What defines competitive advantage in the marketplace?
That question has a lot of layers to it, but for service providers engaged in high- value professional services like consulting, tax accounting, financial planning and insurance firms, you can boil it down to a few simple answers.
To understand what true competitive advantage for professional service firms is, let’s first take a look at what it isn’t.
What Competitive Advantage Is Not
Take a look at this list and ask yourself if you’ve often touted any of these as what makes you different from the competition.
- We have the Best People – Sorry, so does your fiercest rival in the eyes of the prospect, and you all hire from the same schools.
- We are Quality – You’d better be. This isn’t 1986 any longer. Quality is assumed as the minimum barrier to entry in the marketplace.
- Our Technology is Better – Ummmm…maybe, but how many people do you think will believe you in an era of Services from the Cloud that increasingly lower the cost of technology for even your poorest competitors. At the least, technological edge will be fleeting.
- You Can Trust Us – Man, I hate to tell you this, but I can trust everyone in your industry—until I can’t trust them, or until their online reputation makes dubious their honesty and integrity.
Admit it! You’ve used them before. Don’t fret. There is still hope for you.
Do you notice something in common in the Big 4 Lies of Business Competitive Advantage? Anything, and this writer means anything, that your competition can claim without averting their eyes from the customer or chuckling, is NOT A COMPETITIVE ADVANTAGE! No one said it wasn’t true, just not saleable to prospects.
By the way, ratchet up the customer disbelief by a power of 2 if you’re making these claims online.
Disruptive, Counter-Intuitive Offering – Getting Noticed
Look, you are a service firm, not an invention company. Unless you somehow have developed some completely new way to amplify your brain or some algorithm that only you and you alone will have for the next 5 years, you don’t have a technological or patent-worthy edge over the other guys.
But what if you do have something unique? I mean really, controversial, everyone else does it the other way unique? What if your way is totally contrary to conventional thinking yet produces the same or better, make that WAY BETTER, results? You now have a competitive advantage.
EX: Adkins Diet – totally cut carbs out of your diet until ketosis is achieved, burn fat, sell millions of books, even post-humously
The uniqueness and controversy will get you noticed. Just be sure to produce results at the end of the day. Don’t be the guy selling Eastern sunsets.
Unquestionable Results – The Proof
People want to trust that you will give them results, whether it’s the lowest taxes, shortest sentence from the judge, or best return on junk bonds. If you can document, without ye ole lying with statistics routine, easy to understand and unchallengeable results, you may have a competitive advantage. I say may have because your proven results must be better than your neighbors or some index that is published. Think mutual fund or broker performance here folks.
“During the Reagan years, I was able to get my clients an average 10% return. How much do you want to invest?”
And who didn’t, Charlie? Most people in the markets did a lot better than that. What did you do during the Clinton and ‘W’ administrations? Talk to me about what you’re doing now? This of course points out the recency aspect of your results, meaning they’d better be recent AND over the long term.
3rd Party Recognition –Buzz Creator
If you’ve earned or won a prestigious designation or award from a certification body, maybe even a local business publication, that provides your service firm with a competitive advantage. It means that someone other than you is saying it, and they could have said it about your competitor, but they didn’t.
Got your AAA certification as the super A1 provider from your industry trade association or society? Unless they hand them out like Snickers at Halloween, you can use this. Assuming you really are the best at what you do, apply for the “Best of” contests from your local chamber of commerce, business journal, or national magazine. If you win, place or show, you can use that.
Reputation of Trust
So what do the above have in common? They all go to establishing your reputation of trust as a source of whatever service you provide. That’s what people want from a consultant, advisor, realtor, whatever! It takes years to develop and, these days, only minutes to tarnish or even destroy. Online news travels a light speed and is very, very difficult to correct the record when it is wrong.
Most of the time, you don’t have a better widget in professional services, you have you! True competitive advantage for professional service firms gets developed out of a combination of the three things above:
- Get uniquely noticed, on the map (If your website looks like your competitors’, change it!)
- Be good, prove it (Tidy up those case studies)
- Have someone in authority say it, create buzz (It ain’t bragging when someone else is saying it)
Buzz turns into a groundswell and that turns into your current business reputation that you need
Your Competitive Advantage = Customers Trust You More to Deliver Results
Does competitive advantage last forever? No, sorry. We have some nice parting gifts for you. There are always other people nipping at your heels, trying to copy you and saying whatever it takes to steal your business and, if not trash your reputation, at least elevate their own. That’s why for most of us, price is not a competitive advantage and I didn’t list it.
Building and sustaining your true competitive advantage is a “non-stop, never-ending siege” (my thanks to Tom Cruise in Jerry MacGuire) that your business needs to undertake every day. Now that you know what to do, get to stepping.