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MANAGEMENT: How to overcome your competitors and always be ahead in the market
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How to overcome your competitors and always be ahead in the market

By Marwan Emile Faddoul (Managing Partner, Qadisha Consulting)

BT 201705 MANAGEMENT 05Sun Tzu once said: "If you know the enemy and know yourself, you need not fear the result of a hundred battles."

About a month ago, I was giving a lecture at one of the top incubators in China. The lecture was presented to entrepreneurs and startup companies on product development and integration. During my speech one of the audience, William, a young entrepreneur who is running an e-commerce startup in Beijing asked: "Marwan, what are the best strategies to beat our competitors?" An interesting question that takes hours to answer, yet because of my limited time I told William and the rest of the participants that I will briefly share the top strategies that must be applied to always stay ahead in the market.

First and most importantly, you must know yourself, your numbers and your competitors.

BT 201705 MANAGEMENT 02You can be surprised how many people working in a company don't know what their company actually does and what is their company's vision and value. Even CEO's and owner of companies find themselves not being aware of their strengths and weaknesses and not having a clear view on where they want to go. It is important to take a step back every now and then and list all the positive and negative things that your company has along with where you want to go and what you want to achieve over the coming 2 to 3 years. Moreover, you need to know the critical numbers that can either make or break your business, you need to identify them and then commit yourself to tracking and improving them. The essential numbers that startups should track are:

(1) The ACV (Average Customer Value) - This refers to how much money the average customer spends with you over a given period of time.

(2) The CPA (cost per acquisition) - This is your cost every time you acquire a new client.

(3) The ROI (return on investment) on marketing campaigns.

(4) The Break even - This is the volume of sales you need to cover the cost of making sales.

Note that for your internal diagnosis it is recommended to ask for outside advice. Why? People within your business are too focused on execution to observe most market changes. Outsiders can point out what the market is looking for and how you should adjust accordingly to be a stronger competitor.

Despite knowing ourselves, we need to know our competitors. This can be done by attending conferences and events that our competitors visit and by tracking their progress online especially through their website. Most importantly this can be done by preparing a questionnaire and collecting data from our regular customers. In principle when buyers purchase a product they ask for quotation from different suppliers. Our best customers can help us identify our competitors' advantages and disadvantages and eventually give us information on how to develop better strategies to beat them.

Second, focus on service.

BT 201705 MANAGEMENT 04There are basically 3 key areas to focus on when choosing a competitive advantage.

First is to offer a superior quality than others. Second is to offer the lowest prices, and third is to offer unforgettable customer service.

Most of the times, it is not so easy to measure up well on all the three key areas. However, it's important to include service in any of the combinations you want to focus on. Why? The other two forms of competitive advantage (quality or price) can cost you a lot and often customers can choose otherwise.

There's always an alternative to quality. If you focus on only offering the highest quality at a premium price, customers will scout around for a lower quality at a cheaper price.

There's always an alternative to price. If you focus on offering the cheapest price possible it will require that you find a way to drive down your cost to the barest minimum. This can turn out in form of low quality products or services and customers will start to complain.

So what do you do?

BT 201705 MANAGEMENT 03Pick either of the two, price or quality, as your competitive advantage and complement it with service. Without the element of service in your competitive strategy you can never deliver happiness to your customers. People may not remember how great your product or service is, they may not remember how much you made them pay but they will never forget how you made them feel.

Additionally, it is possible for your competition to copy your products or services but they cannot copy the way you treat your customers and the spirit and attitude of your workers.

Third, make sure that you satisfy existing customers.

hl 04It could cost 20 times more to get a new customer than it would cost to retain an old customer. Customers are very expensive to attract and that is why smart businesses focus on a Customer's Lifetime Profitability (CLP) rather than on a one-off purchase.

This implies that smart businesses place more emphasis on building an enduring relationship with their customers rather than on making a sale. They have realized that it is wiser to have their customers for life rather than having them for a while.

Why? It is because your greatest success in business will come from the number of repeat purchases that you're able to generate from your loyal customers. This is how the concept of relationship marketing came into being, building a long term profitable relationship with your customers.

I told the audience that we have a saying in our company: "transform every customer into a friend by caring first about their life before asking for their money and it will be hard for any competition to steal them away!"

In our company we didn't just talk 'to' our customers; we also talked 'with' them through periodic customer satisfaction surveys that we conducted, through gatherings, through dinners, holidays and even while playing tennis with them. Talking to your customers is a good thing but talking with your customers is a great thing.

Why? It is because talking with them helps you to better understand them which in turn would help you serve them better.

BT 201705 MANAGEMENT 01Finally, be innovative.

Even if you are dealing with your closest friends, they will no longer have cause to deal with your business if it is not innovating. Innovation brings excitement to the marketplace and customers like excitement. Take time to study the reaction of people whenever a company is about to launch a new product, service or brand, and you would be thrilled at what you discover.

hl 05If you take for example, Urban Outfitters, the American multinational clothing corporation, it hires artists rather than analytical business people to manage its stores. Because it hires people with strong aesthetic sensibilities, the company can give them unusual freedom in how they shape the interiors of the stores. If a manager sees an old wooden crate on his way to work and thinks it would look good in the men's section, he can bring it to work and put it on display.

By making these seemingly innocuous and naive human resource decisions, Urban Outfitters has created a powerful, disruptive force. Traditional clothing retailers won't give their managers such freedom because they hire analytical business school students, not quirky design and art school graduates. As a result, every Urban Outfitters store looks a little different while every competitor's store looks the same.

In conclusion, because of this innovative strategy, the national retailer Urban Outfitters has increased its revenue by 500% over the last 10 years, expanding to nearly $3 billion today from less than $500 million a decade ago.


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