In 2005, Apple Computer sales were up 68%. Apple opened its first store in Canada. The iTunes store sold it’s 500 millionth song. Profits were up by 384%. And the Apple stock was up 177% (source).
Some believe this was from the success of creating Intel-based Macintosh computers. Others believe it was the success of their latest desktop, the Mac OS X Tiger (source).
But if you were to ask Marketing Hall of Fame Al Ries, he’d say Apple’s success came from establishing a halo effect. Each Apple product was a masterpiece that led to millions of product sales. Every happy customer saw nothing but good coming from Apple. Thus they saw a halo around the company.
With every successful product, Apple created a competitive advantage. Some competitors found success. But none had customers lining up for a product launch.
A competitive advantage is anything used to grow customer lifetime value.
This includes actions which allow you to:
In other words, more money in da’ bank.
In 1980, Michael Porter described four different types of competitive advantages. These are:
Whatever you do, don’t get stuck attempting to apply each competitive advantage.
If you attempt too many, it’s likely you fail at doing any at all.
These four competitive advantages allow you to better serve your customers. And the better you are at a competitive advantage, the easier it will be to defend it.
If you want to become a leader in your marketing, you’ll want to find a sustainable competitive advantage.
Knowing which sustainable competitive advantage to choose will depend on your market’s needs.
Now you have chosen your competitive advantage. There are several ways you can turn this into a sustainable competitive advantage.
Here are 10 examples of competitive advantages you can create:
A skilled developer, product marketer, or salesman is worth her weight in gold. Instead of needing to micromanage her work, she gets the job done above-and-beyond your expectations. She comes to the table with a ready-to-go-system to help you grow from an idea to scale.
The more value your team delivers, the happier and longer each customer will stay with you.
If you pay your employees well, you can also reduce your turnover expenses too.
When your product is top-of-mind, you immediately target more customers. These customers are comparison shoppers. Comparison (or product-aware) shoppers are in the 2nd highest stage to buy your product.
And with a solid brand, customers will buy your product without comparison shopping. People who love Apple products rarely comparison shop.
A network effect occurs when one customer makes your product more valuable for every other customer. Thus the bigger your network, the more value your network receives.
As a result, a customer who may switch to your competitor’s network won’t find as much value in doing so. There is also a risk when switching away from the network. This is why companies like eBay and Monster are going strong.
Every marketing channel will have different costs for you to get a new customer.
For SEO, some keyword phrases have higher difficulties to rank in Google search results.
For PPC, some audiences and keyword phrases have lower costs per click.
For content marketing, some audiences have higher expectations on your writing or videos.
Once you master a marketing channel, you’ll see the benefits of creating the competitive advantage.
For example, Slack and SuperHuman found it easier to raise funds, hire talent, and gain consumer attention when they caught the attention of the media.
The better you defend a marketing channel, the harder it is for competitors to get new customers for each channel.
When you get bigger, several advantages will come your way.
Consider this flow:
The numbers all work in your favor the bigger you become.
People matter. Having a strong relationship with a customer can be an advantage against the competition.
Further, some relationships can turn into business development deals or influencer marketing partnerships.
You can simplify everything you do into a system. This becomes your business operations.
The faster your system can produce valuable results, the higher your margins will be. Think of it like moving twice in chess while your competitor moves only once.
Use legal protection for your designs, inventions, and content. This helps prevent your competitors from using these resources.
IP and patents seem to apply less-and-less to software and other goods in the digital world. But they are applicable for physical goods.
Money makes the world go ‘round. More cash allows you to hire faster. Cash allows you to create more advantages. And when the economy takes a down-turn, cash allows you to invest while your competitors struggle to keep the doors open.
Delivering products that delight your customers keeps them coming back for more.
Consider Apple in the glory days of Steve Jobs. Whenever a new Apple product came to the market, people assumed it would be top-of-the-line. As a result, some die-hard customers would wait for hours to be first to get their hands on a new Apple product.
Creating a competitive advantage takes time and focus.
Apple began in 1976. Yet some historians would say it wasn’t until at least 1997 before Apple hit its inflection point (source). In those 21 years, Jobs, Wozniack, and other Apple employees kept building competitive advantages.
To understand what should be your main competitive advantage, I recommend you take five steps:
In time, you’ll create more competitive advantages to make it harder for competitors to steal your customers from you.