There’s a customer service saying, “You can have it fast, cheap or good…pick two.” While that strikes many as inherently “non-customer-service-oriented,” — as in, shouldn’t your customers get the best of all worlds? — there is also a truth in the concept of knowing your competitive advantage.
Think about the restaurant industry. There’s fast food, which is typically fast and cheap. There’s fast casual, which is usually fast and good, but not cheap. And then there’s fine dining, which takes care of the good, as well as “fast” (or maybe more accurately, attentive) customer service.
But being fast or cheap or even good is typically not enough. “The key to enduring business and investing success isn’t finding an advantage; it’s having a sustainable advantage. Something others either can’t or won’t copy or build off of once your idea becomes popular and profitable,” notes Morgan Housel, a partner at the Collaborative Fund.
Here are four effective ways that small businesses can identify and maximize their competitive advantage:
1. Identify your own “secret sauce”
We all know the examples of KFC’s 11 herbs and spices and Coca-Cola’s classified recipe. But your secret sauce doesn’t need to be as elaborate as that: It might be a company mantra that gets everyone on the same page, or a unique product or service innovation that only the inner circle knows about.There are three questions you can ask yourself that will help determine whether a specific “secret sauce” will help you maintain a competitive advantage, says Yoram Solomon, founder of Large Scale Creativity. These are:
- Can it be reverse-engineered by competitors?
- Can you (and your employees and partners) keep a secret?
- Is it “rocket science” — in other words, are you one of a handful of people in the world who can understand it?
2. Commit to your target market
It’s easy to say that your product or service is for “everyone,” but you will be more successful if you define exactly who your market is and what they need. One mistake many companies make is chasing the “shiny object” of target markets, and in today’s world, that’s usually millennials.
But not every company needs to serve the same market. In fact, Chili’s restaurant recently found out that its target market is actually not quinoa- and kale-eating millennials, but families or older guests who crave burgers and ribs. Having a crystal-clear vision to whom your ideal customer is and focusing exclusively on them can set you apart from your competition.
3. Differentiate your product or service
Is what you offer more of a commodity rather than something completely revolutionary?
Small businesses can use their marketing and brand message to create “perceived differentiation,” that is, highlighting indirect differences, such as touting same-day service or one-stop shopping that can make your company stand out in your customers’ minds.
4. Make it hard to “quit you”
Subscription boxes are having a moment — with growth of about 800 percent between 2014 and 2017 — and it’s easy to see why. Customers sign up once and then automatically receive a box of goods, whether it’s recipe ingredients or beauty supplies, on a regular schedule or paper reams. The company can reap the benefits of those “automatic sales” and the customer can enjoy the convenience of having the items replenished regularly.
While not every company offers a product or service that lends itself to the subscription model, a little creative thinking might yield an idea, such as a monthly check-in for a client’s marketing plan you helped create.