Is Your Competition Killing You? Here's the One Thing You Need to Try This is the key to making your company stand out in a crowded field.
Opinions expressed by Entrepreneur contributors are their own.
"That is an easy one. You have two choices: Either you get your best people in the room and figure out a way to drive your costs way down and compete on price, or you give everything you've got to differentiate like hell."
While attending my first Global Leadership Conference for Entrepreneurs' Organization in Washington, D.C., that was what the surprise guest lunch speaker shared with the 300 entrepreneurs gathered in the room. That speaker was none other than Jack Welch, the legendary CEO of General Electric. The question he fielded was, "My competitors are killing us; what can I do?" Jack's scratchy-voiced, lightning-quick, candorous response made an impression on me. It's advice I took to heart.
One cohesive suggestion
A few weeks ago, a fellow founder asked me a similar question: "Our industry has gotten much more competitive than when we started 10 years ago. I know I need to differentiate our services more; I just don't know how. Can you suggest a process?"
A Google search on how to differentiate your company from the competition reveals that a lot has been written on the subject.
The vast variety of services and products that different companies offer makes it difficult to address the topic in a relevant way to a wide range of businesses in one article. Rather than list all the ways to differentiate or talk specifically about them, I have one cohesive suggestion: Discover the answer by talking to your best customers. How? Send your leadership team on a mission to the metaphorical "Differentiation Town."
The journey to discovering what makes your company different
I once had an executive from a major airline contact me, a gold-level frequent flyer, to ask a series of questions in a friendly, 20-minute conversation. He shared that all of the airline's top management conduct 10 customer interviews every two years to help improve their service and differentiation from competitors.
So here is my advice for every founder who wants to differentiate their offering: Give your top leaders a mission to talk with five to 10 of your best customers.
If you have 10 leaders, ask your accounting department for a list of the top 100 customers that paid your company the most in the last year. If you have three leaders, then ask for a list of 30. If necessary, consider pairing leaders so they have the opportunity to speak with a minimum of five customers each.
However you divide it up, give your leaders 30 days to speak with customers, then get together for a half-day offsite. Spend the first half sharing the results and identifying the most common answers; spend the second half brainstorming what changes you could implement to further differentiate the company from competitors.
Related: 3 Ways to Stand Out from Competitors
What to ask your top customers
After a gracious thank-you for their business, here are the questions I would ask those top customers:
- What do you like best about us and our product or service?
- What do you count on us for?
- If you said to a colleague, "You need to use (our company name) because …" — What reason would you give after the word "because?"
- Why do you choose us over our competitors?
- Is there anything you would value us doing that we are not?
- Anything we could improve that you would truly value?
Let customers give multiple answers to these questions and note all of them, but also ask them to rank their top answer to each. I would also give them something for their time (I got a $100 travel credit) and give them your direct number should they ever want to talk again.
When the leadership meets to discuss the results, read these same questions to the group. Go question by question and write all the common answers on a dry-erase board. Then for each question, have the group vote for the top three most common responses to each. By the end, you will have 18 differentiation points your customers already recognize or suggest you could improve or implement. My guess is there will be some overlap and commonality, so these could be consolidated into 10 items.
Next, brainstorm what actions the company could take to amplify, strengthen, or improve each item. Then vote on which of those actions would have the most significant impact for the least effort. Take the top vote-getters and implement them over the course of two years.
Your company is already differentiated — whether you think so or not. This process should help you "be more you" and stand out even further in customers' eyes. If you do this every two years, then as your industry gets more and more competitive, you are simultaneously getting more and more differentiated — essentially keeping up with or outpacing the "inflation rate" of growing competition.
Go for extra credit
There's an extra credit opportunity that could turbocharge sales and revenue. Since you are isolating your top customers, why not also brainstorm what they have in common with each other and try to identify how you can connect with more like them? If you double your number of such best customers every two years, your revenue could grow 30% or more.
You can't change the fact that your competition will grow more fierce as new, hungry, creative companies enter your space and vie for your customers. What you can change is the strategy you use to nullify those attempts at undercutting your customer base.
When you continuously invest in improving your product or service in a tailored way that reflects customer preferences, you are intentionally creating a differentiated product with proven reliability and experience that nobody else in your category can match.