We have talked about ”competitive advantage” here before, but it’s been awhile and it’s an important concept that bears repeating.
Jaynie Smith is a consultant, best-selling author, and keynote speaker. She is also CEO of her company, Smart Advantage, Inc. I heard her speak about competitive advantage before a group of a dozen or so CEOs. To start her presentation, she said, “Your customers have choices. They could do business with others, but they have chosen to do business with you.” Then she asked, “Why?” She went around the room asking each CEO for the reason his customers did business with his company instead of his competitors . . . essentially asking each for his company’s competitive advantage. To learn what those CEOs said and how Jaynie Smith reacted to their answers, please continue reading below
That’s your competitive advantage? Really? You sure about that?
Jaynie Smith posted the answers to her question, “Why do your customers choose to do business with you?” on a white board. The answers were somewhat predictable:
- Our low price
- Our 99.9% on-time delivery
- Our strong relationships
- Our outstanding quality
- Our world-class customer service
- Etc., etc., etc.
Then she asked, “If I had all your competitors in a room and asked them the same question, what do you suppose their white board would look like?” The assembled CEOs had to admit, “Yeah, it would look just like ours.” The point was, a competitive price, good quality, on-time delivery, etc. are just the minimum requirements to get in the game, but they are not the competitive advantages that will truly differentiate you from everyone else. So how do you figure out your true competitive advantage? How do you learn what you do (or don’t do) that causes your customers to choose you over your competitors?
Jaynie Smith’s answer, “You ask ‘em.”
That’s right, you ask them. You don’t do a telephone survey and you don’t do a postcard “customer satisfaction survey.” You sit down, face-to-face with whoever is making the buying decision, and you interview them. You acknowledge that they could have chosen others, and ask them point blank, “Why us?” And this should not be an activity you delegate to the salesperson on the account . . . the relationship there may be such that the account is going to say what he or she thinks you want to hear, not the unvarnished truth. Find others in your organization who are capable of conducting a good interview and who are more likely to elicit candid responses. If that’s not an option, you may have to hire an outside marketer who can conduct the interviews on your behalf.
Many CEOs will argue that they’ve been in business for umpteen years, that they know their customers very well, and that they know exactly why their customers have chosen them to do business with. Not so says Jaynie Smith.
When she is hired to do the customer survey work, she first interviews all her client’s customer-facing people (marketing people, sales people, customer service people, etc.), and she asks them why they believe their customers choose them over others. Then, when she completes her interviews with her client’s customers, she compares what the client told her (about why customers do business with them) vs. what the customers themselves told her. She says there’s a disconnect 100% of the time . . . sometimes subtle, sometimes stark, but always a disconnect of some kind. For instance, she may say to a customer, “I understand you do business with my client because of their on-time delivery.” And the customer may respond, “No! We buy from them because they’re the only ones who have the product in the color we want. And to be honest, their on-time delivery ain’t that great.”
Out of this customer survey research, you will get two extraordinarily valuable pieces of information:
- You will learn what need you satisfy for your customers that your competitors do not. With that knowledge you can focus on ways satisfy that need even more effectively and make it even more difficult for your competitors to unseat you.
- When you understand your real competitive advantage, you can more efficiently and effectively target new customers in your marketplace that have the same need as your existing customers.
So. Do you really know what your competitive advantage is? If you haven’t asked your customers, you probably don’t.