Much has been written on the subject of competitive advantage. What is competitive advantage? In plain speak, it’s the distinctive characteristics of your organization that create extraordinary customer goodwill and value for your business. Competitive advantage has always been important, but with consumers being more educated and empowered than they were even several years ago, it’s more important than ever. Much of this education and empowerment is attributable to the power of the Internet.
Most folks probably agree that we are going to see higher raw material and labor costs over the next few years. The Federal Reserve’s “easy money” policies will also fuel consumption, which will drive inflation even higher. As raw material, labor and borrowing costs increase, companies will have to raise prices in order to maintain profitability – or stay in business.
Will you be able to raise prices and stay competitive?
Better yet, what if you could raise prices and gain market share at the same time? What does your company offer that is truly unique and hard for your competitors to replicate? Maybe it’s time to seriously examine and exploit your organization’s “competitive advantages.”
This might not be as easy as it sounds. When I hear business executives talk about their differentiators, it’s fairly common to hear things like:
“We have great product quality.”
“We have the best customer service.”
“Our people make the difference.”
Hearing these “differentiators” is like hearing the latest business buzzwords – blah, blah, blah.
“What really makes you different?”
It’s time to peel away the layers and ask yourself what really makes your customers do business with you – and come back time and time again. You might even ask some of your good customers and see what they have to say. You might be surprised at what you learn.
For example, you might learn that your real differentiators are things like your product customization or bundling, production redundancy, information you furnish your customer on product usage, returns and use of costly expedited shipping. Maybe it’s simply a combination of little things that, when taken together, make it difficult for your customer to look elsewhere. It’s also important to identify sustainable competitive advantages. You might have solid differentiators, but which ones will take your competitors a long time to replicate – if at all?
When it comes time to increase prices, companies with sustainable competitive advantage are going to have a much easier time than the low price players. These companies have commoditized themselves, so price is their only differentiator – not a good place to be.
It’s time to take action: With competitive conditions and pricing pressures on the rise, it’s time to identify what makes your organization unique, and vigorously exploit those differentiators to capture market share and increase profits.
How long has it been since you identified or re-assessed your competitive advantages?