| Your customers, or would-be customers, need to be | | | | In business as in war, intelligence can be priceless. In |
| informed and reminded of what added values you | | | | Business @ the Speed of Thought (Warner, 1999), Bill |
| provide them -- extras that can save them money, | | | | Gates writes: "The most meaningful way to |
| time, and aggravation. Yet too many business | | | | differentiate your company from your competition, |
| owners and managers can be ignorant of what those | | | | the best way to put distance between you and the |
| competitive advantages are. The seafood supplier | | | | crowd, is to do an outstanding job with information. |
| didn't communicate that he was selling fresher salmon | | | | How you gather, manage, and use information will |
| with longer shelf life, and thus enhancing his | | | | determine whether you win or lose."Knowing what |
| customers' bottom lines, until a competitor | | | | your competitors are doing, and keeping up with |
| threatened his market share.You could be providing a | | | | trends in your industry, are basic forms of |
| lot of extras to your customers without realizing how | | | | intelligence, and essential if you are going to run a |
| much you are actually saving them. Or, if you do not | | | | successful business. So is listening to your customers. |
| provide meaningful extras now, you might consider | | | | (Your own and your competitors'.)The more |
| adopting them. They can be critical competitive | | | | competitive the business you are in, the more |
| advantages. Consider the following:Terms. If you are | | | | important the role of intelligence. You can't afford to |
| a small or medium-size company up against a | | | | get caught flat footed if, say, a labor strike shuts off |
| category killer, you might have flexible financing | | | | deliveries of critically needed material. Or if |
| terms that the big guys can't match. For example, a | | | | commodity prices suddenly spike or drop. Or |
| lumber company in the Northeast enjoyed a robust | | | | consumer confidence sinks. Or if new products being |
| business with little substantial competition until Home | | | | developed by your competitors threaten your |
| Depot began to close in. One Home Depot box | | | | markets.No matter what business you are in, failing |
| opened twenty miles away, and then another just | | | | to keep a weather eye on changes in your industry |
| ten miles down the road. Observers predicted that | | | | can be fatal. A lot of this "intelligence" is hardly |
| the lumber company would soon be bulldozed out of | | | | proprietary. It simply amounts to smart business |
| business.Surely, it couldn't compete on price, not | | | | practices born out of experience. If you are a B-to-B |
| against Home Depot's buying power. Lumber is | | | | supplier who sells to retailers, your customers' |
| lumber. So it concentrated on hitting Home Depot | | | | success determines how well you do, too. Your |
| where it was vulnerable. It offered more -- flexible | | | | experience can help your clients avoid common |
| credit arrangements for its most important | | | | mistakes.Small and medium-size businesses are often |
| customers -- small contractors who often lack lines | | | | in the dark about key developments in their |
| of credit from banks. The lumber company didn't | | | | industries. They lack the time, money, and expertise |
| have to drop its prices to stay in business. It adopted | | | | to gather and evaluate that information. But that |
| new competitive advantages.Guarantees. It is | | | | doesn't mean it isn't important. Consider the prices |
| common for attendees at my seminars to tell me | | | | they pay for the goods or services they buy. |
| that their companies are "the only ones in our | | | | Advance word of radical price shifts, or new |
| industry offering multi-year guarantees" on their | | | | products that will make others obsolete, can save |
| products. But when I ask if they make a big deal | | | | them from missing a buying opportunity, or from |
| about the guarantee to prospective buyers, most | | | | laying in inventory that will soon become |
| admit they do not.The reason is usually the same: "If | | | | obsolete.Keeping your customers informed of trends |
| we emphasize the guarantee, too many customers | | | | can only make them healthier, and in turn create |
| may take advantage of it."That's a pretty lame | | | | more business for you. Word of mouth from your |
| excuse. Either you offer a guarantee or you don't. If | | | | sales force is one time-honored way to accomplish |
| you are confident enough in the product to | | | | this. But in this age of the Internet there are other |
| guarantee it in the first place, make a selling point of | | | | effective ways, too, from e-mail to Web sites that |
| it. Statistics show that a very small percentage of | | | | keep clients posted on prices and other industry |
| customers in any business actually use the guarantee. | | | | developments.One of my former clients, the Institute |
| But the guarantee takes a lot of risk out of the | | | | for Trend Research, in Concord, New Hampshire, |
| buying decision and clinches a lot of deals.Inventory | | | | analyzes market and economic trends and makes |
| turns. One of my favorite stories about inventory | | | | accurate predictions as to when those trends will |
| turns involves a clothing manufacturer who sold | | | | change. Its business is its forecasting expertise in a |
| women's clothes to boutiques around the country. | | | | wide range of sectors, from industrial construction |
| When I asked him what differentiated him from his | | | | and agricultural market movement to interest rates, |
| competitors, he said he thought his clothes were | | | | commodity prices, and inflation.Subscribers to the |
| "wearable.""As opposed to what?" I asked, trying not | | | | company's publication EcoTrends get an important |
| to laugh. He began to talk about design, fabric, cut, | | | | bonus: a discount on EcoCharts. EcoCharts, using raw |
| and so on. When I queried what his competitors | | | | data that the subscribers provide themselves, tells |
| we're saying, he shrugged and said, "I suppose the | | | | them which indicators included in EcoTrends correlate |
| same thing . . . but I know my stuff sells much | | | | best to their specific businesses. ITR has defined |
| better."I asked him what his customer, the boutique | | | | four phases of economic movement; if the trends |
| owner, cares about most. "Whether or not it sells," | | | | that affect your industry are in Phase C, then you |
| he said. So I asked if his shop owners measured | | | | are expecting a downturn. Your actions might include |
| inventory turns. He answered that some did, some | | | | a reduction in inventory and training, an avoidance of |
| did not. I suggested that he teach them how to | | | | long-term purchase commitments, and deeper |
| measure inventory turns and then he could prove to | | | | concentration on your cash and balance sheet. On |
| the shop owners his clothes sold better. My point | | | | the other hand, during Phase B, an upward trend, you |
| was that he should stop selling "wearable clothes" like | | | | would accelerate training, increase prices, consider |
| everyone else and start selling inventory turns. | | | | outside manufacturing, and open distribution centers. |
| Moving the goods is what matters.Note: Be sure you | | | | This kind of information can provide companies with |
| can back up your boast. Your buyers will know soon | | | | powerful competitive advantages.Training. Many large |
| enough if you can't. As with any competitive | | | | companies offer specialized training for their |
| advantage you claim, make sure you deliver.Materials. | | | | customers, free or at cost, so they can run their |
| One client in the home-improvement business who | | | | business better. McDonald's runs its own academy for |
| sold siding knew his product was "stronger and | | | | new franchise owners, for example, so they can |
| better" because of the materials he used. But he | | | | learn to avoid common pitfalls and maximize the |
| didn't know how to convey that without sounding | | | | return on their investments. The company draws on |
| biased and subjective. Upon asking his employees a | | | | the experiences of thousands of other franchise |
| series of questions I learned from one of his | | | | owners and shares that knowledge, because it is vital |
| engineers that the company's product has a higher | | | | to their own business. I often recommend to clients |
| wind load rating than any competitive product. In | | | | that if they invest heavily in training they should |
| many geographic markets, the higher load rating | | | | make a competitive point of it. For example, "We |
| influences buying decisions. So if your materials are | | | | invest half a million dollars each year training our |
| stronger and provide customers with a benefit, shout | | | | employees" or ". . . training our customers."Excerpted |
| about it in a way that is measurable.Delivery. If you | | | | from Creating Competitive Advantage by Jaynie L. |
| provide the same product as your competitors but | | | | Smith with William G. Flanagan Copyright © |
| you offer better delivery service, you have a | | | | 2006 by Jaynie L. Smith with William G. Flanagan. |
| competitive advantage. But how important is it? The | | | | Excerpted by permission of Currency, a division of |
| Compleat Company, which sells promotional products, | | | | Random House, Inc. All rights reserved. No part of |
| decided to find out. The Seattle-based company | | | | this excerpt may be reproduced or reprinted without |
| polled its customers about the importance of its | | | | permission in writing from the publisher.Published by |
| on-time delivery. It found that its customers not only | | | | Currency; April 2006;$19.95US/$26.95CAN; |
| valued that service highly, they had a pretty low | | | | 0-385-51709-2 |
| tolerance for being late.Eighty-eight percent of its | | | | Copyright © 2006 Jaynie L. Smith and William |
| customers defined "on-time delivery" as being on | | | | G. FlanaganJaynie L. Smith is the founder of ICS |
| schedule 97 percent of the time or better. Only 4 | | | | Marketing and president of Smart Advantage, Inc., a |
| percent of its customers would accept an | | | | management consultancy whose clients include |
| on-schedule rate of less than 93 percent. A manager | | | | hundreds of middle-market businesses. She also |
| from Compleat told me that the company is now | | | | serves as the Florida chair for The Executive |
| focusing its energy and resources to make sure it | | | | Committee (TEC), an international organization of |
| meets that expectation. When Compleat's customers | | | | over 11,000 CEOs. She resides in Hollywood, Florida. |
| want their deliveries, they will get them.Information. | | | | |