Delivering "The Right Stuff"
The following is an excerpt from the book Creating Competitive Advantage by Jaynie L. Smith with William G. Flanagan Published by Currency; April 2006;$19.95US/$26.95CAN; 0-385-51709-2 Copyright © 2006 Jaynie L. Smith and William G.
Flanagan Your customers, or would-be customers, need to be informed and reminded of what added values you provide them -- extras that can save them money, time, and aggravation. Yet too many business owners and managers can be ignorant of what those competitive advantages are. The seafood supplier didn’t communicate that he was selling fresher salmon with longer shelf life, and thus enhancing his customers’ bottom lines, until a competitor threatened his market share. You could be providing a lot of extras to your customers without realizing how much you are actually saving them. Or, if you do not provide meaningful extras now, you might consider adopting them.
They can be critical competitive advantages. Consider the following: Terms. If you are a small or medium-size company up against a category killer, you might have flexible financing terms that the big guys can’t match. For example, a lumber company in the Northeast enjoyed a robust business with little substantial competition until Home Depot began to close in. One Home Depot box opened twenty miles away, and then another just ten miles down the road. Observers predicted that the lumber company would soon be bulldozed out of business. Surely, it couldn’t compete on price, not against Home Depot's buying power. Lumber is lumber. So it concentrated on hitting Home Depot where it was vulnerable. It offered more -- flexible credit arrangements for its most important customers -- small contractors who often lack lines of credit from banks.
The lumber company didn’t have to drop its prices to stay in business. It adopted new competitive advantages. Guarantees. It is common for attendees at my seminars to tell me that their companies are “the only ones in our industry offering multi-year guarantees” on their products. But when I ask if they make a big deal about the guarantee to prospective buyers, most admit they do not. The reason is usually the same: “If we emphasize the guarantee, too many customers may take advantage of it.” That’s a pretty lame excuse. Either you offer a guarantee or you don’t. If you are confident enough in the product to guarantee it in the first place, make a selling point of it. Statistics show that a very small percentage of customers in any business actually use the guarantee.
But the guarantee takes a lot of risk out of the buying decision and clinches a lot of deals. Inventory turns. One of my favorite stories about inventory turns involves a clothing manufacturer who sold women’s clothes to boutiques around the country. When I asked him what differentiated him from his competitors, he said he thought his clothes were “wearable.” “As opposed to what?” I asked, trying not to laugh. He began to talk about design, fabric, cut, and so on. When I queried what his competitors we're saying, he shrugged and said, “I suppose the same thing . but I know my stuff sells much better.
” I asked him what his customer, the boutique owner, cares about most. “Whether or not it sells,” he said. So I asked if his shop owners measured inventory turns. He answered that some did, some did not. I suggested that he teach them how to measure inventory turns and then he could prove to the shop owners his clothes sold better. My point was that he should stop selling “wearable clothes” like everyone else and start selling inventory turns. Moving the goods is what matters. Note: Be sure you can back up your boast. Your buyers will know soon enough if you can’t.