How to achieve a competitive advantage

All businesses must meet the challenges of competitive markets. Doing so involves using a range of approaches and skills. Competitive advantage does not necessarily mean lower prices. Since it is obviously vital in the long-term to maximise margins, the key is to find other ways to make customers want to buy from you. Depending on the resources your business has available, you may need to concentrate on methods that are low cost and straightforward.

This guide presents an overview, describing a series of factors which together can contribute to creating a real competitive advantage. Some of the factors reviewed here are self-contained, quick and easy to implement. Others need to be continuously reflected in the ongoing management of the business. Some link to topics covered in other guides. This review is designed to prompt ideas and give you a quick audit of what can help create a competitive advantage for your business.

Build solid foundations

Look first at your internal customer service processes. The costs involved are minimal but can have far-reaching effects. So ensure your business:

• is easy to work with,
• communicates effectively with staff and customers,
• delivers consistent and good quality products and services,
• pleases people with its style of customer care.

Be easy to do business with

It is all too easy for a business to act for its own convenience. You do things because they suit you to do them that way, not because the customers necessarily want it that way. In businesses that are hard to do business with, the prevailing attitude is often something like: ‘Customers are a necessary evil that are always stopping us from getting on with our work’.

The focus of every person in your business must specifically be the needs of your customers. Everyone else’s convenience comes second. For example, customers want and appreciate:

• Accessibility by phone or in person. If you sell direct to customers on a 9-5 weekdays-only basis, it is highly inconvenient for those wanting to buy after work or at weekends. Just look at how many businesses operate extended or even all-hours for their clients’ convenience. This need not mean you have to stay open 24 hours a day – engaging a call centre to take enquiries could go a long way. So, too, could putting information or even ordering facilities on your website.
• Promptness in everything from telephone answering to delivery, especially if the impression is given that you are really working to provide this. Set standards – for example, telephones will be answered within three rings – and monitor them.
• Simple systems. Avoid elaborate, unnecessary preliminaries, forms in triplicate, and insistence that customers list six references before anything can be found or progressed. 
• Flexibility. Think hard before you decide something will only be supplied in batches of, say, twenty.

Many of the things that make you easy to do business with are linked to communications.

Communicate effectively

Though we do it so much, communication is a minefield. Confusion often reigns. At worst, this changes people’s whole perception of a business and the people in it. For example, which of us does not remember at least one business encounter with distaste and a feeling of ‘never again’? Communication can lose you business; it can also win it. This too is an area of low cost – some thought may be all that is necessary. However, many people find it an easy way to compete more effectively, particularly with larger competitors. Using communication powerfully involves:

• Clarity. This is important in two ways:
  
  Be precise. There is a distinct difference between saying: ‘I’ll get the information together and get back to you fast,’ and ‘I’ll fax the information to you by four o’clock this afternoon.’ One sounds good, but is vague. The other is specific.
  
  Keep it simple. Everyone likes it when something that they expect to be complicated proves to be easy, even more so when they feel real effort has been made to help them this way. So avoid inappropriate jargon, convoluted phrases and laborious description.
• Description. Many things – not least descriptions of your product/service – must paint a picture. Look for strong imagery and impactful language to sell your offering. Nothing should be described as ‘quite smooth’ or ‘sort of shiny’.
• Persuasion. Often you want to do more than inform. Being persuasive needs a truly customer-focused description. The key is to use benefit statements to tell people what something can do for, or would mean to, them.
  
  Thus, while features are important, they are dry and factual. The technique is to turn descriptions about, say, portability – ‘It is portable’ – into a description about use – ‘You can carry this model easily around to wherever you are working.’
• Courtesy. Perhaps this is obvious, but we always need to be polite to customers. Prevailing standards are often low, so it is easy to shine in this way.
• Be organised for communicating. If it helps to show customers something, to demonstrate or use visual aids (which can range from samples to brochures, charts or computer presentations), ensure you have them available in a suitable form. For example, a small country hotel increased its wedding business by creating a photo album of past receptions. Firing people’s imagination, and showing examples of how things could be arranged, impressed prospective customers in a way that showing them an empty function room never could.

Deliver quality

Delivering quality is not about being the best but about delivering consistency. It is about setting and maintaining standards. This does two things:

• It makes you think about what your standards should be – for example, exactly what do you mean by ‘prompt delivery’?
• It creates a mechanism for regular review, ensuring standards are consistently maintained.

Almost every aspect of a business can be subject to standards. For example:

• delivery,
• product quality,
• complaint handling,
• administration (such as the form and timing of providing a written quotation),
• people (in terms, for example, of availability or frequency of contact).

Setting standards helps you gain a competitive advantage – not only will you meet customer demands and surpass expectations, but you will gain kudos for the reliable and consistent way in which this is done.

Please people with excellent customer care

Good customer care must be:

• prompt,
• efficient,
• courteous,
• personal,
• relevant.

All these provide opportunities for a style of service that differentiates you from your rivals. However, it is not simply a question of what you do, or how you do it. It is also important to signpost it. Customers like good service. But you can take this a stage further and personalise it. For example, give customers a specific name to contact – ‘Mary will be your account manager.’

Overall attitude is important, but so too are details. Just a phrase – a travel agent saying, ‘Now, you like an aisle seat don’t you?’ – does more than address the factual detail. It also implies the customer’s importance and individuality. You can achieve this easily by giving all your personnel access to a detailed customer database. Making customers’ service individual and personal augments the impression powerfully.

Develop and improve your image

Image is important. The question is – is yours appropriate and could it be more positive? To cultivate a positive image, you need to be clear what that image should be. Go into detail. For example, if you say you are ‘professional’ what does this imply? You might say you must be seen as:

• approachable,
• flexible,
• well organised,
• up-to-date,
• a good listener,
• expert,
• experienced,
• knowledgeable,
• confident,
• personable.

Having identified the image you seek, think about how you can create such impressions. For example, what will make you appear well organised? Arriving at meetings on time, a tidy desk if people visit you, having information to hand, smooth message-taking when you are away from your desk, and so on. It is the cumulative effect of such analysis and action that makes this work for you.
Image is involved in every aspect of your business, including:

• business cards and stationery,
• your front door and reception,
• the way staff dress and behave,
• advertising and marketing materials,
• correspondence and administrative systems.

Each of these must convey the same message consistently, and together they must strengthen it.

Use public relations

Public relations exercises are not just about getting your name in the headlines. Activities range from running workshops for your customers and prospective customers, to sponsorship. They can help you:

• raise your profile,
• improve your credibility,
• establish your authority,
• generate a stream of likely customers,
• make it easier to convert enquirers to customers.

This all adds up to a powerful competitive edge. Customers and potential customers are reassured, even flattered, by dealing with a company perceived as having a strong public profile. Publicity acts as a kind of endorsement.

You can also use public relations to keep in touch with customers in a way that is perceived as you seeking to build a relationship rather than as always selling. For example, you can run a workshop to introduce people to new technology that might help them develop their businesses. Provided you do not try to sell in these workshops, and you are seen to be helping and informing people, sales are likely to result because you have established yourself as an authority to be trusted.

Use customers as promotional tools

Customers are an asset and are more than simply revenue producers. They can substantially increase your revenue-generating ability.

• Testimonials. You can say what you like about your product or service but people won’t always take your word for it. However, they will believe people with no vested interest in profiting from it. These can include customers, end-users and industry authorities. Testimonials are proof that you deliver on your promises. The more relevant testimonials you can give prospects, the more they will be prepared to listen to what you have to say.
• Referrals. Taking the concept of testimonials to its logical conclusion, many businesses have formal referral schemes. Informal referral schemes can work just as well. All you have to do is remember to ask each customer, ‘Do you know of anyone else who might find this product/service useful?’

Develop customer loyalty

It is always easier to sell to people who know you. But some businesses develop the concept of customer loyalty and create an additional customer service. Examples include loyalty schemes, customer newsletters, and frequent-buyer discounts.

The creation, maintenance and development of customer relationships, a process called customer relationship management (CRM), is important for many businesses. Customers like appropriate ‘keeping in touch’ mechanisms, particularly if these add to their knowledge, pleasure or bottom line. Developing customer relationships in this way need not be expensive. For example, you could send customers a monthly newsletter.

Network effectively

Networking is the process of identifying and keeping in touch with people. It is a real skill and can set you apart from your competitors. You are who you know. You will find customers come to you if you have contacts they find useful, even if these are unconnected with your business. Once you have a dialogue going it is easy to gently switch the discussion to business.

Form business-to-business partnerships

Forging partnerships can bring a unique element to your business, one difficult to inject on your own. So it is worth identifying possible partnerships and developing the idea with the other business. Examples include:

• Joint promotion. This might be as simple as swapping mailing lists with another business (you must ensure you comply with the Data Protection Act when doing this), and perhaps featuring in each other’s mailshots. Or retailers can exchange items for a window display, putting suitcases from the local luggage shop in the window of a travel agent. Or you might create a whole new offering – something competitors could not easily duplicate by themselves.
• Strategic alliances. These normally involve two separate businesses working together as one entity on a project:
  
  1. A hairdresser can link up with a beautician.
  
  2. A dress shop could team up with a neighbouring shoe shop so that they can offer complete outfits.
  
  3. A management trainer could combine with an IT trainer to offer a complete solution to clients that want one company to handle all their training.
  
  4. A PR consultant could team up with a company specialising in design and corporate branding to help launch a new product for a common client.
• Outsourcing. This type of alliance is less visible or even completely hidden. A second company may be billed simply as an ‘Associate’ of the principal firm, for instance, thus extending the range of offerings.

Be adaptable

Competitive businesses are highly adaptable and can react fast. This is where a smaller business can often gain a clear advantage over its larger, more cumbersome rivals. Never let administration, procedures or time pressure curb your ability to be flexible in this way.

For example, two petrol stations operated a few metres apart on a main road. One was independent, the other part of a chain. The independent owner was able to adjust prices on a daily basis safe in the knowledge that price changes took the other business a week of communications going back and forth between it and head office.

Monitor levels of customer satisfaction

Never take customers for granted. Competitive advantage is largely giving customers what they want more precisely than your rivals do. It also involves consistently keeping promises and exceeding customer expectations. Be sure you know what your customers want and, as important, what they think of what you have given them. So:

• Seek feedback (often this can be as simple as the questionnaires you find in hotel rooms).
• Acknowledge the feedback received where appropriate (this can differentiate you too, because few businesses do so).
• Note and be seen to act on sensible comments.

Look at other ways

Other ways to achieve a more competitive edge include:

• Negotiating better deals from your supplier.
• Building alliances with suppliers.
• Managing your business so that you work at full capacity and not waste time or resources.
• Looking at alternative routes to market – for example, direct mail or via the Internet.
• Creating an enjoyable atmosphere for your employees, and training and rewarding them appropriately so they have more job satisfaction.
• Having a clear vision for your business and communicating this to everyone in it so that you work as a team towards that goal, step by step.

This alone will mark your business out because so few businesses plan properly.

Summary

There may be no magic formula that guarantees to give you an instant competitive advantage. Instead, that edge is gained by incremental steps built up methodically over time. Successful businesses never stop seeking out ways to gain advantages, or acting on them.

Finally, remember that many people place a small order with a new supplier first to test the water. If they are happy, they could turn into one of your biggest customers. So never be dismissive of a small order or put it to the bottom of the pile. You might never see them again.