Have We Forgetten About Competitive Advantage?

Everyone is doing it. No, it is not sex. It is talking. People talk to each other. People, who maybe strangers or even far away from one another exchange gossip, ideas, and surprisingly do business with each other everyday. Yes, I know that you know that people talk. But did you know that people talk about you? Oh, ok. You really don't care whether people talk about you or not. Well, if you are a business, what people are saying about you, your products/services matters a lot to your bottom line and your existence.


As a business, you know that the best type of advertising is word of mouth - that informal personal appeal current customers that love your products/services make on your behalf to their friends, family members, and colleagues. You also know that customers may also say negative things about you to those in their networks. Technology has amplified this word of mouth through social media, blogs, YouTube, and in customer review pages.

Word! You don't say!

And NO! You don't have the magical power to change the conversation. Your clever marketing is powerless against the

"desire for people to connect, create, stay in touch, and help each other," 

as well as talk about you. This amplified social connection of people interacting with other people in the cloud (yes, that magical place) about businesses (like yours); and of consumers purchasing from each other is known as the groundswell.

Feeling powerless yet? Well, great! There are a slew of market research companies that would love to tell you what these people are saying about you in the cloud. Only by first listening, can you then capitalize on their narrative or combat it if it happens to negatively portray your brand.

There is something odd right about eavesdropping on customers freely discussing your business. What is stranger is that now you are told to base your business decisions on what they say.You are told that

"To keep your customers—and to attract new ones— you need to remain relevant and superior" 

by constantly revolutionizing your products/services, and yes, your communications to your customers. You are asked to do the nearly impossible.

Well, let me ease your mind. I am going to agree with your mother's personal advice to not give much attention to what people have to say about you, it is all nonsense. Why?
Two words, Competitive Advantage. It is the difference between Cola and Coca-Cola, yes the one and only Coke you drink.

 

Competitive advantage is a "condition or circumstance that puts a company in a favorable or superior business position" (look it up in the dictionary). In "Customer Loyalty is Overrated," Lafley and Martin argue that our normative view of competitive advantage is flawed because we begin with the wrong supposition that people are conscious consumers. They write, that

"The conventional wisdom about competitive advantage is that successful companies pick a position, (compete on price, quality, innovation, or focus on your niche) target a set of consumers, and configure activities to serve them better (align your business to the changing demands of customers, i.e. bend to the customers' will)."

It turns out that customers do not want to expend the effort needed to differentiate between products. Plus, human minds prefer automated choices. So, what?




yeah, yeah, so what? What are you telling me?



Well, if you find a way to build on your competitive advantage by making your products/services the default choice, you will build a cumulative advantage that would make it very difficult for competitors to penetrate into your market share. Cumulative advantage is

the layer that a company builds on its initial competitive advantage by making its product or service an ever more instinctively comfortable choice for the customer.

In order to sustain your competitive advantage, the authors recommend that you Become Popular Early (maybe by offering free trials); design for habit (constant update reminders, i.e. the notifications on SM sites); Innovate inside the brand; keep the communication simple (avoid any compare and contrast arguments). 


Whatever happened to MySpace? MySpace failed to build a cumulative advantage. MySpace became popular early because it was free. However, the ability for users to personalize their pages created inconstancy in user experience. This was further exasperated by the constant addition of features to appeal to more users and the proliferation of ads cluttered the pages more. User experience varied by pages one visited. MySpace failed to build on its competitive advantage because it did not design for habit. Whereas now, with Facebook, every page you visit has a consistent look and feel, even on mobile devices. 


So, if you build on your competitive advantage your business can remain not only relevant but the preferred choice. Preferred by habit.

Make it easier for me!

Innovation and Customers: 

Keep in mind that innovation hardly comes from customers. Customer feedback is certainly helpful, as the feedback creates the space for continual improvement. Henry Ford wrote that

"No business can improve without possible attention to complaints and suggestions," 

But customer feedback should not drive your innovation nor should drive your competitive advantage.

Steve Jobs did not care much for market research, he reasoned that 

"customers don't know what they want until we've shown them."

If you want to survive, kneel before your gods, whether they be rational or not. Heed the maxim that the customer is always right. If you want to thrive, be different, build on your competitive advantage.