Staying competitive is an inherent quality that humans have. Whether it’s playing a video game or working hard to get a promotion, we’ve always “fought” our way to the top, so to speak.
The world of business is no different. Unless you have a competitive advantage, there’s no way to stay in business in the long term. Yet, that’s a piece of the puzzle many companies struggle to figure out.
When you’ve honed in on your true competitive advantage, you’ll always stay ahead of the curve and increase revenue irrespective of external factors.
In this article, we’ll explain what competitive advantage truly means and how you can build one for your business.
What is a competitive advantage, and why is it beneficial?
A competitive advantage, also known as a “protective moat,” is a factor that allows you to outperform competitors in the market. It’s the one thing that gives customers confidence in your brand/offer and makes you the preferred option in your target market segment.
Here are a few aspects that can give you this advantage:
- Exclusive partnerships or distribution channels
- Unique technology or intellectual property
- Economies of scale or cost efficiencies
- Efficient contract management processes
- Better product quality or design
- Excellent customer service
- Strong brand reputation
Suppose you’re selling an e-learning platform that lets B2B companies create academies or knowledge centers. Most competitors only offer access to the platform via a web browser, but you let customers create their own branded mobile apps for this purpose. Offering a key feature like this would be a competitive advantage for your sales pitch.
There are several benefits of figuring out your advantage, and some of them include:
- Increased market share: As you become known for one specific thing, you’ll attract more customers. For example, if you’re offering the lowest price in the market, price-sensitive customers might choose you compared to other options.
- Higher profitability: If you can offer a unique offer, you can charge a premium with better profit margins, which will help you build a sustainable business.
- Customer loyalty: When you consistently deliver on your promise, customers will likely remain loyal, resulting in repeat business and referrals. A PwC report found that 46% of consumers say that better quality results in brand loyalty—so if that’s something you offer, that could be an advantage.
- Differentiation: Service or product differentiation sets you apart from competitors, making it easier for customers to recognize and choose your products or services. For example, Apple is known for its innovative capabilities, which differentiate it from the rest.
- Resilience: If you have a competitive advantage, you’re better positioned to attract and retain customers irrespective of market or economic challenges. For example, Walmart maintained low prices and offered online delivery/order placement options during the COVID-19 pandemic. This was only possible due to its personal shopper network—helping them adapt to a new normal.
7 steps to build a competitive advantage in 2024
Now that you know how to stand out, the question remains: how do you do it? Here’s a step-by-step process to uncover your competitive advantage.
Step 1: Know your competition
You won’t know how to stand out unless you know what your competitors are doing, so start studying them.
You can do that by searching for keywords related to your industry on Google or looking at third-party review websites. For example, Airtable’s team could search terms like “project management software” or “operations software” to find potential competitors.
Alternatively, you could cut research time by using a tool like Unkover. The tool allows you to add your direct or indirect competitors and will provide a list of competitors in your space.
You can then categorize these competitors based on whether they offer:
- Similar solutions with new inventions (emerging competitors)
- Similar solutions but are laggards (legacy competitors)
- A tangential solution (indirect competitor)
- The same solution (direct competitor)
Then, build a competitive matrix based on the type of competitor. Here’s an example:
After this, study the company’s entire business strategy. Look at aspects like:
- Customer’s bargaining power
- Supplier’s bargaining power
- Supply and logistics chain
- Company financials
- Marketing strategy
- Market positioning
- Customer service
- Hiring operations
- Cost leadership
- Pricing strategy
- Sales strategy
List these points in a sheet and see where your business and offer truly stand out.
Step 2: Understand your customers
Next, learn more about your existing customers. Your best customers will have certain attributes, and this data indicates potential customer segments to go after. For example, those attributes are predictable revenue indicators if your best customers are in a specific industry or use certain technologies.
You can get this data by doing the following:
- Conduct customer surveys or interviews to get feedback about your product/service.
- Analyze internal data like purchase history, website behavior, and social media interactions.
- Evaluate customer reviews to see where you excel and which customers have had a positive experience.
Alternatively, use Breadcrumbs Reveal to connect your data sources and let the platform identify revenue predictors and accounts with high buying intent.
Step 3: Hone in on your USP
Differentiation is key to your success—or else your brand will drown in a sea of sameness in today’s market. Case in point: LinkedIn’s research report found that 50% of buyers incorrectly identify a brand behind an ad. So, highlighting your USP goes a long way.
One way to do that is to focus on a specific segment with a tailored offer. If you’re selling software, focus on innovation. Create product features that address the market’s specific needs. If you’re a service provider, focus on what makes your service different.
For example, a divorce mediation firm could optimize its website for local keywords like “cost of divorce in Arizona” or “divorce mediator in Arizona” to attract the right traffic.
The firm can rank higher in local search results by creating detailed blog posts, FAQs, and service pages that address the specific costs associated with divorce in Arizona.
This targeted approach drives more organic traffic to their site and positions the firm as an authoritative resource on the financial aspects of divorce in the region.
Step 4: Build a robust tech stack
Your tech stacks include software and technologies your business uses to operate and deliver value. It’s a strategic decision that helps you reach your business goals faster. In an article, Dion Drost, Account Manager of IT & Innovation at LINKIT, said:
“Old techniques often impose restrictions on the growth of a company. On the other hand, modern stacks are designed to scale seamlessly with an organization’s (growing) needs, making it easier for them to adapt to changing circumstances. The speed and performance that a modern stack brings results in significant time savings and increased productivity. But also regarding data processing and real-time insights, you put yourself 1-0 ahead of your competition.”
Here are a few components to consider:
- Customer service tools: Platforms like Zendesk let you quickly manage customer inquiries, improving the customer experience.
- Analytics tools: Software like Google Analytics provide insights into customer behavior, product usage, and marketing performance.
- Competitor analysis tools: Competitive analysis platforms like Unkover help you track and analyze your competitors’ activities, strategies, and performance. This way, you can regularly score yourself against them and innovate faster.
- Lead scoring tools: Use tools like Breadcrumbs to score every lead based on historical data and identify buying intent. This capability lets you focus on accounts that matter the most to your business.
Step 5: Make data-driven decisions
Now that you have your data, use it to your advantage and define your competitive edge. According to Valona, global brands use intelligence to make decisions about competitor/customer understanding and strategy development.
For example, Shopify created a platform for e-commerce business owners to build a website for online sales. While other website builders in the market required multiple plugins and extensive functionality to do this long back, Shopify found that wedge in a competitive market and built a purpose-built product to cater to this need. Today, it’s a household brand for e-commerce owners—but it would’ve never gotten there without extensive research into its customer’s needs and frustrations.
Step 6: Deliver an exceptional customer experience
Zendesk’s CX Trends report found that 62% of customer experience (CX) leaders feel they’re behind in offering instant experiences customers expect. Meanwhile, 85% of business buyers emphasize customer experience as a critical differentiator. This is why you need to improve your customer service strategy.
Here’s how you can do that:
- Provide personalized experiences by segmenting and targeting your lists based on specific attributes.
- Create an omnichannel customer service strategy so that customers can reach you easily.
- Make sure you respond to customer inquiries as quickly as possible.
- Actively ask for customer feedback and implement improvements to your product/service.
- Give frontline employees the tools and resources they need to do an excellent job.
Step 7: Create a strong company culture
A positive company culture goes a long way in helping you succeed. According to Gallup, only 2 in 10 U.S. employees feel connected to their company culture. However, companies with a strong culture see an 85% increase in net profit (5 years) and a 25% increase in workforce (3 years).
In addition, you build a resilient business where employees stay longer and are more engaged, resulting in better productivity.
Here’s how you can cultivate a more robust culture:
- Define your company’s mission and values and ensure employees are aligned.
- Hire and promote employees who align with your values.
- Create a transparent communication culture—for internal and external communications.
- Regularly take employee feedback and implement that in every function of your business.
It’s time to build a strong competitive advantage
A saturated market and rapid innovation capabilities are making it harder for companies to create a real competitive advantage these days. That doesn’t mean it’s impossible.
You’ll continue to stand out as long as you keep your finger on the pulse of the industry, market, and competition. The only way to do this is to stay close to your customers and have the necessary tools to uncover opportunities continuously.
Sign up for a 14-day free trial of Unkover to enable always-on competitive intelligence.
If you want to start analyzing customer data and scoring existing leads to find your best opportunities, book a demo with Breadcrumbs today.