Tuesday, June 17, 2008

Liveblogging the Profit 100 Summit-1

I'm in the dining room at the Granite Club which is packed with PROFIT 100 entrepreneurs assembled for a one-day summit and celebration.

Florida-based speaker Jaynie L. Smith is talking about competitive advantage. She's the author of a book called Creating Competitive Advantage.

She started off by asking the attendees to write down their competitve advantage. Then she asked people to stand up if they had written down any of the following advantages:

Customer Service

Pretty well everyone was standing up by then.

Smith then pointed out that those are the same competitive advantages everyone else is selling. In other words, everyone is selling the same thing. All those wonderful qualities - including knowledge, innovation, relationships, etc. - are all just commodities now.

They're all cliches.

2. Jaynie is explaining Three Types of Competitive Advantage. And everyone is writing this down. Well, except for those on their Blackberries.

Sustainable: can be maintained, with a little work.
Competitive Advantage: differentiates us for a time.
Competitive Positioning: may not be unique, but can position you as a leader.

A few minutes ago, she mentioned the book Differentiate or Die as must reading for CEOs: "If you don't have tme to read it, just memorize the title."

Smith's 3 Strategic Flaws of Most Companies:
1. They don't have a competitive advantage;
2. or they have them, but don't know them;
3. or they know them, but don't tell them.

She asked the CEOs of they recognized themselves on this list. From the murmurs in the room, most of them think they're either No. 2 or 3.

Update 3.
Create statements of competitive advantage by analyzing what matters to customers. Examples: “We have a 95% customer retention rate.”
“85% of our business comes from referrals.”

Where possible, relate these statements to your competition. Example: Saying you have 50 service reps is not as powerful as saying that you have 25% more reps than the competition.

Where do we find these statements? “Right under our nose,” says Smith. She cites the example of J Tech, a supplier of pagers to the restaurant industry. They allow restaurants to notify guests waiting in the bar when their tables are ready in the dining room. When Motorola started eyeing their niche, J Tech went to Smith for help. She helped them come up with the compelling statement, “Of the 50 top restaurants, 100% of them use our pagers.” Motorola never did enter the market.

Your goal, says Smith, is to build confidence and reduce risk in the buying decision. When you do that you no longer have to compete on price.

Update 4.

Look for “only statements” you can make: they are the only true competitive advantage. E.g., we are the only supplier with this system, with this level of quality, or to be chosen by all the best seafood restaurants on the east coast.

``Invest in appropriate market research” to make sure you know why your customer buys. Her company has done a lot of market research for their clients on buying decisions, and often she gets to tell her clients why their customers buy from them. Usually she asks them to tell her why they think their customers buy – and in the past few years, she says, only one company has ever gotten that right. And even they only got two out of three.

Even if it costs you $15,000, she says, outside market research will be a much better investment than lowering your price.

Update 5:
Look for the Shadow Effect: What one thing is so important to your customers that they will forgive you for everything else. EG, for airlines it`s leaving on time: if you can do that, then your customers are likely to think that their flight is smoother and your food tastes better.

You have to identify the Shadow Effect in your marketplace, and then make sure everything you do revolves around getting that right.

One more point: What do visitors want from your website. Not ``About Us``, but ``Why Us.``

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