Previously, I’ve proposed that the first step toward creating a competitive advantage is to redefine your market as “a group of people who share a common task they want to get done.”

For example, the market for a traditional city newspaper might be defined as “people seeking to catch up on local news.”

The newspaper’s rivals almost certainly include digital news outlets that also enable people to catch up on local news.

This definition broadens the market and enables you to identify true competitive threats and substitutes, regardless of what product or service they may sell.

The questions leaders must answer are:

• What are the primary tasks our customers are trying to accomplish with our offering?
• Who are the people that want to get these tasks done?
• What is the full range of offerings people are using to get these tasks done?
• Who is our top competition, regardless of the type of solution they offer?

Once you have answered these questions, you are ready to conduct a competitive analysis and discover your company’s strengths and weaknesses.

Cultivating insight

The traditional way to do this analysis is to create a table that lists companies across the top, and the features and benefits that are thought to be important to customers down the left side. Then, each feature/benefit can be rated for “importance to the customer” and “satisfaction delivered” by each company.

The great hazard with this approach, of course, is that this table is internally generated with limited customer input and, therefore, is likely wrong.

Only customers can define what is important to them and why. And only customers have the authority to rate each company for the level of satisfaction it delivers. So it’s essential you get customer input. In many cases, doing this well requires professional expertise but, nonetheless, significant insight can be gleaned from interviewing current and lost customers.

Hearing customer voices

A case in point is my own experience when I was the national marketing and sales manager for a managed behavioral healthcare company. We provided high-end mental health and substance abuse treatment programs to large companies for their employees and families. When I was first hired, the founder and CEO of the company, a medical doctor, was confused about why the company was losing sales to “inferior” programs because he was confident that we were providing the best medical treatment available anywhere, and that we could prove it.

Before attempting to sell anyone anything, I took it upon myself to interview current customers to find out why they selected us. I also interviewed lost customers to find out why they had not selected us and chosen a rival provider instead. The primary decision makers for our services were senior benefits managers. After talking with a few of them, it became clear that they defined “quality” as “no noise,” that is, no problems. Because they were not medical doctors, they did not feel qualified to evaluate the medical quality of the programs and, hence, our program was not perceived as the highest quality. Instead, providers with less rigorous medical standards were winning business from our company because they had superior problem resolution processes.

Once we understood this, we were able to develop processes and procedures to resolve problems more quickly to prevent noise. Additionally, we were able to simplify the complexity of evaluating the medical quality of programs so senior benefits managers could see that we really were delivering superior medical outcomes. These insights were key factors in enabling us to grow the company 500 percent and get acquired.

Whether you do it yourself or hire a professional, establishing a competitive advantage requires understanding your strengths and weaknesses from the customers’ point of view.