On September 28th, The Wall Street Journal announced that the U.S. Postal Service (USPS) will again default on its obligation to fund future retirees’ health care costs. The $5.6 billion default marks the second failed payment to the U.S. Treasury in two months.
The USPS May be on the Verge of Losing its Competitive Advantage
While there’s no doubt the USPS must overhaul its business model if it wants to stay in the game, closing offices and eliminating Saturday delivery only undermines its competitive advantage- further exacerbating its financial woes. Virginia Congressman Gerry Connolly said it best, “Giving up six day mail service, closing rural post offices, and ending next day mail service will forfeit USPS’ competitive advantage, and would accelerate the decline of the Postal Service.”
Just like thousands of companies, large and small, the USPS is responding to financial trouble with a laser-like focus on cost-cutting; believing that cutting costs (read: eliminating services) will help pull it out of the red. The trouble is this: the cost cutting measures the USPS proposes represent valuable customer services. Cutting these services results in an inconvenience to its customers, and jeopardizes its competitive advantage.
What other company delivers first class mail to your door six days a week and offers a brick-and-mortar shop in every small town across America? What other company offers affordable Saturday parcel delivery? This is what makes the UPSP unique. Par down on post office facilities and strip Saturday delivery - you’ve effectively wiped out the agency’s only differentiators. Disgruntled customers will look elsewhere.
Moreover, your friendly postal worker acts as a company ambassador; an extended competitive advantage of sorts. Customers often develop a genuine relationship with their mail carrier who strengthens their confidence in, and emotional attachment to, the USPS. Take away that friendly ‘Saturday hello,’ and the convenience of Saturday mail delivery that comes along with it, and you’ve told your customer that their needs don’t matter. You’ve distanced the customer yet again and practically begged them to look for an alternative. These are distinct competitive advantages that the USPS should maximize and exploit, not eliminate.
In 1985, Michael E. Porter wrote a ground breaking textbook, Competitive Advantage: Creating and Sustaining Superior Performance. Porter stated that a competitive advantage can come about in two ways—cost advantage and differentiation advantage. The USPS should be capitalizing on both.
Interested in learning more about the positive impact of a well defined competitive advantage? I suggest you read Creating Competitive Advantage, by Jaynie L. Smith. This powerful guide ranks in the top 1% of books on Amazon.com and BarnesandNoble.com, and will help you begin to learn and understand the power of identifying and communicating your Competitive Advantages in order to stay ahead of the competition.
Can anyone compete with the iPad? The new Kindle Fire, from Amazon, is going to try. Amazon has had success with its eReader, the Kindle, and its Kindle Fire is in full color and priced at only $199, well below the iPad sale price of $499. The Kindle Fire is getting good reviews and analysts are reporting projected Kindle Fire sales figures of 5 million by end of 2011.
Amazon certainly has its work cut out for it: Apple sold 11 million iPads during the most recent quarterly reporting period, and seems to have an insurmountable competitive advantage in delivering sleek, easy-to-use tablet PCs that are easy to integrate with other devices. Other tech companies like HP and Research in Motion have tried (and mostly failed) to emulate Apple’s success in the tablet PC market.
Two potential competitive advantages that should help the Kindle Fire be a big hit:
- Focused on media: Amazon is positioning the Kindle Fire as a tablet specifically for media consumption – books, magazines, video and music. It’s not trying to be all things to all people. It’s not trying to offer everything that the iPad might offer in terms of apps. Instead, Amazon is saying, “Here is a compact, easy-to-use tablet that you can use to watch movies or TV, listen to music, or read – and oh by the way, it’s a lot cheaper than an iPad.” This angle might be a relevant competitive advantage since many Amazon customers buy their movies, books and other media from Amazon.com.
- Drive customers to the Amazon store: Amazon's strategy seems to be that the Kindle Fire is a loss leader to put an Amazon storefront in people's hands – it’s a loss leader as a portal to the rest of the Amazon store items, so they can then sell more books, movies, streaming TV, and other Amazon products. Amazon is creating a more robust platform to sell its products, even if that means taking a loss on every Kindle Fire sold.
Despite these early signs of success, I have a word of caution for the Kindle Fire: they should not allow their marketing to focus on price alone.
Here’s why: Are people who buy tablet PCs really motivated by price? Or are they buying tablet PCs because these devices are new, cool, fun, and are bringing new experiences and efficiencies and abilities into their lives?
Is anyone who hasn’t bought a tablet PC hesitating to buy one because it’s “too expensive,” or are the holdouts doing so because they haven’t yet found a use for a tablet PC and don’t know how it would benefit them or fit into their lives?
I’d be curious to see what customer research Amazon did prior to setting a price point for the new Kindle Fire. I doubt that price is truly the biggest consideration in a product like this. With the iPad, it was a big hit with early adopters and tech evangelists; they wanted one, and the price didn’t matter. For people who aren’t such big tech enthusiasts, they might just be waiting awhile to buy a tablet, or they might still need to be convinced of the value.
Competing on price alone is misguided. We always tell our clients: don’t compete on price, deliver more value instead. If you know and accurately convey your competitive advantages, your customers will be willing to pay more. So even though Amazon is selling the Kindle Fire at a cut-rate price, they should not market the product based simply on price.
Instead, the marketing should focus on all the great things you can do with the Kindle Fire, its ease-of-use, why it’s so great for viewing movies, TV or reading books, or why it’s so convenient if you’re a big Amazon user.
According to a recent article in the New York Times (“RIM Suffers as Profit Falls 58.7%,” Sept. 15, 2011), Research in Motion (RIM), maker of the BlackBerry smart phone, recently announced disappointing earnings results. The company’s shares lost 19% of their value, and many Wall Street analysts are saying that the future viability of the company is in doubt.
Just a few years ago, RIM was one of the most-admired companies in the mobile phone world. They basically invented the smart phone as we know it today – the BlackBerry was the first phone that also allowed people to check their e-mail, becoming known as the “CrackBerry” for its addictive properties. RIM’s reliable and secure systems made the BlackBerry popular with corporate IT departments, enabling companies to keep their people connected even when away from the office.
But after the iPhone was introduced in 2007, RIM failed to adapt to a fast-changing market. Even though BlackBerry was the first modern smart phone, and RIM basically invented the category of smart phones, most people today probably think of the iPhone as the prototypical smart phone.
Why BlackBerry and RIM are losing their way, and the lessons other companies can learn from RIM’s difficulties:
Be proactive, not reactive: RIM got caught flat-footed by the emergence of the iPhone. The iPhone was something new – a smart phone that was more like a computer in your pocket, with a full Web browser and an ever-growing selection of software “apps” to navigate the everyday difficulties of life. BlackBerry was slow to offer a full Web browser capability, and they gradually lost relevance because their phones didn’t offer the same extensive features and apps as the iPhone and Android systems. Once the iPhone came along, suddenly people had the ability to surf the Web, shop online, get directions, buy movie tickets and access specialized content and tools on any conceivable topic, all from their phones: just being able to check e-mail wasn’t enough anymore. But instead of being proactive by innovating and offering something new, BlackBerry merely rolled out updates to its existing product.
Focus on your best customers: BlackBerry achieved some of its biggest success in the corporate market. But after Apple introduced the iPad, RIM tried to get into the consumer market for tablet PCs by introducing its PlayBook tablet. The problem for RIM is that the PlayBook is nowhere close to being able to compete with the iPad. The iPad is better for presentations, has a bigger app selection, and is generally setting the standard for what a tablet should be. Instead of rolling out an inferior version of a highly successful tablet geared toward the consumer market (where Apple already had an insurmountable lead), perhaps RIM should have focused more on developing great new products for the corporate market. Too many tech firms try to sell to the common consumers instead of to corporate clients, even when they don't have the right products and the right message.
To stay in first place, you have to innovate: Five years ago, BlackBerry was by far the #1 smart phone in terms of market share. They ran ads with trendy designers, artists and entrepreneurs talking about how much they loved their BlackBerry and how it helped them live a bigger life and be productive on the go. The decline of RIM shows yet another example of how being the first to market doesn't necessarily lead to lasting dominance. You have to continually innovate, and keep giving your customers something new to be excited about.
I am a BlackBerry user, and in fact I just bought a new BlackBerry Bold, and I like it a lot. So I am not rooting for RIM to fail, by any means. There are still signs of hope for the company – RIM still has over 65 million subscribers and preparing to release a new generation of phones based on its QNX operating system. Perhaps RIM can defy the expectations of analysts and find a way to survive. But ultimately, this story shows the rest of us, especially in the tech sector, how fast the world can change. No company can afford to rest on its laurels or coast along based on its past success. We all need to continually adapt and innovate to make sure our products are relevant to what customers want to buy.
A recent article in the Wall Street Journal (“Wal-Mart Tries to Recapture Mr. Sam’s Winning Formula” – subscription required) highlights the struggles of Wal-Mart, America’s largest retailer, which recently announced its second annual decline in U.S. same-store sales. While Wal-Mart was widely expected to be one of the “winners” of the Great Recession, as customers became more likely to trade down to lower-cost products, it’s becoming apparent that something is not right at the home of “Everyday Low Prices.”
So what is going wrong for Wal-Mart?
Strike 1 - Wal-Mart Misses the Mark on What Their Customer Values
Wal-Mart has fallen away from this key competitive advantage. Instead, it’s tried to sell higher-priced, trendier clothes. It’s started to offer higher-priced organic food in its grocery stores. In doing these things, Wal-Mart has tried to target a higher-income demographic of customers – the kind of customers who might otherwise shop at Target or Macy’s or other higher-priced “aspirational brand” retailers.
Wal-Mart was trying to compete on the same territory as “cheap chic” retailers like Target, but instead they forgot to focus on their core customers. As the article states, in a quote from former Wal-Mart executive Jimmy Wright: "The basic Wal-Mart customer didn't leave Wal-Mart. What happened is that Wal-Mart left the customer."
Strike 2 - Wal-Mart's Core Focus is Price - Ouch!
Perhaps Wal-Mart’s stagnant sales in the U.S. are a sign that low prices are not the answer for everything. Wal-Mart has seen its market share getting nibbled away by Target and Dollar Stores and warehouse stores and other low-cost competitors that can come close to matching Wal-Mart’s prices.
Many Dollar Stores have thrived by locating themselves right across the street from Wal-Mart stores. Dollar Stores provide a more convenient way for people to hurry in and quickly buy a few items, without the long walks and long lines required with going in to a Wal-Mart SuperCenter. Also, their focus on everything being a dollar or less is quite enticing for those consumers watching their wallets.
Wal-Mart may be discovering that their "low price" motto is catching up to them – if other competitors can emulate Wal-Mart’s pricing, while still retaining more affluent customers who are willing to pay more, Wal-Mart may find itself stuck in an uncomfortable middle ground – not high-quality enough to attract higher-paying customers, but no longer capturing as much business from the bargain-hunters.
Why Selling on Price is NOT the Answer
Here at Smart Advantage, we tell our clients over and over again that lowering prices is not the answer – if the only relationship you have with a customer is based on price, they will always find someone else who can sell it for even cheaper. Now, even the largest U.S. company who sells on price is losing sales and market share to other "Lower price" providers.
Again, Wal-Mart is not going away – they are still the pre-eminent powerhouse of American retail. But perhaps Wal-Mart’s leaders are realizing that their business model is not so safe in the long run, and need to look for another strategy – or find a way to rediscover the winning strategy that made them so successful in the first place.
Know your customers. Stay true to what your customers really want to buy from you. Maintain your competitive advantages and keep doing what you do better than anyone else. This is how any company can create long-term success – “low prices” have nothing to do with it.
What will Strike 3 be? Leave your thoughts in the comment section.
We’ve written before that companies need to be careful when offering deep discounts through group buying sites like Groupon – but the story of Groupon itself presents some interesting lessons for companies.
Groupon has become one of the most popular and well-funded group buying sites, offering daily deals from local businesses in 150 cities, 3,000 employees, and annual revenue estimated at $2 billion. Google recently offered at least $5 billion to buy Groupon, an offer that Groupon rejected.
As happens in any industry, competitors have seen Groupon’s success and want to get a piece of the action. Groupon copycat sites have become a growth industry – as of March 2010, there were nearly 150 Groupon clones online, with some sites basically copying Groupon’s coding and design. And the worst part is this statistic is from a year ago - who knows what the number is now.
Success = Copycats. How to Stay on Top
Groupon is particularly vulnerable to “copycats” because the Groupon service is easy to duplicate: it was founded as basically a mass mailing list, offering only one deal per day in each city that they cover.
What will Groupon do to ensure they maintain their market share? If all these copycats offer the same thing as Groupon, will Groupon be able to differentiate themselves, or will they become just another “coupon site?”
There are lessons here for any company that faces intensifying competition and the threat of “copycats.”
Here are some ideas for how Groupon (or any business owner/ company) can continue to capitalize on its success:
- Choose your business partners wisely. Groupon prides itself on offering deals from only the best local businesses – they do extensive research on Yelp and other customer review sites to make sure they’re working with businesses that people love. Groupon wants to protect its brand by only offering deals from top quality businesses that people will be happy to buy from – this is good for Groupon in the long run, even if they leave money on the table in the short run. By being more exclusive about which deals they choose to promote on their site, Groupon is enhancing the value of their brand and strengthening their competitive advantage.
- Offer added value for your customers. As our previous blog post warned, some businesses have had mixed results from using group buying sites – if you’re not careful, deep discounts can hurt your business more than they help. As this article states, Groupon has worked to avoid creating “a community of penny pinchers” – in fact, Groupon claims that their users tend to spend 50% more than the value of their deal.
- Know your customers – and be prepared to personalize and customize your offerings. Groupon has become much more than just a mailing list. With their detailed knowledge of where their customers live and what they like to buy, Groupon has introduced personalized deals offered to customers based on prior purchases, ZIP code and other identifying details. By having deep relationships built on trust (and cemented with successful purchases), Groupon can do more than a simple copycat site.
- Ask yourself, “what business are you really in?” Groupon is working to position itself as more of a “merchant discover/city guide” site, rather than a simple coupon/discount site. Groupon wants to attract affluent, well-informed buyers who are motivated by more than just discounts – Groupon wants customers who are eager to try new things, to find out what kinds of interesting things are happening around town – or discover an exciting new restaurant, event or shopping experience. It’s much easier to copy a “coupon site” than it is to duplicate the trust and cachet of a “city guide.”
No matter what you sell, if you are successful, your competitors are going to try and find ways to copy what you have to offer. It’s important to solidify your position by focusing on your key Competitive Advantages – find out what you can do better than anyone else on the market. The best competitive advantages are the ones that are hardest to duplicate.
To Learn More About Smart Advantage's Marketing Consulting Services CLICK HERE
Southwest Airlines has been one of the few big success stories of the American airline business. While other airlines constantly lose money, go bankrupt, and disappear, Southwest Airlines is consistently profitable, with a great reputation for low fares, on-time flights, friendly service and a fun-loving culture.
The regional airline that started out offering flights between Dallas, San Antonio and Houston turns 40 in 2011, and they now fly more passengers than any other U.S. airline (86 million during 2009) and recently announced the purchase of AirTran Airways for $1.4 billion.
Although Southwest is in many ways a model for the rest of the U.S. airline industry, as this New York Times article points out, many airline industry observers are wondering if Southwest Airlines will be able to preserve its competitive advantages that have taken it to such great heights.
Competitive Advantages that the Merger might Affect
All companies (I am assuming) want to make sure that they can preserve their competitive advantages over time, so that they don’t lose touch with the key reasons for their success.
In the case of Southwest Airlines, the key competitive advantages that would be under pressure are:
- On-Time Flights: For years, Southwest flew to the smaller, less-traveled airports instead of the busy hubs. In Chicago, Southwest flew out of Midway Airport instead of O’Hare; in Dallas they flew out of Love Field instead of Dallas-Fort Worth International. This gave them a competitive advantage of more on-time flights for their passengers – Southwest could deliver passengers to destinations without the hassles and delays of dealing with big airports. Southwest could get their planes unloaded, reloaded and refueled and back in the sky with fewer delays. Now with their purchase of AirTran, they will be flying out of busier, more crowded airports – which cuts down on their fast turnarounds and quick takeoff times (as anyone who has ever sat on a crowded runway waiting for takeoff can tell you).
- 100% Consistency with their Planes: Another key competitive advantage for Southwest Airlines over the years has been their insistence on flying only one kind of plane – the Boeing 737. By only using one variety of aircraft, Southwest has been able to save a lot of money on maintenance costs – fewer parts to source, fewer varieties of training required, etc. Now with the merger, Southwest will have to absorb a fleet of Boeing 717s. This is one of the classic challenges with mergers – in addition to the strategic upsides and growth potential, there are also costs and complications that leaders need to bear in mind. Not to mention passengers expectations of the aircraft.
- Company Culture & Passenger Experience: Southwest Airlines has one of the most unique and cohesive corporate cultures in the airline business. (How many airlines even have a unique or memorable culture?) Southwest flight attendants sing songs and play games with passengers. Southwest pilots sometimes help clean the cabins to get the planes ready for takeoff more quickly, and the whole company tries to create a spirit of fun at work – the CEO even dressed up like Woody from “Toy Story” at the annual Halloween party. As Southwest keeps getting bigger, they need to find ways to keep their unique culture alive – and this is also a challenge that many CEOs of growing companies can relate to. As companies grow and evolve from “startups and underdogs” to “establishment figures,” it’s important not to lose sight of the personality and character of the company.Not only for internal operations, but for your customers as well. Have you ever heard of the expression "If you confuse them, you lose them"?
Southwest's Challenges are Good Ones in the End
The challenges that Southwest Airlines is encountering are ultimately “good problems to have.” It’s better to grow and have people wonder whether you can sustain your success, than never to grow at all.
Whether your company is small or a big, established player, we all can learn something from thinking about the challenges facing Southwest Airlines. Sometimes the competitive advantages that help your company during the early growth years are not the same competitive advantages that will endure for the long-term. You have to constantly stay on your toes and keep thinking about the future, while preserving the most important aspects of what makes your company competitive.
Watch Jaynie L. Smith's take on the Major Airline Mergers in her interview with First Business
When Chasing New Customers, Don't Forget your "Bread and Butter"
Magazines are always offering special deals to new subscribers – “Save 80% off the cover price! Special offer for new subscribers!”
But what about the “old” subscribers who have been loyal customers for year after year? Why do so many magazines make an effort to attract new customers, while ignoring the loyal customers who have helped to keep their businesses operating in the black?
It’s tempting to put all your marketing efforts into finding new customers, but you cannot forget your current customers because they can leave you at anytime. You need to keep reminding your current customers of why it’s worth it for them to do business with you instead of a competitor.
Most magazine subscribers wouldn’t cancel their subscription just because they saw that new subscribers were getting a better deal. But I wonder if all those “80% off” coupons floating around act to devalue the magazine to its current subscribers – it’s not a good strategy to ask your existing customers to keep paying full price for something that you’re trying to give away for almost free.
Instead of offering steep discounts in the hope of wooing new customers, perhaps these magazines would be better off communicating their value. Talk about the unique content they offer, the one-of-a-kind stories you can’t get anywhere else, the coverage of a particular industry, city or scene. Magazines create a community of people who share common interests and aspirations – part of the fun of subscribing to certain magazines is being part of this community.
Every magazine needs to find its own unique selling proposition or competitive advantage. Some good examples are:
- The Economist is a global business digest for executives (and aspiring leaders).
- Vogue is for people who love fashion because they are known for introducing the newest trends.
Their competitive advantage has even become their competitive position.
Every magazine – and every business – needs to know who its audience is, know what kind of community it is creating, and know how to identify and trumpet its competitive advantages. The main reason that magazine subscribers choose a magazine is not price, it’s the stories that magazines tell, and maybe more important, the story that the magazine allows its readers to tell about themselves.
Does this Example of the Magazine Industry Compare to What Your Business is Doing?
Businesses that can only compete on price are doomed to fail in the long run. Instead of offering deep discounts to woo new customers, take a hard look at the reasons why your existing customers have kept choosing to do business with you.
Prevent your business from becoming the In Touch, Star, OK , US Weekly of the gossip magazine world.You have to constantly be flaunting your competitive advantages, because if your company begins to look the same as another with cheaper pricing – more than likely your current customers will leave, because there is no tie breaker, except price. You will then be another business shouting: “Save 80% off the cover price! Special offer for new subscribers!”
Say it Before Your Competitor Does
One of the best ways to stake out a competitive advantage is to take credit for what everyone else in your industry is already doing. State "it" before your competitor does.
This doesn’t mean you’re being dishonest – it means that you’re helping to educate customers about how your business works, in a way that’s true for the particular practices of your company. And if you get known as being the “first” in your industry to offer a certain competitive advantage, so much the better for you.
Some companies have a hard time finding their competitive advantages (aka unique selling point, differentiator etc). If you’re in an industry where every competitor does things pretty much the same way, what reason does a customer have to choose your business over any other? What if your product or service is considered a commodity?
Example of a Company Claiming a Competitive Advantage First
One of our clients a few years back was a regional pest control business that was trying to find new ways to differentiate itself from the competition. At one of the workshops we led with the top management, we went through all the possible competitive advantage statements, and talked about everything that might be considered special and noteworthy about the business.
One of the top executives mentioned, “Well, we do a lot of training.” One of the other executives was not convinced that this was a valid point of difference – “Heck, everyone in our industry does that – it’s required.”
We asked the team to tell us more. It turns out that this pest control company, like all of its competitors, spent a significant amount of time training its employees every year – everything from technical requirements to safety regulations. But no one – not this company or any of its competitors – used “training” as part of its competitive advantages in their marketing messages.
This was a great opportunity – a hidden gem of competitive advantage. We did some more research and were able to accurately describe that the company spent over a million dollars a year on technical, safety and environmental compliance training for its employees – and this became one of the key elements of the company’s revised marketing and sales messages.
So even if “everyone else is doing it,” there still might be a competitive advantage lurking in some of the most mundane or expected practices at your company.
What Your Company Could Claim as a Competitive Advantage
- A bank could claim: “We passed 100% of our regulatory compliance checks during the previous year.” (Even though regulatory compliance is a fundamental responsibility of banks, not all banks pass 100% of their compliance checks.)
- An architecture firm could claim: “100% of our new associates are professionally certified in architecture.” (How many competitors are claiming this, even if they can?)
- A construction contractor could claim: “We have a ‘safety first, no injury’ culture – and last year we lost zero days to injury.” (This message appeals to customers who want a professionally run contractor that pays attention to a safe workplace – and whose attention to detail and adherence to budgets and deadlines are likely to be strong as well.)
Even if “everyone is doing it,” they might not all be “saying it.” So maybe you should – in a way that is true and accurate for your company and relevant to your customers.
Why You Need to Develop Your "Elevator Pitch"
We’ve all heard the concept of the “elevator pitch.” If you had 30 seconds riding in an elevator with someone who was crucial to the success of your business, and you had one chance to sell yourself, what would you say?
How can you succinctly encapsulate the best attributes and key points about your company, in 30 seconds or less – without being too wordy, too aggressive, or too overwhelming?
If that idea sounds daunting, what if you had to shorten that speech even further?
You see, the world moves too fast now for elevator pitches. No one has time or the attention span for a 30-second pitch. So one of the things our business consulting services provides to clients is identifying competitive advantage statements – “elevator sentences,” you might say.
These are concise, tightly worded, and rigorously defined positioning statements of the key competitive advantages of your company. This is how you can present your company with confidence and explain what you do best – and most importantly, show why it matters to your customers.
Competitive Advantage Statement Examples (AKA Elevator Sentences):
- Our technicians solve problems in less than 2 hours.
- Our consulting firm helped clients raise over $50 million in venture capital during the past year - a 10% improvement in a year when the industry as a whole was down by 20%.
- Our HR training program helps clients improve their employee retention rates by at least 30%.
- Our law firm gets over 85% of business from repeat clients.
- Our car wash delivers the highest water pressure and longer wash times than any other competitor in town.
- Our interior design team stays on budget 95 percent of the time.
- 90 percent of our business comes from referrals and repeat customers.
- Our gym program has an average of 15 pounds lost in 5 months for over 60% of our members.
Developing Your Competitive Advantage Statements
All of these competitive advantages are concise (one sentence). They are specific – focused on one unique attribute or achievement of the company. And, given, they are relevant to the customers (conduct Market Research to find out).
If you want to get your car washed, it’s relevant to you if one car wash can give you a more powerful spray – and more washing time for your money.
Talking about repeat business and referrals builds credibility. Explaining about how you can outperform your industry or stay on budget 95% of the time helps your customers understand your unique skills and dedication to delivering value.
Smart Advantage business consulting services has helped clients develop their own “elevator pitch” – short, concise, evidence-based statements to encapsulate and promote their own competitive advantages. We do this by meeting with the company’s top leaders, where we brainstorm, discuss and drill down into the fine details of what makes the company unique.
In Chapter Two of Creating Competitive Advantage learn how a commercial realtor replaced his "Elevator Pitch" with his competitive advantage statements - and ended up getting $38 Million of new business. We guarantee to our clients that they will uncover 50-100 competitive advantage statements they did not even know they had!
Smart Advantage can give your company a new vocabulary to describe what you do best, how to measure what you do best, and how to convey that information to your customers in a way that is relevant to them.
The best businesses to be in are the ones with high barriers to entry.
Think about it – why do doctors and lawyers and dentists earn so much money? Because there are barriers to entry – medical school, the bar exam, dental school – keeping people from getting into these professions. That keeps the supply scarce – we can’t all be doctors and dentists and lawyers.
Professional qualifications are one type of barrier to entry. But have you considered that your business might be able to create its own barrier to entry – that is built on your company’s competitive advantage?
If your company truly understands its competitive advantage, you can “build a moat” around your business – you will establish such a lead over your competition that no one else will be able to beat you in your market. Competitive advantage creates scarcity in your market; just as “not everyone can be a dentist,” if “not everyone” in your market can do what you do, that makes your company even more valuable.
Just as “the only dentist in town” can earn a great living because of the barriers to entry keeping people out, your company can become “the only” one in your market – if you understand and embrace your competitive advantage, and become widely respected and recognized as “the best” at what you do.
For example, if your company can offer the following results, you might have a significant competitive advantage to share with your customers:
- Guaranteed on-time delivery. Can you be more reliable than anyone else – and are you prepared to bet money on it?
- Same-day service. Can you be faster than anyone else in your market?
- 99% success rate. Can you be more accurate than anyone else in your market?
- 24/7 on-call service. Are you able to go the extra mile to be available when your customers need you?
- The “wow” factor. Is your product or service so much better than anyone else that your customers feel compelled to talk about it with others? Do you get a lot of word-of-mouth business and referrals? If so, you’re doing something right – and you have a significant competitive advantage.
Internal Competitive Advantages
In addition to these “external” competitive advantages, there are also “internal” competitive advantages. These take a long time to develop, but they are often the best way to build a “wide moat” around your company.
For example, Walmart is a wide-moat company – no one is ever likely to beat Walmart at low-price, mass-market retail. Walmart’s biggest competitive advantages are internal – it’s sheer size, its logistics, its buying power. Customers at Walmart don’t see Walmart’s elaborate network of warehouses and its skill at distributing the right products to the right places at the right time; but they benefit from it in terms of lower prices.
Similarly, Coca-Cola has an almost insurmountable lead in the beverage industry because of its worldwide distribution – almost anywhere in the world, you can buy a Coke. Coke is able to enjoy this competitive advantage because of its internal capabilities – its powerful distribution networks and its canny marketing ability to find and capitalize on new markets for growth (such as China).
Smart Advantage helps companies who are not (yet) the Cokes and Walmarts of the world to uncover their true competitive advantages. You might not have a universally recognized brand (like Coke) or massive scale to bargain with your suppliers (like Walmart), but we can use market research and strategic insights to uncover what it is that makes your business competitive in your market.
Some companies are able to pinpoint their own competitive advantages internally, but it is more often the case that companies don’t know their own strengths – it takes an outside observer to help them identify their true competitive advantages.