While she wasn’t speaking directly to small business at the time, Coco Chanel offered great wisdom when she said, “In order to be irreplaceable, one must always be different.”
Two questions are fundamental to your long-term success as a small business owner.
- Who is your target customer?
- Why would they buy from you?
In today’s highly competitive and digital marketplace, it is critical to offer customers a clear and compelling reason to choose your products and services over your competitors’. In marketing, we refer to this as your unique point of difference.
Here are two best practices to help articulate your competitive advantage.
1. Identify What Customers Really Want or Need
Small business owners are typically very passionate about what they do. You’d probably have no problem spending an hour or two telling a customer about your industry and how your product or service is the best.
While excitement about your business is always a good thing, one of the biggest mistakes we see small businesses make is not tailoring messages to their target audience.
Consider this example. Imagine that I sell personalized jewelry online, and I want to target first-time dads gifting personalized jewelry to their wives as a push present when the baby arrives. (Yes, push presents are really a thing… Google it if you don’t believe me.)
I could highlight the intricate manufacturing process that I use to make sure my jewelry is the highest quality or the unlimited personalization options available to make it just the right gift for the customer’s significant other.
However, if I don’t tell them up front that it takes two to three weeks to manufacture and up to another week to ship, I’m likely not answering one of the customer’s first questions, since we know he has a somewhat firm date he needs the item.
My competitor, on the other hand, may feature the product availability time in all his materials and be doing a much better job at framing expectations and answering what it is the customer really wants or needs to know.
I could potentially lose the sale before I even have a chance to get into the conversation, because I haven’t addressed the customer’s fundamental wants or needs.
Take time to identify the top 2-3 things your customers really need to know in order to make a purchase decision.
You need to maximize potential customers’ limited time and attention with the content that matters most.
One way we recommend doing this is by going through the “5 Whys” exercise.
Japanese industrialist, inventor, and founder of Toyota Industries Sakichi Toyoda developed the 5 Whys method. The problem-solving technique looks at what is actually happening versus what someone in a boardroom thinks might be happening. The goal is to get to the real root of your customer’s problem, understanding what is really driving demand for your product or service.
Start with the problem your industry addresses and keep asking “why” until you discover what really drives customer behavior.
Even better, ask some of your best customers to do the exercise live. Make sure they know you’re going to keep asking “why” so they don’t get frustrated, but you’ll be amazed at what you learn about the real reasons why they are choosing your business.
In addition to the 5 Whys exercise, check out this video from Six Figure Mastermind for additional ideas on how to identify customer needs and wants.
2. Audit Your Competition
Once you know what drives customer behavior in your business, you need to assess how well (or not) your competitors are speaking to these wants and needs so you can position your products and/or services as unique in the marketplace.
A brief competitive review reveals what you’re up against. Knowing what others are saying will help you define a point of difference that creates value for customers beyond price.
The audit doesn’t need to be complicated, but you should be intentional about the competitors you choose to review and consistent with the information you capture.
To begin, you need to determine the top 3-5 competitors based on the customer you are trying to attract. Sometimes your competitors are obvious, but I would encourage you to think about who it is you’re really up against. For example, someone in the art industry may be competing directly with local entertainment attractions instead of other art-related businesses, if they operate in a high-tourism area.
Go back to your customer’s wants and needs to determine if other industries and businesses could satisfy that demand. Determine the list of direct and indirect competitors and then focus on the 3-5 from your list that already have significant share of the market or are growing rapidly among your target.
Next, decide what type of information you want to capture. We suggest capturing what competitors are saying first and most often about themselves, where they are saying it, and how customers are responding to those messages.
Your review doesn’t have to be exhaustive, but you do need to make sure you understand what they are communicating and how they are positioning themselves relative to customer needs.
Audit Process
- Start by visiting their owned media channels, such as their website. Go to the “about” section and see what they are communicating, in both visuals and words.
- Look at how they communicate with customers on social media and the frequency of that communication.
- Use a search engine, such as Google or Bing, to see what the first few lines of their listing say about what they offer.
- Check out reviews on Amazon, Google, and social media to find what customers are saying.
- Summarize your findings. For each competitor, note key messages and visual examples. Keep it simple – no more than 1 page per competitor.
Finally, audit your own communication in the same format. Look for consistent themes across communication of your competitors to see if those items are already being addressed in your materials. Highlight any of your product or service benefits that stand out as unique solutions to the customer wants and needs you identified earlier.
Capitalize on What Makes You Different
Your point of difference may be something concrete, such as longevity in the marketplace, better performance, or higher ratings and reviews. Or it could be something more abstract, such as being trendier than your competitors.
If you’re having trouble here, try focusing on quality or design differences that your competitors don’t have.
Apple did a phenomenal job with this by convincing customers that there was no substitute to their line of products. They created strong brand loyalty and drove cross-category purchase by connecting their various products together via the iOS platform.
As a small business owner, developing a well-articulated point of difference and using it consistently in your marketing will pay off greatly in the long run.
Never stop studying your customer. You’ll need to revisit your point of difference annually (at a minimum) and stay on top of industry and consumer trends to maintain relevancy and relatability.