Photo taken by David Stelzl
A couple of attendees emailed questions regarding competitive advantage…following Wednesday’s Cisco sponsored webinar. I thought it might be helpful to address this here:
(Q) Why is Operational Efficiency or Risk Mitigation easier to sell than Competitive advantage?
First, it’s important to note, I did not say you can’t sell using competitive advantage as your value proposition, but rather, operational efficiency and risk mitigation are preferable; at least to the average sales person. Here’s why…
Companies can use technology to compete, however this type of advantage is often short lived unless the company deploys some type of unique patented technology; something their competition can’t go out and buy tomorrow. More often than not, technology driven competitive advantage is really an operational efficiency gained by the perfection or automation of some process. So in the end, it’s really an operational efficiency sale, that in-part, delivers competitive advantage, in addition to delivering cost efficiencies (which their competition will either adopt or find another way to accomplish). The technology sales person’s ability to foresee such an advantage in a complex manufacturing situation (for instance) is not so likely. (Again, speaking of the average rep calling across many verticals).
True competitive advantages are seen when a larger company has more buying power, putting others out of business by squeezing their margins such as is the case with the Home Depot stores competing with smaller hardware stores. Wal*Mart does this by putting highly efficient distribution processes in place that are unaffordable by the average mom and pop store in your local area. While Wal*Mart may have some unique applications in place, their infrastructure isn’t really unique, just unaffordable to smaller companies. The process itself is key, and unique as it is cost prohibitive to the smaller company.
Operational efficiency in itself may offer competitive advantage as seen above, and the seller can use this to gain momentum on the purchase, but the efficiency is more easily articulated by the seller. To go down the competitive advantage road with technology sales may require a deep understanding of the vertical’s market pressures. Perhaps if the sales person has come out of that industry, they’ll have success with this.
Competitive advantages not tied to operational efficiency, which stand alone as a true advantage that cannot be duplicated, may come in the form of location such as the best corner owned by McDonalds, exclusive distribution of a product, or patented technology such as the iPad and Mac OS. These advantages are not easily matched. Will Dell come out with a better laptop than Mac? Probably not (in my opinion), however they certainly have a less expensive one. Note how first to market has earned Apple 90% of the market on tablet computers! This won’t be easy to steal. This is hard to match when selling commodity goods which are largely over distributed in the VAR/Reseller world.
© 2011, David Stelzl