How to Gain a Competitive Advantage
Competition is fierce in many industries these days. The heightened level of competition is driven by factors such as an increased number of sellers, information availability, and globalization. It’s harder than ever for brands to distinguish themselves from competitors.
That’s why it’s never been more important to gain a competitive edge, which Investopedia defines as creating conditions where a business offers a product or service of equal value that either costs less or is more desirable than its competitors. By doing so, it’s easier for your business to generate more sales and have better profit margins than market rivals.
Here are seven specific strategies you can use to gain a competitive advantage.
1. Analyze Competitors
To begin, you should perform a competitor analysis to determine who your competitors are and what they’re doing to win over customers. You’ll want to examine their product or service, marketing strategies, and sales tactics to get a basic idea of how they run their business. You may also want to look at their website content, what they’re talking about on their blog, and their social media presence to see how they’re engaging with customers.
As you unearth information, use it to gain insights into your competitors’ strengths and weaknesses, so you’ll have a clear idea of what you’re up against. Also, pinpoint any particular opportunities or threats.
Some useful tools for performing a competitor analysis include:
- Search engines;
- Paid ads;
- Trade publications;
- Social media;
2. Establish Competitive Prices
Next, you want to ensure your prices are set to keep up with competitors, while at the same time maintaining a solid profit margin. One of the simplest ways to analyze the prices of competitors is to look at the pricing pages on their website. Many businesses disclose this information freely, making it easy to figure out how much they’re charging on average. If that’s not an option, you can check government sites, resellers and distributors, or use a manual query through Google. Use the search parameters “filetype:pdf” and filetype:ppt” to help streamline this process.
In terms of setting competitive prices, there are three main options. You can set a lower price than competitors, which is viable if you’re able to produce products in bulk at a lower production cost. You can set a matched price where the price is basically the same but you’re able to provide a higher level of quality or have distinguishable features that set your brand apart. Or, you can set a high price if your product or service has features or benefits that your competitors can’t offer.
This third option tends to work well for luxury brands, especially when customers associate spending more with getting higher quality.
3. Build Relationships With Customers
Customer trust is essential both for distinguishing your brand from competitors and for achieving longevity. According to the 2019 Edelman Trust Barometer Special Report, “A major consideration for brand purchase is now ‘I must be able to trust the brand to do what is right,’ at 81 percent.”
There are multiple factors that help a brand build trust, but one of the biggest is simply treating customers well. This begins by offering polite, prompt customer service with minimal friction. Interactions throughout the entire lead funnel should be painless, with customers who walk away feeling positive about their experience.
It’s also vital that you stick to your word and business guarantees. This can include honoring warranties and return policies, as well as creating loyalty programs through which customers are rewarded for their patronage.
4. Create Value
It’s also crucial that consumers understand the inherent value behind your product or service. If they don’t see the value, you’re already behind, and it’s going to be an uphill battle from the start. So, how do you create value?
Develop a unique value proposition (UVP), which, according to Unbounce, is “a clear statement that describes the benefit of your offer, how you solve your customer’s needs and what distinguishes you from the competition.”
For example, Uber’s UVP is, “The smartest way to get around.” Slack’s is, “Be more productive at work with less effort.”
Next, place your UVP in prominent locations, such as your website homepage, on landing pages, and social media accounts. If you are going to pay for lead generation, you need to be prepared to quickly speak to the needs your inbound leads express.
Also, explain the issue that your product or service combats. What particular pain points does it solve? How does it make your customers’ lives easier and more convenient? Why should customers buy from you rather than your competitors? These are some specific questions you need to address. By clarifying these points, the value should become obvious, making prospects feel more confident buying from you.
5. Utilize Various Marketing Approaches
And of course, you need to effectively promote your product or service. While there are numerous marketing approaches you can take to get your brand out there, there are three, in particular, to focus on in 2020.
Search engine optimization (SEO) is about creating web content based around targeted keywords your audience naturally searches for. The goal is to rank for keywords to drive organic search traffic to your website. Most SEO projects cost somewhere between $750 to $2,000 per month in 2020.
Social media marketing focuses on building your digital following and connecting with customers on top networks like Facebook, Instagram, YouTube, and Twitter. With nearly four out of five people having at least one social media profile, social media marketing has the potential to result in massive brand exposure. On average, businesses that outsource their social media marketing spend around $4,000 to $7,000 per month.
Finally, with email marketing, you build a list of engaged subscribers and send them targeted promotional materials. The average return on investment is $42 for every $1 spent.
The effective use of technology is a trend among many of today’s most successful companies. Here are some types of technology that can be especially helpful for gaining a competitive advantage
- Customer relationship management (CRM) software to manage customer interactions and improve relationships;
- Collaboration tools to streamline communication between team members;
- Cloud-based tools to store information digitally;
- Analytics to identify patterns in customer behavior.
7. Evaluate and Adjust for Convenience
Just like any business plan, gaining a competitive edge for your brand isn’t a one time deal. It’s something that requires consistent evaluation and adjustments as time goes on. Therefore, you should get in the habit of routinely assessing the progress of your strategy and looking for ways to continually improve.
Ideally, you’ll partner with an expert that understands the ins and outs of this process. They can help you gain an overarching perspective on how you’re doing from a competitive standpoint and provide helpful suggestions to accelerate your progress.
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