It’s easy to get caught up in the New Year, new products mindset, but sometimes it doesn’t take a big shift to grow your business – just a minor one. I like the idea of taking the end of the year to regroup and go back to basics. One of the fundamental questions every business must answer is – what is your competitive advantage.
A competitive advantage is how you uniquely add value to your industry. It should be a method that helps you to stand out from the pack and if possible, create a barrier to entry for competitors. As you set your end of year goals, don’t just focus on what you can do that’s new, rather consider what you can do better. Here are some ideas that will help you to develop your sustainable competitive advantage in 2014:
Customer Service. The idea that businesses should do an excellent job servicing its clients has been brought back to life by companies like Zappos that offer free round trip shipping when you place an order. They believe in service as a part of their culture and even set up a microsite to share their best practices with the world. Because customer service has declined so much over the past several years, a business can stand out from the crowd when they put people first.
Custom Offerings. I recently wrote a New York Times article about French Fry Heaven, a company started by Scott Nelowet. I believe the success of the business lies in their competitive advantage, customization. French Fry Heaven offers 50 different flavors of fries. They have created characters and a mobile app for people to match the characters to flavors. People enjoy creating their own experience when making purchases and if you can customize your offering, you can build a lifetime customer.
Innovative Solution. Many small businesses are not creating a new industry but starting a company in an already saturated one. That’s why a competitive advantage can be even more helpful. Take for example Redbox. There is nothing new about home videos, but Redbox provided an innovative solution for the industry. They located in supermarkets and convenience stores to make it easy to reach buyers. They also give the appearance of a lower price by offering customers a dollar per day, when quite often people keep the videos longer than 24 hours. However, they are not using price as a competitive advantage and I would like to caution you against doing that. People who are looking for the lowest price offers are not long term customers. As soon as someone offers them a dollar less, they will no longer do business with you.
Speed of Delivery. A few years ago, Domino’s Pizza kicked off a campaign – Hot Fresh Pizza in 30 minutes or less or it’s free. The campaign excited pizza lovers and drove sales for the company. While having a delivery guarantee can be an advantage, you need to be certain you can deliver. Before making a delivery offer, test the offer with a pilot group of people to make sure that you have the team and systems in place. If you don’t plan well, what was meant to be an advantage could be a financial downfall.
Where is it made? When American Apparel launched back in 1998, they decided that the core of their brand would be American made. This was a point of differentiation in the apparel business because it was the height of many companies of all types outsourcing their production overseas. Since then, companies like Etsy have launched, focused on handmade and there are also businesses that leveraged local made as a way to compete.
The businesses that will thrive in the New Year and beyond will be those that have a special way of differentiating from competition and generating value for customers.
“Crowds” courtesy of xedos4 / www.freedigitalphotos.net
What will your competitive differentiator in 2014?
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