Just for a moment, let’s be brutally honest about business. No business likes rivals. Every business wants to operate in a vacuum of competitors–to be the only option. However, nature abhors a vacuum and the Federal Trade Commission hates a monopoly. Therefore, your business has competitors and it’s up to you to distinguish yourself from your rivals in such a manner that potential clients see you as their best option. That’s your competitive advantage.
Before you can wow the world or even your local neighborhood with your competitive advantage, you must first know how to determine those traits that distinguish your business in a positive sense. Kimberly Amadeo, writing for The Balance, states that three “determinants” distinguish your business from everyone else: benefit, target market, and competition.
● Benefit relates to a good or service that your customers need and provides real value.
● Target market implies a critical understanding of the customers who need your service or product. What does your product or service do to make their lives better?
● Competition refers to anything else–product or service–that will also satisfy the needs of your customer base
Business Queensland, published by the Queensland Government of Australia, addresses this topic, showing that the importance of competitive advantage concerns businesses worldwide. Their market research determined that “When customers buy your product or service, they are buying the benefit that it gives them.” Benefit need not be singular. In Business Queensland’s example of a sandwich shop, the stated competitive advantage of using “fresh, local ingredients” to make gourmet sandwiches offers different benefits to different customers, such as avoiding ingredients that trigger their allergies, the high quality of “gourmet” sandwiches, and warm fuzzies of supporting a local business.
Let’s carry on with the Australian example. Have you ever been to a food truck rally?
Often organized as a special event featuring dozens of fiercely competitive rivals, each food truck brings something unique to the crowds eager to sample their wares. Some cater to specific diets, like vegan. Others tout unusual and tasty flavor combinations: pineapple and jalapeños on a hot dog, anyone? Others offer innovative preparations, like macaroni and cheese on a stick. Still more will advertise unusual ingredients unfamiliar to the local populace, such as she-crab soup in the American Midwest. And a few more will promote sourcing their raw materials from local producers, showing a willingness to buy locally and support the local economy that supports them.
Regardless of the complexity of your business and the multiplicity of the services and/or products your business provides, discerning your competitive advantage oftentimes poses difficulty. It’s not enough to claim that the quality of your product is better or that your service is faster, because your rivals make the same claims. Identifying and defining your competitive advantage often requires an exploratory and investigated process, such as a SWOT analysis. The information gleaned from that investigative process can then be summarized into your statement of competitive advantage.
Writing for EyesOnSales, Tony Allendra identifies the four components which comprise that statement: your name, the company’s name, a statement about a problem in your market, and how you and your product/service solve that problem. This becomes your 30-second elevator speech that you use to wow potential clients, sets your business apart from the competition, and make a great first impression that sticks.