Ross Kernez is Director of Search Marketing at HPOne, Mentor at Starta Ventures, and Founder of SEOMeetup.

Achieving and sustaining a competitive advantage is essential for success and long-term viability. A competitive advantage is what sets an organization apart from its competitors, allowing it to generate greater sales or margins and retain more customers. This advantage stems from various sources, including cost structure, product offerings, market positioning and customer service.

Competitive advantage, in its essence, is what makes an organization unique, compelling and more successful than its rivals. Whether through innovation, cost leadership, customer service or brand strength, it’s the unique mix of attributes and execution that sets a company apart.

Before I dive into the ins and outs of competitive advantage, I would like to highlight the importance of this topic with a real-world example I encountered two years ago when I was called in to consult with a company that will remain anonymous.

When consulting with any client, one of the first steps I always take is to distribute detailed surveys to both past and existing customers. It’s a method that uncovers invaluable insights. In this one particular instance, these surveys revealed a common customer service issue not only within the firm I was advising but others in that industry as well: Customers frequently felt their needs were not being understood or adequately addressed.

Realizing the gravity of this issue, I saw a unique opportunity to establish a competitive advantage. We set out to transform the firm’s customer service approach. We started by thoroughly training the customer service team in active listening and empathy. We also customized the CRM system to better track and respond to customer queries. Regular follow-up surveys were then conducted to ensure that the changes were effectively meeting customer needs.

This proactive approach led to a remarkable turnaround. Our customer satisfaction scores soared, and the firm began to stand out in an industry where others were still struggling with similar issues. By addressing a problem that was pervasive and largely ignored by competitors, we were able to position the firm as a leader in customer service, significantly enhancing its competitive advantage.

Understanding Competitive Advantage

Competitive advantage refers to any characteristic that allows a company to outperform its rivals. This can be achieved through several means, such as offering lower prices, providing superior quality, innovating new products, or delivering exceptional customer service. The ultimate goal is to create a unique and sustainable position in the market that competitors cannot easily replicate.

Types Of Competitive Advantage

There are three primary types of competitive advantage that come from Michael Porter’s important 1985 book Competitive Advantage: Creating and Sustaining Superior Performance:

  • Cost Leadership: The focus here is on becoming the industry’s most cost-effective producer. Businesses that attain cost leadership can provide products at the most competitive prices, appealing to budget-conscious customers in the market.
  • Differentiation: This involves making products or services different from and more attractive than those of the competition. Differentiation can be based on product design, brand image, technology, features, customer service or dealer network.
  • Focus Strategy: Focus strategies involve concentrating on a narrow market segment and tailoring offerings to the needs of that particular market, thus achieving dominance in that niche.

Porter showed us how companies can stand out from their competitors. These strategies, known as “generic strategies,” help businesses find their special place in the market. They can be the cheapest offer, a unique angle (exclusivity) or focus on a specific group of customers. Porter’s ideas are useful for companies to understand how to be successful for the long haul.

Sustaining Competitive Advantage

Achieving a competitive advantage is one thing; sustaining it is another. It requires constant vigilance, adaptation and improvement. Companies must continuously monitor market trends, customer preferences, and competitors’ actions and be ready to adjust their strategies accordingly.

The Role Of Technology

In today’s digital age, technology plays a crucial role in gaining and maintaining a competitive advantage. Digital technologies—such as AI, big data analytics and IoT—can help businesses optimize operations, enhance customer experiences, and create innovative products and services.

In the example I gave earlier, we used AI, specifically an LLM, to develop surveys that would ask relevant questions that would provide the information we needed most. We then harvested all the data accumulated from the surveys and fed this into the LLM to find common problems and ideate a plan of action on how we could improve the failing customer service.

Competitive Advantage In Different Industries

The pursuit and maintenance of a competitive advantage are much more than a mere business tactic; it’s a vital strategy that ensures a company’s survival and prosperity in an intensely competitive market. It’s about understanding and capitalizing on what makes your business unique and valuable to your customers. Whether it’s through unmatched efficiency, groundbreaking innovation, unparalleled customer service or a powerful brand, a competitive advantage is a multifaceted and dynamic asset.

However, it’s essential to recognize that competitive advantage is not a static achievement. It requires constant nurturing, adaptation and reinvention. In an era marked by rapid technological advances, evolving consumer preferences, and the globalization of markets, companies must be vigilant and agile. They must continually scan the external environment for changes and opportunities, invest in new technologies, innovate continuously and remain customer-focused to stay ahead of the curve.

Moreover, the challenge of maintaining a competitive edge in different industries underscores the importance of a tailored approach. What works as a competitive advantage in one industry might not apply to another. Therefore, companies must develop a deep understanding of their industry dynamics, customer needs and competitive landscape to craft a unique and effective strategy.

Finally, the journey toward achieving and sustaining a competitive advantage is ongoing and demanding. It requires not just the right strategy but also a commitment to a culture of continuous improvement and adaptation. By staying committed to these principles, businesses can not only secure a competitive edge but also ensure their long-term growth and success in an increasingly competitive and globalized business world.


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