Business strategy theory posits that there are two sources of sustainable competitive advantage. You can be cheaper, or you can be better. Those are your only two options, as all other advantages are temporary. Your software has the most buttons? Your competitors will add more. Your patents are ironclad? Eventually those patents will expire. Your salesforce gets up earlier? Your competitors will offer richer commissions and throw in an exotic year-end trip.
The first advantage is straightforward. If you have a sustainable cost structure that allows you to consistently underprice your competition with a comparable product, then you win. And you will continue to win, until someone else cracks that code. This is a hard road, one that relies on strict systems, controls, and constant fine-tuning of supply chains, labor costs, all overseen with obsessive focus on the smallest details. The end result of all this effort are molecule-thin margins and a need for ever-higher volumes.
The second advantage is more complex. After all, what is the definition of better? Does your product perform better than your competitor’s product? Is your service faster than your competitor’s service? Does your product taste the best? The key to successfully pursuing a “better” strategy is to understand what it is that your customer values enough to pay for, and then finding a way to give it to them. If you have a superior product that fulfills a customer need, then the customer will happily pay the price.
Unfortunately one aspect of this “better” strategy that companies often ignore are customer communications. Companies think about the product, what the product should do, how the product should look, how the product should make the customer feel, and not about actually creating a conversation with the customer.
What does the customer think? How does the customer want to interact with the product? How does the customer want to find out what you’re planning to do next? Any corporate strategy that is focused on “better” must take this conversation into account.
Your product must be better, yes, but so must be the entire experience that your customer has while researching, evaluating, purchasing and using the product. If you want to be better, you have to be willing to communicate.
