Whether you’re pitching investors or launching a new product, success is more likely if you can create and communicate a sustainable competitive advantage.
Being first to market isn’t enough, as someone bigger with something better will come along and leave you in the dust. And it doesn’t matter if there isn’t a product in the market that’s exactly the same as yours. If another company is solving the same pain you’re addressing, for the same customers – they are competition.
While creating a sustainable competitive advantage is not easy, the following will help ensure you get and remain ahead of the field.
1. Establish Brand Loyalty. Customers will often remain with a brand they have loyalty towards, even though the company does not offer the cheapest or most effective product. Focus on building strong relationships with your customers and delivering a great customer experience and service.
2. Patent Your Product. There has been a lot of debate recently about the true value of a patent. While patents are not a ‘cure all’, they are an important weapon in an entrepreneur’s competitive advantage arsenal.
3. Continually Innovate. Customers like updates and upgrades. Keeping your product fresh and compatible with the market place (particularly if software) is essential.
4. Hire ‘Connected’ Team Members. If your market includes large companies and government departments, connections to key individuals within these organizations can dramatically accelerate your ability to meet and secure contracts. Try to have at least one member on your team who is ‘connected’.
5. Use Long Term Contracts and Incentives. This step has to be executed carefully, as it can backfire. If you can establish a long term contract with your customer, then clearly they are less likely to switch to a competitor. If you only offer long terms contracts, however, and your competitors are offering short terms contracts, then you are likely to lose business.
Ideally you want to incentivize your customers to enter into a long- term contract with you, possibly by providing a slight reduction in cost or a bonus. Equally, customers are more likely to be willing to enter into a long-term contract if they have just completed a successful short-term contract with you.
Image credit: CC by Gregory Pruden