If there's one thing that small to- medium-sized businesses I speak with are looking to create, it's a competitive advantage over all of their rivals in the marketplace.
Unfortunately, far too many don't know where to start.
Going to market with a message about a great track record, a strong focus on quality and terrific employees is not the kind of positioning that will make you stand out from the crowd.
Instead, building a competitive advantage requires nothing more than a mind finely tuned on figuring out ways to bring those you serve greater benefit or more distinctive results than what is already available in the marketplace.
It's difficult to go wrong if your focus is on trying to produce more value. This is how companies innovate and create the next generation of products and services.
To ensure you're always on the right track, continuously ask yourself these three questions:
- Does what I offer provide a better result than what the marketplace is used to?
- Does it bring more benefits than what is currently offered?
- Does it bring an advantage the customer wants, needs or doesn’t already have?
If you can't answer yes to any of those, then what you're putting your money and effort into isn't an innovation – it's a sinkhole.
Before you can create products or services that satisfy any of these criteria, you need to know what gaps to fill. For that, it's critical to consult the marketplace.
This process should be a discovery of customers' and potential customers' biggest problems, hugest sources of pain and most immediate needs. The answers to these questions will provide the starting point for building an innovation that will provide you with a competitive advantage.
To gather information, use a variety of tools, from surveys to one-to-one conversations to social media.
Once you identify the problems, you can figure out how you can provide the solutions.
It takes lots of creativity to conceptualize and create something innovative. But you can't fix something until you know what's broken or plug a hole until you know where it is gaping.
There are many different strategies that companies of any size can use to build competitive advantage over their rivals – from increasing efficiency to boosting safety, offering greater selection to building better access.
Speed of delivery is another way to create competitive advantage. With its overnight delivery service, FedEx, for instance, turned speed of delivery to its advantage.
A small Canadian software development company vying for a sizable contract came up with a way to guarantee completion of the project in three months – faster than its rivals and the competitive advantage that made it the winner.
Offering add-ons can also be used to competitive advantage. A computer dealer used a portion of its profits to pick up items such as webcams and external hard drives, and threw them in with laptop purchases. It blew through all of its stock in one weekend. In a small move, it managed to go from a company selling a commodity to a company with a competitive advantage.
Decreasing risk can also be used as a competitive advantage. One training company putting on a two-day seminar asked those attending to pay – but offered to return their money after the first day if they didn't feel they'd gotten enough value out of what they had learned. That was a risk-free proposition. And under 3 per cent of participants asked for their money back.
The takeaway
Gaining a competitive advantage doesn't happen by accident. It's a deliberate choice that entrepreneurs must make and create.
It doesn't require an extraordinary IQ or deep pockets. It just requires a laser-like focus on putting the customer first, finding ways to solve their problems and minimize their pains in ways others haven't figured out. That's how you deliver more value, and how you build a competitive advantage into your company.
Special to the Globe and Mail
Ryan Caligiuri is a Winnipeg-based marketing specialist who believes that many organizations are wasting their money on ineffective marketing tactics, that many professionals and students feel lost because their actions don't translate into positive results, and that all three groups are too comfortable following the status quo. He is driven by the desire to refocus their efforts to resurrect the impact of marketing.