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Finding Your Competitive Advantage

It’s easy for today’s business managers to lose sight of the basics as they focus their attention on a host of other reasons why their margins may be shrinking. You read and hear a lot about the threats of offshore outsourcing. You worry about falling behind in your use of new communications tools and in making the most of the Internet. These threats are certainly real, but you’ll never have to deal with them if a more basic problem undermines your company.

In the U.S. Army, young recruits are taught this life-or-death lesson during combat field training. The recruits are alerted that three snipers (played by other soldiers) are crawling through the grass toward them. As they wait for the aggressors to advance, suddenly, across the field, a figure pops up, and the recruits begin firing (using blanks). A little closer in, another figure pops up, and again the recruits direct their fire to that target. Two seconds later, the platoon is “annihilated” by hand grenades tossed by the third aggressor, who has managed to sneak up right next to the platoon while they fired at distant targets. The platoon was “wiped out” because it failed to act against the closest, and therefore the most serious, threat.

As a business manager or owner, the biggest threat you face is losing sight of your most important target— your customer. He is the one who can blow up your business simply by going elsewhere. You may play golf with him, bend over backward to rush a delivery to him, and even consider him a friend. But you can lose him to a competitor if you lose sight of your competitive advantage.

Competitive advantage is what separates you from the rest of the herd. It’s what keeps your business alive and growing. In short, it’s the reason you are in business. Yet the biggest marketing flaw in most companies is their failure to fully reap the benefits of their competitive advantages. Either they think they have a competitive advantage but don’t. Or they have one and don’t even realize it. Or they know they have a strong competitive advantage but fail to promote it adequately to their customers and prospects.

Your eventual goal should be to come up with a hard list of competitive advantages that you can use to increase profits at your company. So get out pen and paper, or spark up your laptop, and write down the answers to the questions below. Let your imagination go. Bounce your answers off colleagues, if you like, just as I ask people to do in my workshops. In fact, it is better if you involve your top staff as well as others from different departments. The more ideas, the better.

At this point, you want a long laundry list of possible competitive advantages, which you will refine, winnow, reject, and rethink as you progress through the book. Note: You might settle on a single, clear competitive advantage with which to go to war. Or you might have five to ten or more competitive advantages with which to arm your sales staff. Sometimes a single shot will level your enemy; sometimes it takes a machine gun.

But before you begin, some words of caution. As you make up your list, bear in mind the following:

  • Competitive advantage is objective, not subjective.  How many times do we hear a company say, “You should do business with us because we deliver good quality and great customer service”? Well, your idea of quality and my idea of quality may be galaxies apart. This kind of boast is subjective and tells us nothing. In fact, words like quality, reputation, and trust, when used to describe competitive advantage, are so hackneyed we tune them out.

  • It is quantifiable, not arbitrary. Which statement is more compelling: “We have great customer service” or “Ninety-five percent of our business comes from referrals”? When you make objective, quantifiable statements such as these, the customer is more likely to believe your claims. Your company may be trustworthy, loyal, helpful, friendly, courteous, kind, obedient, cheerful, thrifty, rave, clean, and reverent. And your customers may appreciate those traits. But they don’t buy from you for your Boy Scout traits. In fact, in today’s marketplace, they have come to expect them as givens.

  • It isn’t claimed by the competition. If your sales force goes out with a list of attributes that your competitors can match or exceed, you are courting disaster. (In fact, that is the principal reason so many sales calls don’t result in closings or why salespeople resort to price as a tiebreaker.) Find out exactly what you provide that the other guy doesn’t and harp on it. Explore what that advantage means to the customer. If it can save him money—and it often can—make sure you stress that. Better yet, tell the customer how much he saves by using you. Even if your goods or services are more expensive than those of the competition, you can still save your customers money because of fewer breakdowns, guaranteed on-time delivery, training assistance, better payment terms, and so on.

  • It is not a cliché. Don’t tell me that you “exceed your customer’s expectations.” How do you know what their expectations are? Your customers expect good service. How do they define good service, and how do you? I bet those definitions are not the same. After all, who would admit to providing bad service? Again, be specific. If you provide service twenty-four hours a day, seven days a week—and the others guys don’t—say so.

Now you’re ready to start writing:

  • What are your company’s most critical competitive
  • What do your employees think are your company’s
    competitive advantages?
  • What are your competitors’ competitive advantages?
  • How do you respond to customers when they ask,
    “Why should I buy from you?”

Copyright © 2006 by Jaynie Smith. From the book Creating Competitive Advantage by Jaynie Smith, published by Currency Books/Doubleday, a division of Random House, Inc. Reprinted with permission.