If you own a business, there’s at least one thing that makes you special – at least one thing that you do well. If there weren’t you wouldn’t still be in business. So what is it that makes you so special – what makes your customers choose you over your competition? It’s called your competitive advantage.
What does competitive advantage mean?
Re-read that last line. What makes your customers choose you over your competition? I believe that is as simple a definition for competitive advantage as you can find. As a business owner, if you provide value to your customers, they will choose your product or service over your competitors – even if they are all selling the same product or service. And this is important – price does not always equal value. Customers will pay more for a perceived value.
So what IS your competitive advantage?
If you are still in business, you have one. And it might change as your business changes. William Wrigley Jr. began by giving away free chewing gum when selling his soap and baking powder. He quickly realized that the gum was his competitive advantage. And the rest is history. It’s a great question to ask yourself – Why are you better at what you do than your competitors? What value do you provide that your competitors don’t?
Once you know what your competitive advantage is, you can exploit it in your messaging, marketing, packaging, and everything else you do. To better position your business, and gain market share. And to remind customers and potential customers that “this is why we’re better than our competitors!”
Trying to determine your competitive advantage takes some research and some data. Here are some ideas to start to understand your competitive advantage more concisely.
- Look at customers that you are able to charge a premium to, and determine why they are willing to pay you a premium (they demand extremely fast delivery, higher quality, etc.)
- Try to match sales trends in your business with changes you’ve made (i.e., you improved quality and sales went up; or you increased price and sales went down)
- Don’t forget there are many other factors that can affect your business. (Remember our blog on data analytics.)
- Look for demographic/industry patterns among your customers that might explain your competitive advantage (your products sell well with seniors, construction workers, Hispanics, etc.)
And if all else fails – get your data the old fashioned way… TALK TO YOUR CUSTOMERS. Ask them what they like about doing business with you. Not only will you get some great feedback, but it’s great PR and your customers will love you even more!
So figure out your competitive advantage – because there is at least one thing that makes your business special… and your customers need to know about it!