Every distributor says they are different because of their service and their people. But those are not differentiators: They are just the ante to play. If you have both, you get to bid. But if that’s your strategy, you’re going to be stuck competing on price.
To gain true competitive advantage, you must create higher profits in two ways: Cost advantages due to your operating scale, productivity or processes, or price advantages thanks to scale with suppliers or mass customization.
You also gain price advantages from making it more difficult for a customer to switch suppliers. If it’s easy for a customer to switch, the dumbest guy in the market will control pricing. Make it harder for customers to walk away by implementing special terms, managing their inventory, offering custom orders or kitting, selling data on product usage, offering specialized support and more.
To gain competitive advantage, you must do something new and not just the same things better. Invest in tools or programs that help you gain a cost or price advantage such as a CRM system, a strategic pricing system, a realignment of the sales force, or the implementation of e-commerce.
If you’re worried about the forces of changes that we’re seeing in the industry – consolidation, the rise of nontraditional competition, the shift in how customers buy – you need to play to win and not play not to lose. Those who are playing to win are not just complaining loudly. They are investing proactively for true competitive advantage.
Read more about refining your competitive advantage: