If you don’t have a competitive advantage – don’t compete – Jack Welsh
We all have a favorite business – one that we spend our hard earned money at in preference to the countless others that offer the same thing. What makes that businesses more attractive to you compared to the others?
- Is it the product – are they the only ones that offers what you want? –
- Is it the price – are they the cheapest?
- Is it the most convenient?
- Most likely it how they make you feel each time you visit them?
How that particular business makes you feel is their competitive advantage over the others.
How they make you feel is the reason that makes you want to use them, to likely pay more than you need to, happy to drive past other similar businesses to get to them and to voluntarily recommend them to family and friends – and not just “go to Joes” but “you have to go to Joes”! The same goes for businesses you won’t deal with, or dread having to visit as well. It is usually how they treat you or make you feel that puts you off them.
So what is your competitive advantage?
Is it product, price, convenience or the experience you give your customers and employees – how you make them feel when they deal with you – just like your favourite business..
Before looking at each possible competitive advantage option, lets first consider:
Why is a competitive advantage so critical to my business?
The no 1 threat to your business today is the risk that your customers don’t see what you are offering as beneficially different to that of your competitors so they make their decision based upon price or convenience. They treat you as a mere commodity – something that is common, interchangeable or worse replaceable, so price and convenience wins every time in the decision stakes. The only way to ensure you are not seen as a commodity by your customers is to turn your transactions into memorable experiences. Turning what you offer into much more than a commodity – you turn it into a personal relationship. In today’s world, usually the only thing that separates one business from the next is the relationships they have with their employees and customers and how they make them feel.
So again what is your competitive advantage?
Is it product, price, convenience or the experience you give your customers and employees – how you make them feel when they deal with you.
Let’s look at the first 3 (product, price, convenience).
No matter how dominant or good you may think your competitive advantage is , if it is based around anything other than the experience you offer then that competitive advantage or differentiation will likely be short-lived. Because if it is any good, someone somewhere is going to copy it – and in these competitive times it will happen sooner than you think, or want it to! Given enough time and money, your competitors can duplicate almost everything you’ve got working for you – your products, services, prices, technology and even strategy. They can head hunt your best people. None of these are a long term sustainable competitive advantage due to their ease of copying.
So what about Experience as your Competitive advantage (aka how you make them feel)
Customer Experience is the only true long term sustainable competitive advantage today. Predominantly the only thing that separates one successful business from the next is the relationships they have with their employees and customers and how they make them feel. The only way to ensure your customer chooses your business over your competitors, and that they don’t view what you offer as a commodity is to turn your transactions into memorable experiences.
In doing so you turn your offering into much more than a commodity – you turn it into a personal relationship.
While the tangible side of your business (product, price, convenience, strategy etc) can be easily copied by your competitors, it is almost impossible for your competitors to copy the Intangible side of your business. The Intangibles side of your business include all the things that you can’t see or touch, but you can feel , things like your culture, your brand, the relationship you have with your customers and employees and how you make them feel, your levels of engagement and experience, your emotional connections etc.
“What keeps me awake at night are the intangibles. It’s the intangibles that are the hardest thing for a competitor to imitate, so my biggest fear is that we lose the culture, the spirit. If we ever do lose that, we will have lost our most important competitive asset” – Gary Kelly CEO Southwest Airlines
Note: we aren’t saying to ignore the tangible side of your business (product, price, quantity etc) in preference to the intangible side – one without the other is useless. What we are saying is that you must be looking at how you can differentiate yourself on that experience.
More about Intangibles and the benefits they can bring to your business…
How you make people feel as a huge impact on your bottom line and is usually more important than what you make or do. A recent McKinsey survey found that 70% of buying experiences are based on how the customer feels they are being treated. If people don’t “feel” anything about your business, product or service then it is only a commodity to them. The truly successful businesses compete and thrive on their intangible attributes (feelings) while commodities compete on their tangible attributes, usually price, convenience etc
Commodities are purchased, Intangibles are experienced, and that’s where you create your competitive advantage – by making it easy, enjoyable and memorable for your customers and employees to choose your business.
Your business will stand out from the crowd if you focus on making use of your greatest asset – the emotional connections you make with everyone that comes into contact with your business, via the experiences you deliver to them.
“Engaging the hearts, minds, and hands of talent is the most sustainable source of competitive advantage” – Greg Harris, Quantum Workplace
“No company, small or large, can win over the long run without energized employees who believe in the mission and understand how to achieve it” – Jack Welch,former General Electric CEO
So if you want to be remembered for providing an experience and not for selling a product or commodity, contact us to find out how you can create a sustainable competitive advantage.