Developing a Competitive Advantage

The Competitive Advantage

A. Define Yourself

Before your customers can get to know you, it’s important to first know yourself and your vision in the marketplace. In today’s highly competitive world, it isn’t enough to simply say, “we are a credit union and we give loans.” You must define the type of financial service provider you are.

Ask yourself the following questions:

• Is my product or service unique, and if so, why?
• Is the way I operate my business unique?
• Do I service a niche market? Are there other markets that could benefit from my product or service?
• Are my employees a key asset that sets us apart from our competitors?

B. Define Your Competitors

Now that you have a clear understanding of who you are, you must make a list of all your competitors and track them on a regular basis. In order to compete, you should compile the following data about each competitor:

• What are their strengths?
• What are their weaknesses?
• What are their capabilities?
• Who is their customer base?
• What are their revenues?
• Are their profit margins growing?
• What are their promotional and marketing strategies?
• What are their current offerings?
• What are their future goals?

C. Know Your Customer

Once you have a handle on your competitors, the next important step is to clearly define who your customer base is.

To clearly identify your customer base, ask yourself the following questions:

• Who are my customers?
• What are my customers’ needs?
• What motivates my customers to buy, i.e., price, quality, credibility, customer service, location, etc.
• When do my customers do their buying? Daily? Weekly? Monthly? Annually? Seasonally?
• How much research do my customers do on a product or a service before spending money?
• What services or products are my customers willing to spend more on?
• What services or products are my customers willing to spend less on?
• What are my customers’ buying trends and habits?

A good way to identify what your customers want is to talk with them and really listen to what they have to say. Customer feedback can be a cheap and invaluable tool in creating a competitive edge.

D. Personal Experience

Chances are, in any given week you reverse roles and go from business owner to consumer. Consciously or unconsciously, you make decisions about which businesses will get your own hard-earned money. Stop and analyse the choices you make. Why do you make the choices you make? Why would your members be any different?

Make a list of all your favourite companies and ask yourself why you enjoy doing business with them. What is it about them that attracts you? Is it their prices? Their products? Their service? The fact that they know you by name? Do they clear up problems and correct mistakes in a timely, hassle-free fashion?

Now list the companies that you refuse to do business with. Again, ask yourself why. What has turned you off? Are their salespeople rude and unhelpful? Are their shelves scarcely stocked? Is their parking limited? Is the quality of their product or services poor? Are they overpriced? Do they not take your problems and complaints seriously?

Analyzing both the positive and negative personal experiences you have had as a consumer can significantly improve your own business. You may be able to implement similar policies of the things you liked and altogether avoid those that have steered you away.

E. Differentiation

In today’s crowded marketplace, consumers have lots of choices. In order to gain a competitive advantage, you must give customers a reason to choose you over the competition. You must make it your business to see that your product stands head and shoulders above the crowd. While lowering prices is certainly a viable way to reel customers in, there are other things you can do to make your company unique simply by using a little imagination and creativity.

The following are ways to differentiate your product and/or company from your competitors:

• Look at what your competitor has to offer. What new spin can you put on it?
• Assess your product. Can you add any new features that might make it more desirable or useful than your competitors?
• Think of new uses for old products or new ways to package or bundle your offerings
• Analyze your marketing strategy. Are there ways to use your promotional campaign as an advantage?
• Make sure your products are user-friendly and easy to order. Make it easy to do business with you.
• Can you provide exceptional customer service, hours of operation, guarantees, etc.?
• Are there any special services you can offer your customers that your competitors don’t?
• What is the credit union advantage?

F. Price

While there are those people who will spend top dollar on any given product, most people are price-conscious especially around financial services. Many folks are willing to shop around to see where their money will go the farthest. It is important to recognize that you may not always be able to be the lowest priced service and still maintain a healthy profit margin. However, there are still many ways to lure customers including some repeat customers and introductory offers; loyalty rates etc

G. Product

Here is the golden rule: Your product or service is everything. Without it, your business is nothing. It is what your entire reputation will ultimately be based on. You can have the nicest business location, the lowest prices and the best customer service, but if you don’t have something people want to buy, your business will, more than likely, go belly up. Therefore, it’s crucial to constantly place your product or service under a microscope, examine it and re-examine it carefully.

Ask yourself the following questions about your product or service:

• Does my product perform?
• Is it durable?
• Is it reliable?
• Is it fairly priced?
• Does it consistently live up to its reputation?
• Am I known in my industry for producing quality goods or services?
• Is my product easily recognizable?

It is important to understand that your product has a life all its own. Like people, it goes through a life cycle. First it is born, then it goes through a growth period; eventually, it may decline or die altogether.

The following are ways to ensure that your product or service has the longest possible life:

• Create ways to ensure your product or service is in demand
• Make your product or service a trendsetter
• Think of innovative ways to encourage more people to buy your product
• Venture into new and different markets
• Add new features to your product
• Market a companion product

H. Marketing Strategies

Now that you have a fabulous product, it’s time to take it out into the world. You would never think to venture into a blizzard without the proper snow gear. Why? You know you wouldn’t survive. Likewise, you should never venture into the market without a specific strategy as to how you intend to sell your product. A good place to begin is with the competition. Look at companies with similar products and analyze how they have marketed them. In what ways have they succeeded? In what ways have they failed? You have the luxury of learning from their mistakes and benefiting from their triumphs. It’s an invaluable tool. Don’t overlook it.

You have heard the phrase, “nothing ventured, nothing gained.” In other words, don’t be afraid to try new things. There is something to be said for a fresh approach. Be inventive and come up with your own creative strategies.

In devising your own plan, you may want to keep in mind the following:

• Remember to whom you are selling
• Focus on your product’s or service’s benefits rather than features
• Don’t be afraid to toot your own horn
• Be sure your plan is attainable
• Have a back-up strategy in mind, especially if your primary one is risky
• Collect facts, figures and important data before you put your plan into action

Download further guidance on the ABCUL website here.