How many times have you been in a selling situation where the customer’s sole focus was on price? Anytime your customers can’t tell the difference between your product or service and your competitor’s product or service, the customer will buy based on price. You must be able to differentiate your company, your product, your quality, your service, and yourself if you want the customer to stop focusing on price and start seeing you as a partner, and not just as a supplier. You’ve got to show how you are different.
Companies or sales reps who don’t understand their competitive advantage say things like “Our product is better quality” or “Our service is better.” Even if a company has better quality or better service, it won’t convince its customers just by saying so because many of its competitors will be saying the exact same thing! You have to define quality. You have to show what outstanding service looks like and how your quality and service differ from the competition.
How can you demonstrate your competitive advantage? Suppose someone walks up to you at a business conference or social gathering, introduces herself, and asks you what you do for a living. Exactly what would you say? Did you have any trouble? Did you stumble? Do you know what sets you apart from your competitors? If this was hard for you, you’re not alone. If you were to ask the average car dealer, computer store or furniture manufacturer what they do for a living they’ll probably say, “I sell cars, computers or furniture.” But what does every other car, computer or furniture company say? Exactly the same thing!
So, what should the salesperson who understands his competitive advantage say? How about this for a car salesperson, “My name is Mike from Competitive Motors. We’ve found that there is a lot of confusion in the automotive market today because there have been over 150 new models introduced in just the past three years. We’ve developed a computer program that profiles everything the buyer wants in a car and, in less than five minutes, identifies the models most likely to fit their needs.”
Your Statement of Competitive Advantage should contain four components:
- Your name
- Your company
- A statement about a typical problem experienced in your target market
- An intriguing statement about how you can help solve that problem
The competitive advantage statement should be a 30-second statement of what differentiates your company in the marketplace.
Here’s another example. “My name is Marlene, and I work for ‘The Prescription for Doctors.’ Physicians today are being pressured by insurers, employers, and patients to cut healthcare costs; yet overhead costs for physicians are constantly rising. We provide a service that allows the physician to spend more time with patients and cut overhead costs at the same time resulting in better quality care at a lower cost. It’s just what the doctor ordered!”
The best way to determine your competitive advantage is to first break down the components of your product or service into four distinct categories, Competitive uniquenesses, competitive advantages, competitive parities, and competitive disadvantages. Let’s look at each one individually.
Competitive uniqueness: What can I offer my customers that no one else can offer AND that my customers value?
Competitive advantage: What can I offer my customer that my competitor can also offer, but I can prove my offer is better?
Competitive parity: My competitors and I are the same here — no real differentiation.
Competitive disadvantage: Where does the competition have an advantage over me?
You may want to do your analysis by market segment, by competitor, by product, or all of them. Knowing your competitive position quickly gets you on your customer’s wavelength.
Let’s say a pharmaceutical company just got FDA approval to sell a new drug that patients need. This company now has a competitive uniqueness because no one else has this drug.
An example of a competitive advantage might be where two companies market the same drug, but one is a large well-known company and the other is a small relatively unknown company. Even though both are selling essentially the same product the larger company has an advantage because it’s well known and people ask for the drug by its company name because of its wide name recognition. If no real competitive advantage exists in your product, try to focus on your company reputation, your excellent service, your responsiveness and reliability or any other factors than can positively differentiate you from your competition.
Next, let’s look at what things are the same between the competition and you? That is, what do you have that is exactly like the competition but is still important to the customer? Aspirin pills are a good example. Several ethical drug companies make different formulations, but all with similar records/results. This is competitive parity.
And finally, what specific disadvantages does your product possess? That is, what does the competition do better than you do? Your drug may have more side effects than the competitor’s. That’s a competitive disadvantage.
In the examples above, I was talking about the whole product as being unique or the same. But you could do the same analysis if you have a product where some features may be unique, some may be advantages, some may be the same and some may be disadvantages.
By doing this analysis you’ll be in a position to help your customers distinguish between you and your competition. Once they see, embrace and effectively articulate your uniquenesses and advantages, you will rise above your competition to make more sales, more profits and more long-term satisfied customers.