In business, differentiation is a means to an end, but it shouldn’t be the goal itself. I have seen the pursuit of uniqueness without consideration for other factors blind executives to other lucrative opportunities. If another company does something well, that doesn’t mean no one else can use the same idea — the most successful companies routinely appropriate best practices from other businesses to maintain an advantage in the market. To glean valuable insights from others, ask yourself the following questions:
1. What are my key value propositions, and how do they compare to others? If consumers are choosing another brand over yours, conduct research to determine where the value gap lies. If this reveals that others in your industry perform well in demographics you don’t target, consider whether expanding into that market would benefit your bottom line.
And don’t limit yourself to your industry, either. Look at comparable companies across verticals, particularly if they perform well within a similar target demographic. I operate in the luxury space, so I look to companies like Ritz-Carlton for inspiration. Even though I don’t deal in hospitality, I’ve learned a lot by studying the way Ritz-Carlton trains its new managers and teaches its frontline employees to conduct themselves with customers.
Remember, too, that failure can present invaluable learning opportunities. Look at businesses that have failed, whether in total or in specific pursuits, and consider their cautionary tales before attempting similar challenges.
2. How satisfied are customers? Customer satisfaction is one of the most important key performance indicators in nearly every industry. Research from the American University of Sharjahfound a positive association between customer satisfaction and financial performance, which should come as no surprise to CEOs who value repeat business.
Distinguish between people who choose a brand once and people who routinely exhibit brand loyalty. Don’t reinvent your offering and jeopardize a long-term advantage if your organization outperforms the market in repeat customers versus winning more one-time buyers.
Tiffany & Co. exemplifies the value of customer loyalty. In NetBase’s “Social Media Industry Report 2016: Retail Brands,” Tiffany outperformed even Amazon in customer passion and positive sentiment. The company might win more customers with a different strategy, but its current approach remains successful in preserving the value of its brand.
Consider customer satisfaction, but look at multiple metrics before you throw out your current tactics in favor of someone else’s. What looks good on quarterly reports isn’t always sustainable.
3. How do our benchmarks compare? Identify the KPIs that matter most to your business, and compare them to those of similar companies in both your industry and across other verticals. For instance, I look at five key metrics that are closely tied to financial performance in my industry, with a focus on quality over quantity.
Ignore vanity metrics in favor of numbers that directly affect your bottom line. If other companies value metrics you don’t, find out why. They might be mistaken, but they might also know something you don’t.
And when you identify discrepancies, don’t just take note and forget them; act on them. Research published in Harvard Business Review found that only half of companies use the competitive intelligence they collect. You can choose not to change course, but if you don’t look at the data, you’ll never know whether you need to course correct.
Different doesn’t always mean better, and other successful companies are smart. Use their strategies to augment your own operations. By asking these questions, you can plug holes in your strategies and identify opportunities you might have otherwise missed. Studying businesses across verticals may, in fact, be your best source of inspiration.