How relevant is your Competitive Advantage?
In our recent blog nem Business Insights - Post Covid Reality, maintaining focus on Competitive Advantage was the first point of emphasis. In this blog, we’ll share our insights into Competitive Advantage where we deploy Johari Windows principles, not only with our clients but also their clients or customers though research questions fine-tuned over the last ten years. Client research can enable quantification of a very qualitative subject matter.
Clients may have a narrow view on what their Competitive Advantage involves.
Competitive Advantage is built over time and is relative to competitive forces
There will always be competitive choices to measure a firm’s offering against. It’s rarely just one or two factors that customers base their purchasing or loyalty decisions around. It can be as many as 5,6 or more.
Customers may not even know or be able to explain the intangible, the depth and quality of customer relationships, for example. But nem’s experience is there are likely iceberg principles at play. What’s above the water may be value, location, distribution outlets, depth of offering. What lies under the surface after customer relationships could be a host of service metrics like flexibility with timing, extended business hours, helping with technical problem solving, transparency around pricing and a trusted culture of not underquoting- the list gets larger with B2B transactions.
Being as good as your competition on a range of metrics can often disguise a lack of Competitive Advantage with resultant pressures around pricing and margins.
It is also not desirable to have Competitive Advantage is areas that clients or customers rate as not so important. This is the exact reason why the nem approach to Competitive Advantage measurement is to seek firsthand opinion from our client’s customers. We have developed specific research question methodology for this and the ranking of how they perceive our client’s Competitive Advantages across all the metrics previously uncovered in whiteboard sessions.
Validating research
Our independent research validates if our client is “as good” as their segment competition, “a little worse” “a lot worse” or hopefully “a lot better” or “a little better” across the range of prompted metrics.
(Competitive Advantages may differ across segments which is what we explore in our cama™ methodology which will be the subject of another blog).
Our Competitive Advantage Map is nicknamed a CATMAP (Competitive Advantages That Matter After Prompting). On the vertical axis is what’s important to clients or customers and the horizontal axis shows the level of Competitive Advantage our clients has scored.
Metrics inside the circle are what’s most important to our client’s customers and where our client’s customers have rated our client (their provider) as having Competitive Advantage (better than competition). These must be reinforced in all customer communications including website audits. Items outside to the left of circle become opportunities for development and improvement.
Because competitive tensions lead to innovations, this Competitive Advantage measurement process should be reviewed every year as part of your business planning cycle.
Creating awareness around what can drive competitive advantage can stimulate client development initiatives. Competitive Advantage is dynamic. Competitors’ initiatives are a force driving change. Business growth requires innovation- doing new things or doing things differently.
Author: Scott Nelson, Partner nem Australasia
This article is based on research and opinion available in the public domain.