Trying to figure out where to focus limited resources and energy is not a problem unique to small business owners. When I worked for a division of United Technologies the conversations at budget time, were always about the trade offs.
The R&D Department would argue we needed to invest in new innovative products, to give us a competitive advantage.
The Sales Team wanted us to work on product revisions which would give us the lowest price in the marketplace.
And as part of the Marketing Group I was always negotiating for more money to improve the customer experience.
Because you can’t do all three we always debated which investment would separate us from our competitors. If you imagine a triangle, with each objective at one of the points it become obvious, the more you emphasize and move in one direction the more you move away from something else.
Trying to do all three equally well leaves you standing in the center, not really great at anything.
So where do you want to be in this triangle?
When I worked for Carrier the answer was fairly simply. The company was built on almost 100 years of innovation They were known for technological innovation, offering expensive, high end products and more services than competitors.
It was difficult when low priced competitors came into the market and stole share because they were cheaper. But when Carrier offered low priced versions of products, they were not successful. Customers still wanted the same level of support, and quality at the lower price.
The lesson: To be successful, you have to be known for excelling in something. Innovation/Technology, Price, or Service. CHOOSE ONE!
When we first started my agency, I thought we needed to compete on price, offering a lower cost alternative to larger agencies. And just like when I was in my UTC days, it was hard to walk away from the position which built the company in the early days.
But I came to understand, our real advantage was not our price, but our expertise and service. For small business owners who wanted more personal service, we were a fit. If they wanted a cheap website, there were plenty of other companies who will build one. When they want to learn what to do with it after it was built, they come to us.
You can’t be be great at all three. Where is you best position?
Ready to Work on Your Competitive Advantage?
Defining your competitive advantage starts with an evaluation of your strengths and weaknesses. It also includes an evaluation of the external marketplace.
A SWOT Matrix is a simple tool you can use to get started . Download our FREE worksheet today.