branded by default, meaning the brand is based on the marketplace’s experience with it. If you’re B2C you can keep your brand alive with plenty of advertising. B2B uses trade shows, trade magazines, and invests in their salesforce. Whatever strategy you use, it’s expensive and far from guaranteed.

2)     Relationship business

Sales people like to talk about how good they are at building relationships. It’s important – but your competition’s out there doing the same thing so if you focus on it you’re vulnerable. We need to balance out bringing in new business, with driving home our value proposition of competitive advantages to existing customers. When we let our existing customers know the value we bring to them, and quantify it for them, we are much better protected when someone dangles a lower price in front of them – tempting to anyone even when there’s a great relationship in place.

3)     Why us?

When we can answer ‘why us’ with a solid, relevant, competitive advantage value proposition, we shore up the brand. We keep the customers we have. It’s much more secure and we have a much better ROI from our brand and awareness investments.

Business benefits of a competitive advantage-based value proposition

Now let’s look at some tangible metrics to show why you should focus on competitive advantage. A competitive advantage-based value proposition is:

  •       Fundamental to strategic planning: Strategy and planning not built on this is flawed because you’re guessing where you should invest.
  •       The basis for marketing and sales planning: Skills and tactics are important but teams need to be armed with the right information.
  •       Able to minimise price as an issue.

So what are your competitive advantages? If you’re good at your deliverables they’re a strength. If you’re good at them and measure them then they’re a differentiator. And if they’re measured and relevant then they’re a competitive advantage!

Jay Conrad Levinson, author of Guerilla marketing, believed that: “A company should concentrate solely upon their competitive advantage and nothing else…investments in competitive advantage are frequently the wisest investment a company can make”

Jaynie believes Levinson’s bold statement: “Get your competitive advantage nailed and you build confidence, remove risk and minimize price as a differentiator. ”

Jaynie is one of our expert Vistage speakers. You can see the Highlights of this session on our website.