Why would a client buy from you rather than a competitor?
The reason the answer is so critical is that it is your starting point – what clients to target, how to chase them, how to service them and retain them, what people do I need, what systems do I need to establish, how do I innovate?
Known as a sustainable competitive advantage (“SCA”), the ability to clearly articulate what sets your business apart from your competitors and compels clients to buy from you (and hopefully keep buying), in my experience varies dramatically across businesses. At one end, there are businesses or brands that have become so celebrated for their product or service that we use their name as a verb to describe the act of consuming that product or service – think Google, Xerox, Skype, Uber and Hoover. However, in my experience as a banker servicing professional and property services businesses, most businesses describe their point of difference as their people – and whilst they are different because of their people, they can’t all be right! Yet, there are firms in crowded, competitive market places that stand out and excel.
Armed with a distinct SCA the development of your strategy across marketing, operations, HR and finance should become much clearer. They will have a better chance of working together and supporting the growth of your business, rather than pulling it apart at the seams.
A lot of businesses struggle to describe their SCA either because they’ve never thought what it is, they simply compete in a manner that their industry segment is conditioned to, or they struggle to articulate what it is. A reasonably straightforward process to flesh out your SCA is as follows:
Who are your clients (current or target)? Segment them in a logical way: type, size, location, age, buying behaviour – whatever makes sense but get specific.
What do they value? Think about all the factors that your target client considers when making a purchasing decision – product quality, responsiveness, trust, ease of purchase, professionalism, product suite, experience, reputation, refund policy, lowest price are examples – and rate them in terms of importance on a scale of 1 to 10. As an SCA should only be based upon a factor if it is truly important to your target customer, any factor that doesn’t rate extremely high should be ignored. A further point of guidance – you must understand and distinguish between product features and the benefits they convey to a customer to truly capture an SCA. As an example, a feature of Uber is they have a user-friendly app (feature), that helps users order a ride quickly and keeps them informed of the whereabouts of their driver (functional benefits) which in turn reduces frustration associated with waiting times and provides a sense of control (emotional benefits).
How do you compare to your competitors in delivering into each factor? Again, rate yourself on a scale of 1 to 10 against current competition. This is more so a consideration of degree of difficulty but worthwhile factoring into your thoughts because whilst a factor might be important to clients, if you’re weak relative to your competition at present, it will take time to improve your competitive position to attain parity or surpass your competition and this may impact your planning.
How would competing upon a certain factor energise your business? Whilst your target clients rate certain factors as important, which of these factors would energise your business? If a segment of your target market considers price a key determinant of their buying decision above all other factors but your business sees itself as a premium provider in relation to the quality of service delivery or its people, how will you and your staff feel about chasing that market?
Add up your responses to the first and third questions and the highest factor(s) will be a guide to your SCA, remembering that your response to the second question is an insight to degree of difficulty.
In summary, an SCA is only an SCA if it’s important to your target clients and if it energises your business. An SCA is dynamic, it can change from time to time and should be reviewed regularly. The main reason for this is that markets and clients’ behaviours/perceptions can and will change from time to time.
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