What makes your business special?

A competitive advantage is your point of difference – something you offer to your customers that your competitors don’t have. In today’s busy marketplace, people need compelling reasons to pick your business over other businesses. 

Your point of difference is even more important if (like most businesses) your business offers similar products or services to your competitors. The more similar your business is to many others, the greater your need to stand apart. Here are three ways to help you identify your competitive advantage.

It might seem obvious, but how well do you understand the benefits – not the features – of your product or service? To clarify the benefits, try using the question ‘So what?’ to dig deeper into what the customer receives when they buy from you. What advantages will they get? For example, will they save time, receive a product which lasts longer, or get better value for money.

Think about your market. Are you targeting people in a particular industry, age range, or lifestyle? Your business will be more appealing to potential customers if it addresses a specific need they have and can make their lives better. Do some research online and survey your potential customers to dig deeper.

Finally, look at what your competition offers to your target customer. Write a list of other businesses that might be competition, then look at the range of products or services they offer and how they compare to yours. Determine how well your business stacks up.

Your competition isn’t just a business that’s obviously similar. It might be a corporation, sole operator, online business, or community collaboration. It could even be a completely different product or service – for example, a personal trainer and a health food store may be competitors if they share a potential customer that has a limited budget.

Now it’s time to develop your concept and describe what makes your business better than the rest.

Cost leadership, focus and differentiation are three main areas that can form your competitive advantage. You can choose to combine more than one of these, however whichever you choose, you’ll need to make sure that your competitive advantage strategy will be sustainable for your business.

Cost leadership means you can offer something of value at a lower price than others. However, make sure you don’t under-price. You need to pay fair wages to yourself and staff, and use quality inputs (materials or expertise) to deliver value to your customers.

Focus means your offering is targeted to a clear market segment. You’re able to deliver products and services to a particular market that hit the mark better than those of other businesses.

Differentiation means you have a clear advantage over the competition. For example, you deliver high-quality or specialist products or very fast services to your customers.

As the business owner, remember that you’re a competitive advantage yourself. Customers come to your business because of what you bring to it – no one else has quite your mix of skill, experience, expertise, and vision. These have a big part to play in your business brand and values, which feeds into your business reputation – a unique aspect to your competitive advantage.

Offering a unique product or delivering an exclusive service gives you an advantage. Showing innovation gives you an edge in the market, too. Use your marketing to emphasise your difference, and use your technical knowledge in your sales process to inspire trust.

Choose your staff with care – they can be the difference that makes customers come back again and again. Customers will often recommend your staff to others if they get great service.

If you offer a complete package of services, you can be a one-stop shop – which means people will come to you because they can get all the things they need. Make sure you keep your customer base up to date with everything you offer.

Treating your suppliers well can give you a competitive advantage because having their loyalty helps you to deliver on your brand promise. Pay suppliers on time, and let them know about any changes you’re planning that might affect their business – if you’re a major client, changes to your orders can affect things like how promptly they can deliver to you or discounts they can offer.

Find a location that suits your business. If you’re offering courses for businesspeople in the CBD, make sure your training room is easy to access for city offices. If you have a specialist shop, find a location with high foot traffic. If your business is online, secure an appropriate web address that’s easy to remember.

Getting your business out to customers with business-to-business accounts, free pick-up and delivery, drop-off points, or wholesaling means your location isn’t so important. You might be able to save on property leasing costs, too.

Your continued success depends on keeping on top of your competitive advantage – so ongoing communication with both staff and customers is crucial.

Communicate with your staff – get their insights and ideas for improvement and involve them in marketing efforts. They’re at the coalface day-to-day, so they’re sure to have ideas you haven’t thought of.

Even a small amount of marketing (for example, through social media) will contribute to future sales, so aim to set budget aside for regular marketing each month. Start with a modest but achievable marketing plan and build on it as you grow.

Feedback helps you sharpen your service levels and target your customers better, so keep in touch with them by asking for feedback and running surveys. When you get great feedback, ask for testimonials you can use in your promotional material.

Once you feel like you’re making headway, consider getting a snapshot of customer feedback through a survey of your Net Promoter Score. This specialist survey looks at how likely your customers are to recommend you — the essence of your competitive advantage. It uses a formula that calculates the difference in results between ‘promoters’ and ‘detractors’. You can commission a third party to conduct the survey and report back to you.

Keeping in touch with other business owners gives you a great feel for what’s going on in the market and where you sit. Go to business networking events, and read reports and surveys from a local Chamber of Commerce and other business hubs.