I’ve mentioned this before, I grew up in a small business. We sold industrial supplies, primarily bolts and nuts. I’m not sure there is any more of a commodity business than that. We worked very hard to leverage expertise to help our customers make their purchasing decisions based upon something other than just how much our products cost. Most of the time we were successful.
A few years back I attended a workshop based upon the book, Creating Competitive Advantage: Giving Customers a Reason to Choose You Over Your Competitors, by Jaynie L. Smith and William G. Flanagan. I enjoyed their common sense approach and agree with the assertion, “We decide to have competitive advantages—they don’t just happen.”
A great example of this mindset is illustrated in three questions that Jet Blue asks themselves every day:
- What do we do better than our competition?
- What do they do better than us?
- How can we do that better than them?
Most of us are very proud of the products we sell, but our products are not a competitive advantage. It’s not the product, it’s the deliverables. In fact, a real competitive advantage isn’t something itemized on the invoice. Let me explain. My dad was successful at turning a bolt and nut business into something other than a commodity business because he did a couple of things very well:
- He had an understanding of the product most of the engineers we sold to didn’t have. They would call him to ask for advice about materials and applications—he became a resource.
- He was a real stickler for answering inbound phone calls quickly, usually by the second or third ring.
- Everything went out in a clean and well-marked box.
- We made regularly scheduled deliveries every day.
Although these four things might not sound like very much, Smith and Flanagan outline some criteria for a legitimate competitive advantage, judge for yourself if some of the above mentioned practices fit into their criteria:
- It must be objective, not subjective: For example, “We provide great customer service,” is a subjective claim. “We provide great customer service by answering the telephone by the second ring,” is an objective claim.
- It must differentiate, at least for a while: Although Volvo and Honda have the same crash safety rating, Volvo was the first to make the claim that they were the safest vehicle in the world. I remember seeing this commercial as a young driver and being very impressed that the driver cage of the car remained intact. Volvo was the first to make safety a significant claim in their marketing, taking that competitive advantage from the rest of the competition. If Honda were to make the claim that they were the safest vehicle, it wouldn’t be a competitive advantage because Volvo already owns it.
- It must be quantifiable: If you consider the customer service claim again, “We provide great customer service,” is not a competitive advantage while “96% of all customer service claims are resolved within 24 hours” would be. You can quantify and measure it.
- It can’t be, or isn’t claimed by the competition: If all of my father’s competitors had been sending out orders in clean and well-labeled boxes, that wouldn’t have been a competitive advantage for him. Something as simple as keeping your hands clean while packaging orders actually gave him something that set him apart.
- It can’t be a “given” or cliche: There was a time when air conditioning was considered an option, whereas today I can’t think of the last time I looked at a new car that didn’t include air conditioning. Any automaker making the claim that air conditioning was included with their car as a competitive advantage would be making a claim that most of their customers would consider a “given.”
- It must be true: I am always surprised at the willingness of many business owners to make claims based upon what they want to be, rather than what they are. For example, if your goal is to resolve 96% of your customer service claims within the first 24 hours, but it takes you 36 ours to do so, making the claim that you do it in 24 hours isn’t true. You have some work to do before you make that claim. “Our goal is to answer 96% of our customer service claims within 24 hours” isn’t a competitive advantage. It’s a nice goal, but that’s all it is.
- It must be important to the customer: Any claim of competitive advantage must be important to the customer or it doesn’t matter. If the customer doesn’t care if the boxes your bolts and nuts are delivered in are clean or not, it isn’t an advantage. Any advantage over your competition you have that doesn’t matter to your customer isn’t a competitive advantage.
There were a number of things my Dad did that fit into the category of competitive advantage, he just never said much about it. He hoped his customers would notice, which some of them did. If you have a real competitive advantage and you don’t tell anyone about it, it doesn’t really do you much good. As you look at your product or service, take some time to:
- Identify the deliverables
- Identify the competitive advantages
- Learn what your customers think is important
- Apply the results
- Share your competitive advantage with your customers (tell them about it)
Like most things, this sounds pretty straightforward. Although it might not be rocket science, the number of businesses that take the time to strategically look at what sets them apart from the crowd is very small. What are you going to do to set yourself apart?