Running a business today is like sprinting towards a finish line that is just out of reach. It can leave you gasping for breath, exhausted and overwhelmed. But it doesn’t have to be that way–not if you discover your company’s X factor. That’s what allowed company’s such as Starbucks, WR Hambrecht, Bikram Yoga and University of Phoenix to dominate their industries or markets. By finding their X factor, specifically the advantage that put them at least two times ahead of competitors in a key area like customer loyalty or employee retention, they left their rivals miles behind and unable to catch up.
What is exactly is an X factor? It is using your company’s unique skills and resources to implement strategies that competitors cannot implement as effectively. Also known as a competitive edge. It’s the secret ingredient(s) that can help you run faster, see the finish line more clearly, cut out the clutter, and focus only on what will help you ultimately reach success.
To build a business that dominates, you need to discover that competitive edge that puts your company ahead of its competitors and provides value to your customers. A closer look at some well-known companies and local small businesses will provide you with some ideas where you might find the basis for your X factor. Some X factors seem so logical. But if your competition is not doing it, it’s a competitive edge no matter how simplistic. Additionally, the X factor for most of the companies below is a combination of elements.
Breaking the Mold: Break the mold by revamping a product or service, developing a new process, partnering with your competitor, selling to customers you would never dream of reaching, reorganizing around customers instead of products, or productizing your service. If it has never been done before, ask why and can I deliver value to my customers?
Who is doing it? WR Hambrecht changed the institutionalized IPO process that only allowed connected investors to get in on the ground floor of public offerings. The company created OpenIPO, an online auction system that allows all interested investors to participate in the pricing and allocation of IPO shares. In the face of fierce competition from Wal-Mart and eBay, Best Buy is reorganizing its stores’ product offerings and layout around five specific customer types. By implementing this unique, never-been-tried organization, Best Buy provides more value and creates loyalty by serving these specific customers better than any one else.
Leveraging IT: It has often been cited that information technology contributes to business profitability through reduced costs, better control of scarce resources, and increased customer satisfaction. Studies abound that indicate that those companies that invest more in IT relative to others in their industry are the most likely to outperform their competitors.
Who is doing it? University of Phoenix coordinates its 21,000 faculty members and 200,000+ students through its extensive online infrastructure. All curriculum and textbooks are digital as are all class management tools, grades, learning resources, and online tutors. Across the globe faculty and students login to the same system, increasing efficiencies university wide, timeliness of educational material, and consistency of teaching. A local Reno service firm has integrated its time tracking and invoicing system into one seamless process. The result is minimal lost billable time, detailed invoices (which clients love), and a high efficient invoicing process. Bills are in the mail on the first of the month, it’s A/R cycle is reduced, and cash flow increased.
Niching Out: Expert knowledge and customization are hot trends. On the service side, becoming an expert in an industry is a long-term strategy, but you create an edge by building a knowledge base and relationships in a specific industry that can be impossible for others to replicate. On the product side, providing exactly what the customer wants can be difficult to achieve in a cost effective manner, but not impossible. In both cases, you will outperform your competitors because you are delivering unmatched value to your customers.
Who is doing it? Nationally, the computer industry has become commoditized. But Dell left everyone in the dust with custom-built PCs. Locally, the staffing industry is becoming more and more cluttered and competitive. Instead of going head-to-head, a local staffing agency has decided to only recruit and provide talent for a specific, niche business function.
Delivering Consistency: Customers expect to receive the highest quality product or service every time they do business with you. No matter what the industry, delivering consistency can be a competitive edge that is hard for others to copy. The trick is to understand what about your business sets the expectation and how to create a process that ensures consistency. Consistency leads to customer loyalty, increased brand awareness and repeat business.
Who is doing it? Starbucks is the shining example of providing a consistent experience every time, everywhere. Bikram Yoga is a franchised yoga company (there are two in Reno/Sparks) that offers the same, unique yoga class in every studio across the country.
The companies cited above have, by and large, realized above average returns due to an increase in revenue and reduction in expenses. They focused on developing and growing that competitive edge by continually investing resources into improving it.
You also should make it a top priority to find your company’s X factor and put it to work for you. In fact, failing to develop an edge puts a business in danger because it is easy to get off course. Fortunately, there are unlimited ways to find an X factor. The key is to pull yourself away from day-to-day operations long enough to think more broadly about your business. And whether you find your strength in doing something differently, leveraging IT, finding a niche, being consistent or filling a void, by maximizing your X factor, you can catapult your company into first place.
Erica Olsen (Erica@m3planning.com) is a principal of M3 Planning, which helps companies build market-focused cultures through customer-driven strategic planning, empirical market research, and measurable marketing approaches. She is also an instructor and a writer.
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Topics in this post: Customer Loyalty, executing strategy |