A competitive advantage is defined as the ability of a company to demonstrate a perceivable difference in their product that elevates it over that of their competitors. To make your product stand out against the competition, there are a few steps you can take that will have the most impact.

Competitive Advantage starts with knowing what the market wants

This may sound trite, but it’s amazing how many times companies really don’t understand what their buyers want. If your product is, say accounting software, and you focus on time management capabilities, but the market is more concerned with ease of use, you will lose whatever competitive advantage you sought to gain.

It’s impossible to make your product stand out if you don’t know what matters most to your target audience.

Start out by talking with current customers and prospects. Ask them their top three criteria for your type of product. Follow this up by asking them to rate your performance in those areas. You will quickly see both the top issues of importance for your market and your performance levels versus your competitors.

By giving weight to top answers, your key areas for competitive advantage can become clear.

Accounting Software Criteria by Importance (20 respondents)

Criteria First choice (x3) Second choice (x2) Third choice (x1) Total rating
Ease of use 15 3 1 41
Core payroll 6 3 10 34
Integration 6 2 6 30
Time management 3 3 8 23
Performance management 1 3 1 10

Note: this chart is purely an example of results and not based on any data relating to expectations of actual accounting software buyers

In the above example, “core payroll” received more overall votes than “ease of use”. But it received almost double the number of first-place votes, showing this is by far the most importance issues to the bulk of respondents. So, even though “core payroll” had the most votes overall, respondents show that it is of lesser importance as the bulk of its votes were ranked third in importance. For competitive advantage, “Ease of use” is clearly the vital criterion to respondents in this sample study.

Now, let’s look at how our sample accounting software company performed in these key areas of importance compared to its competition:

Accounting Software Criteria Performance Ratings (20 respondents)

Criteria Client rating Avg. competitor rating Gap
Ease of use 8.3 8.2 0.1
Core payroll 8.0 8.1 -0.1
Integration 9.0 8.5 0.5
Time management 7.5 7.6 -0.1
Performance management 7.0 8.2 -1.2

Note: this chart is purely an example of results and not based on any data relating to expectations of actual accounting software buyers

Now, we see that in “ease of use”, our sample company is only marginally better than its competition. And this is the most important criterion in the minds of their buyers.

But look at “performance management”. The gap in performance is quite dramatic. This normally could cause the company to panic and invest important resources in solving this issue, but if you look at its importance to buyers, it is dramatically less significant. Therefore, just focusing on the biggest negative gap doesn’t necessarily improve competitive advantage.

Focus efforts on the top areas of importance

While it’s important to focus on weaknesses in the top areas that matter to clients, improving strengths can also yield a large competitive advantage. If that issue has a significant impact in buying decisions, making your product the clear leader in that area can overcome many other weaknesses. And many times, it is easier to accentuate a strength than repair another weakness that may not have the same impact with buyers.

For instance, take our “ease of use” example. Our sample company has a very slim advantage over its competition. Since this is by far the most important criterion in the minds of the buyers, how do you think it will affect their competitive advantage if they dramatically improve in this one area?

Conversely, let’s say they improve performance management to equal that of its competitors. Would this really make much difference in their ability to sell their product?

Focus marketing and sales to maximize competitive advantage

Make sure you target the top areas for improvement in both your marketing and your sales approaches. Educate your sales team on the top areas of importance. Even in its current ratings, our sample company is better in two of the top three criteria than the average competitor. By targeting marketing efforts on those main criteria, you are putting emphasis on what buyers want most.

If you train the sales team to keep focused on those top issues, they will immediately create a competitive advantage the majority of the time in sales engagements.