Do You Have Competitive Advantage That Matters?
Building a unique edge over your competitors in ways that really matter to key customers can be challenging to achieve, and even harder to sustain. However, the benefits of achieving a competitive advantage are substantial. When effectively managed, it can lead to increased sales, improved customer lifetime value, and enhanced margins and profitability.
In fact, companies that are customer value focused, in ways that surpass their competition, are up to 60% more profitable.
The 3 Circles Premium Growth Strategy framework offers a simple yet powerful way to build competitive advantage, that is centred on what key customers value the most. By following this proven approach, you can rapidly align your team, enhance the value you provide to customers, identify opportunities for innovation, and reduce wasted resources that have minimal impact on customer decision-making.
Align your team by applying these five steps to develop a growth strategy that is customer value centred and helps build a sustainable competitive advantage.
1. Align your team on your Growth Context
Start by aligning your team on the Growth Context for your specific product/service. Define what you are wishing to grow (e.g. sales volume, value, customers), by how much (relevant metric), over what period, for what type of customer (mindset and profile), against which competitors.
2. Understand what matters deeply to the most valuable customers
Once you have defined your target customer, the next step is to identify the desired value (choice factors) they consider when making a purchase decision. Consider the rational and emotional benefits the customer is seeking to satisfy. Make sure you thoroughly understand what matters deeply to the customer based on their mindset when purchasing from you or your competitors. Rank these choice factors by importance, ensuring they represent the entire marketplace, not just your strengths. The most important factors for your customer will be placed in the orange circle.
3. Understand how they perceive you proposition versus competitors
The next step is to understand how customers perceive your offering in relation to each of these factors. Remember, their perception is their reality, shaped by a myriad of influences such as your marketing, customer reviews, and previous brand experiences. Compare this perception with how they view your competitors offer on the same choice factors. This comparison allows you to map where each choice factor stands in the minds of customers.
4. Determine your strategic priorities based on available skills & resources
Once the choice factors are mapped, you can make informed strategic decisions based on your skills and resources to build and defend your competitive advantage. You will also identify innovation opportunities by understanding unmet customer needs and discover where you can convert points of parity with competitors into more advantage. Additionally, this process reveals areas of investment that may be less relevant to customers, offering opportunities to redirect or save resources.
5. Continually align internal beliefs with customer reality
Research shows that, on average, internal team assumptions align with customers’ actual priorities and brand perceptions only 48% of the time. This means that for many organisations, more than half of their strategic decisions aimed at winning and retaining customers are mis-directed. To close this gap, it is crucial to continuously engage with customers and compare these insights with internal team assumptions. By doing so, you can constantly refine your growth strategy to better reflect what matters most to your current and prospective clients.
Premiumisation Partners worked closely with Professor Joe Urbany, who created the 3 Circles Growth Strategy framework, published in 2012 in his highly acclaimed book ‘Grow by Focussing on What Matters - Competitive Strategy in 3-Circles.’ The combination of this thinking, AI and NLP supported choice analytics research, and aligned teams can rapidly create growth strategy that leads to competitive advantage, and profit potential.
Start by asking your team to complete a quick customer value diagnostic that will identify your current strengths, areas for improvement, and where misalignment is undermining your competitive advantage, and customer lifetime value.