Is What You Offer Really a Competitive Advantage?

Horse-nose Businesses struggle to be different. Staples has an Easy Button, Best Buy has the Geek Squad, Chrysler had  “Dr. Z.” and of course everyone knows the AFLAC duck. Do these gimmicks really create a competitive advantage though?

Dr. Z, remember, turned out to be a bomb. For one thing, he wasn’t Lee Iacocca — who everyone knew was a big cheese and knew what he was talking about. You can read Iacocca’s ideas about the marketing of Dr. Z in his book, “Where Have All the Leaders Gone?”

Little Richard howling during the Nationwide Insurance commercial may make you hold your sides with laughter, but if your roof falls in over the weekend and the Nationwide claims adjuster doesn’t return your call until Monday, Little Richard may just be a constant reminder of how Nationwide wasn’t on your side. 

So what does it take to turn your differentiation into a competitive advantage? First, you need to understand that the fact you’ve found something that makes you different doesn’t necessarily mean that it is a competitive advantage. Although companies brag that they bring their dogs to work and that they’re family owned, do they really know how that translates to increased business? Sure, the customer wants to know how your dog is doing — he’s sitting in your showroom and in your ads, but how many customers actually thought this was a good enough reason to pay your prices?

Being in a family-owned business for 20 years may make you and your family feel proud, but to customers it may just make them think that you’re old, your showroom isn’t up to date and your store isn’t very interesting.

Now I know that some of you are up in arms because you’ve worked so hard to make the dog a celebrity, but consider the talking gecko from the GEICO ads. He isn’t just a gecko — but an educated gecko with lots of statistics and information to make you want to believe what he has to say. He knows his job and his lines, but again, if the gecko didn’t come through with your insurance payment you’d be looking for geckos to stomp in your front yard.

Does your dog know his lines and does he make sense?

The important point again is: don’t confuse differentiation with competitive advantage.

One of the better business books on the market is Jaynie Smith’s “Creating Competitive Advantage.” After listening to Jaynie discuss her book on NPR, I immediately went out and bought it. I then emailed her about how right on the money I thought she was. A couple of conversations later I began to think about what it had to do with our industry. Jaynie's statement about building margins really stuck with me:

"Too often managers who see their business drifting and their margins shrinking will try to compete based on price. But the manager who drops his prices while his market share is shrinking is courting tragedy.”

It reminds me of the two brothers who are building a watermelon business and decide to go to Mexico to outsource their product. At $1.00 a melon they can hardly touch the price in the US. With that in mind they set up their stand in Texas and put out a big sign saying “Watermelons: $10.00 a dozen.” Of course at the end of the day the watermelons are gone and the boys are broke. After soul searching about their thriving business and lack of cash, they come up with a solution: let’s buy a bigger truck! Somewhere we all know that if you’re losing money you can’t make it up in volume — but that doesn’t stop many from trying. 
After years of designing and delivering sales training, something began to gnaw at my mind. Salespeople still ask the same question: how do I overcome objections and close the sale?
It has become evident that one of the reasons not to ask the big “D” question (“Do you want it?”) has to do with the  possibility that you will have to defend what makes your company or product different.
So what are the steps? First is to determine what makes you different and whether it’s actually a competitive advantage. Who would really know other than your customers? So let’s talk to them. Let’s start with the customers who have defected. Even the most successful businesses have some customers that manage to get away — even businesses with huge market share. Why? Mainly because their salespeople don’t exactly know their competitive advantages and why customers buy from them.
The second is to commission a survey on customers that are MIA and find out what happened. A list of well thought-out questions designed to understand why they bought at the other store and how much they spent will give you enough information to scare even the most successful businesses to re-examine how they are treating their customers. 

Third you can take this information, feed it back into work groups with your staff and have them design new business practices that will at least control the process and what I call “points of decision” for the customer.  Now we’ll have information about what we need to change or where we can step up to the plate.
The next place for customer information would be customers that are sometimes called “raving fans” — customers who love you, paid your prices and are out spreading good will. A survey with them will help you discover why they actually brought from you. This is a good time to bring up the dog and your family. If none of these rate high on the customer’s priority list, you will discover what does. Find out what it is, how you can do more of it and teach your employees to embrace these principles.
Armed with this data, you’ll come to the real work: putting words to the music. Here is the part where customer service has been defined and quantified — something we have not done in our business. Being in business for 30 years should provide you with data on your abilities. How many of these customers are repeat and referral business? How many satisfied customers do you have? What is your complaint ratio and how many photos of completed jobs and letters from delighted customers can you show your prospective customers?
One focus group tells us that customers want to see photos of jobs more than anything — and most businesses say they haven’t got the time to take pictures!

Remember: female customers don’t buy products — they buy interiors. Do you have completed interiors to show them or just products? The key is, how does “that” look in a home like mine?
What about your commercial business? Do you have data on your performance that would make that elusive contractor want to switch vendors? Take it from the airlines who brag about “on time arrival, 95% of the time” or “3% lost luggage.”  Hyundai with their “100,000 mile warranty,” or the face cream with “85% of customers saying that within one month they’ve noted at least 50% improvement.”
If you can translate your good will, the number of happy customers or the lack of complaints into measurable data, then you can build your competitive advantage. Something to make your competitors cringe. But it will mean that you will have to be diligent with your surveys, which many businesses dismiss as being a pain.

But being able to promote 35 years in business or 95% customer satisfaction could be the tie breaker for your salesperson and the sale. Depending on how gutsy you are, who knows what you can measure?
One owner shared with me that he had sold flooring to four employees at the local big box. How fun to run an ad that even gets the local big boxes to buy from you? What are they saying about you at the Better Business Bureau or Angie’s List? Is someone out there blogging about your incompetence or raving about your service? Start collecting the data.

Even something you’re not proud of might turn out to be a competitive advantage. An owner recently told me that over the last 20 years, he installed flooring in the right house 99% of the time. It might bring a chuckle, but it might also get the customer to wonder about your competitor’s track record.
Getting back to our salespeople, the hardest people to get to come to training — if they come — are the seasoned veterans who are making a lot of money. With all due respect, they pretty much think they have it all figured out and rarely worry about who got away. These are perfect candidates to train the rest of your staff. Send them to training for new skills and some training ideas — put them to work.

Back to the list of  customers that got away and the amount the customer spent with your  competitor will kick even the most successful into high gear and give them something new to shoot for. Remember, it’s the customer who makes us either successful or not successful, and it’s time to find out whose side they’re on.

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