Honest Marketing

How to Identify Your Unfair Advantage

• Honest Podcasts • Episode 48

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Today's dynamic market demands more than just being another player; uniqueness is now a critical factor more than ever.

Richard Rumelt, in his influential book "The Crux: How Leaders Become Strategists," emphasizes the power of uniqueness.  Your unfair advantage isn't just advantageous; it's an indispensable strategic lever.

Join me in exploring how to harness your distinct strengths to elevate your business.

This episode isn't just about theories; it's about practicality. I break down the areas of information, position, and efficiency, and discuss how each can give you that coveted unfair advantage. From proprietary knowledge and expertise to establishing your reputation and brand, we explore the various strategies you can use to leverage your unique strengths.

By the episode's close, you won't just comprehend the unfair advantage concept; you'll possess a roadmap to effectively identify and leverage your distinct strengths.

The pursuit of your unfair advantage begins now. Don't miss out—make sure to tune in for transformative insights!

Specifically, this episode highlights the following themes:

  • Identifying your business's unfair advantage
  • Leveraging information, position, and efficiency
  • Strategies and case studies for each area

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Want to give your podcast the boost it needs to stay ahead of the competition? Check out honestpodcasts.com and take the first step toward achieving your podcasting goals!

And if you have a guest in mind who you think would be a great fit for this show, drop me a line at hello@honestpodcasts.com. 

All right. In business competition, one cannot expect to make a profit without some source of advantage. That's a quote from Richard Rumelt's newest book, the Crux how Leaders Become Strategists. And in this episode, we're going to to break down three areas where you can find your business's unfair advantage, making sales and marketing a whole lot easier. Welcome back to The Honest Marketing podcast, where you learn proven strategies to grow your business without selling your soul. I'm your host, Travis Albritton, and today we're talking about how to find your business's unfair advantage. And you may be saying, well, Travis, that doesn't sound very honest. Where I would argue that it's probably the most honest thing you can do. Assessing your company, looking at the landscape of where the opportunities are, where the threats are in your industry, in your niche, and figuring out what is it that you bring to the table that's super unique? So that way you can stand out in a crowded environment. And at some level, we're all competing with someone. Even if you get to this place that Netflix is at, where now they're competing against sleep, everyone has a competitor. Everyone has something that is drawing attention or resources or potentially business away from you. And so if you're able to identify where you hold an unfair advantage compared to other businesses that can serve your clients, your customers, the better you're going to be able to speak into those things and really elevate your business and the minds of those prospects. So let's break down each of these areas. We're going to talk about each area in particular, what it is, and then talk through some strategies that you can use to lean in if you feel like that's an area where you have an unfair advantage. And we'll talk about strategies and examples and case studies as we go through each of these. But the first area where you want to look for an unfair advantage, and this comes from the book The Crux, is information. So area one is information, and that is knowing something that others do not. Some people would call that proprietary information, but it could either be know how, it could be having a skill, it could be having a patent, some piece of the puzzle that is unique to you that is not common knowledge, that's not on Wikipedia and that other people don't have and can't easily replicate. So if you feel like within your business and within your company, you have a lot of experience, you have a lot of senior leadership or senior workers that have a lot of experience, have a lot of wisdom in the field that you're in, this can become a really compelling unfair advantage where when a prospect is kind of sizing up your company versus another. If you're able to highlight the amount of unique wisdom and experience that you have depending on your client and what they value, and we'll talk about how to choose which area to lean into towards the end, then this could be really valuable. But on a strategy level, how can you make information an unfair advantage regardless of how much experience you have in a particular industry or vertical? And there's two different ones, there's two different ways you can take basically the same strategy. And ultimately what we're trying to do with information is create a new niche, a new vertical, a new industry, or a subset of that industry. And you can either do it by coupling or decoupling. So let's define what these words mean. So coupling is bringing together multiple domains to create something new. So this is where you take your expertise as a dog walker and your expertise doing mobile app development. And you create a mobile app where people can look for dog walkers. That would be an example of coupling. You're taking two domains, two different sets of expertise and bringing them together to create something new. So an example of this would be talent agencies for social media influencers. So those are two very different sets of expertise. If you're going to become a social media influencer or grow a following on social media, then that is one skill set. If you then are a talent agency, basically an agent that is working on your behalf to secure sponsorships and brand deals and things like that, that's an entirely different domain that's separate from growing your Instagram account. And so if you have both of those skill sets, you can bring them together to create a coupled vertical or niche where you are a talent agency that works specifically for social media influencers. So you've created something new, something that didn't exist ten years ago and that's exactly what people have done with social media influencers. The opposite of coupling would be decoupling or specialization. So that's where you specialize in one piece of an industry to create dominance. So if your business is in a particular industry where most companies wear lots of hats, then this can be a great opportunity for you. So for example, the broad industry that my business Honest Podcast is in is in digital marketing. And there's all kinds of different kinds of digital marketing. There's the traditional SEO website development, there's content marketing, there's paid ad campaigns. So there's different things and features that a lot of marketing agencies will have, but for the most part, they all basically do similar things. So a decoupling example would be choosing one particular feature and becoming the best at that one thing and becoming known at that one thing. So this would be going from a digital marketing agency that does everything from websites, to SEO, to content marketing and blog posts, to paid Facebook ads campaigns. And you are just specializing in we are a TikTok marketing agency for Fortune 10,000 companies, like anywhere in that large to mid cap size. And that's what we're going to do. That's all that we do. You ask us about blogs. We don't do blogs. We only do TikTok. And what that allows you to do is to create an unfair advantage. Because the information that you consolidate when you specialize, whether it's the people that you bring onto your team or how you market yourself, makes it really obvious and evident that you have a specialization in a particular need that people see the value in paying to solve. And so that would be how you would use a strategy of coupling or decoupling to lean into this unfair advantage of having information or things that you know that other companies don't. Okay, so that's area number one information. The second area where you can find your business's unfair advantage is in position. And this is having a reputation, a brand or an existing market system, for example, a distribution or supply chain that others cannot readily imitate or push aside. So basically, does your business have staying power? Is it entrenched in some way? And can you create that entrenchment if you're not there? So an example of position would be a really big company that's been around for a long time and has a lot of momentum and is a safe choice. So if you think about, especially in B, two B with Enterprise Software solutions, salesforce has position that is an unfair advantage that they have compared to other sales management systems. And so this can become an unfair advantage if you execute one of these next strategies. Effectively. The first strategy to create an unfair advantage in position would be market saturation. So market saturation is where you are everywhere, all the time, in the minds of your prospects and your clients. You've just completely saturated their environment. So you do this with targeting and retargeting campaigns. So you drive cold traffic to your website, and then you make sure that you have pixels set up. So that way you have retargeting campaigns. You can even set up retargeting campaigns within the platforms that you're advertising on. So if you run a Facebook ads campaign, you can run the first campaign to just be showing a video about a case study or somebody that uses your product. And then you can tell Facebook, go back to everyone that watched more than 3 seconds of that video and show them another ad. And so you create a subset of an audience that you can then retarget at a higher frequency to create this market saturation effect. So it's not that you're literally everywhere, but that you seem to be everywhere with the people that you want to do business with and with the people that you want to be known by. You'll see this with content marketing on LinkedIn, where people that see LinkedIn and their profile on LinkedIn as a valuable asset to their own personal brand into the growth of the company that they're leading or running or helping to build. They'll just create three, four, or five posts a day because the friction in doing so is so low. And then if you're following this person, then you roll into LinkedIn, you start scrolling down your feed and it seems like every other post is from this person. And if they are speaking about something that you're interested in, or on a topic that is valuable to you, then when you're in the market for that product or service, who's going to be top of mind? It's going to be that person. Because they've achieved market saturation of you, they have saturated your market. Another thing that you can do to be everywhere is to sponsor industry events and conferences. So this is where whenever you identify places where people in your industry are congregating or spending time or networking or connecting, be there, be very present, be very loud about it, and then you can create again that market saturation effect. So that Way the Perception of you is that you Have An Established Brand that's entrenched and has Staying power that Is A Safe Business To Do Business With, especially If You this Is Especially True if you're in a b to B or Enterprise sales situation where the clients that you're reaching out to, they want to know when they make a decision to work with you, that they're not going to have to go back to their boss six months from now and say, hey, that company didn't work out. They went under. They didn't deliver. They don't want to have to do that. So the more that you can position yourself as a safe entrenched player in the space, the better. The second strategy that you can use to achieve a better position or an unfair advantage in this area is network effect. Network effect. And that is where the more people that join a quote unquote network, the more valuable it becomes. So think about Facebook for example. The more people that use Facebook, the more valuable Facebook is to people. If you join a social media network and you're the only one that you know on there and it's just a bunch of strangers, that's not very valuable to you. But if you join a social media network that has all of your high school and college classmates and you're a media and extended family and your neighbor down the street, and there's all these different ways you can connect with people, that social media platform is much more valuable to you personally because of the size of the network. Another example would be Airbnb, where there's actually a network effect on both sides of it, that the more people that list on Airbnb, the more valuable Airbnb is as a place to find rentals for people looking for a place to stay. But then on the flip side, the more people that you bring in that are looking for a place to stay, the more valuable Airbnb becomes for somebody who's looking to rent out their space. And so you actually have a network effect on both sides. And so the reason this is really great for Airbnb is the more that they can bring people into this network, into this ecosystem, the more they establish an entrenched position that's hard to replicate. Again, most of these strategies and most of these areas are about finding opportunities to do something that other businesses or other players in your space would have a hard time repeating or imitating. And so with Know, outside of VRBO and a couple of other rental sites, they're really like the biggest name in town when it comes to renting your own space. Whether you're looking for a unique place to stay when you go travel somewhere, or if you are looking to make some extra money, passive income if you consider short term rentals passive income if you're a property owner. Another example of how to create your own network effect is something that Dropbox did when they first launched. So Dropbox at the time did something very innovative where in order to get lots of people to sign up for their service, they had this deal where if you were a user and you invited your friends to join Dropbox using your unique link, that you would get extra storage space. So if you got two gigs for free and you invited a friend to join Dropbox and share files with you and they joined, maybe it went up to two and a half gigs of space. And so it didn't cost you anything to share that referral, but you gained something in exchange. One way that you can turbocharge this is creating two sided referrals where if somebody uses a link, a unique link to them and their account, they either get a discount or money back or a prize or an Amazon gift card. But then also the person joining that uses that link gets something as well. So if you can make it so the person making the referral and the person accepting the referral both get something valuable, then you can super turbocharge this network effect strategy. So those are two different ways that you can create an unfair advantage in your industry by essentially becoming the leader, the dominant leader in your space. And then the third way that you can create an unfair advantage is in efficiency. Sorry, I'm going to cough and then restart number three. And then the third way that you can create an unfair advantage with your business is in efficiency. So whether it's based on scale, technology, experience or other factors that others cannot easily attain, so this comes down to execution. So if you can be better at executing whatever it is that you do, then you can create an unfair advantage, either with higher profit margins, being able to drive down cost in order to drive competitors out, or just through other means. And there is a particular strategy that works really well for efficiency, and that is integration. Integration so vertically integrating your business or your supply chain through research and development, or mergers and acquisitions, those are the two main strategies. You either develop the efficiencies in house or you acquire the pieces that you don't yet have in order to create a fully vertically integrated stack. Now, what are all these terms mean? So vertical integration means that you own every single piece of the process. So if you're building an iPhone, for example, then it's not just about owning the software, it's not just about owning the schematics of how you build the iPhone. You would also own the factory that produces the iPhone, but you wouldn't just own the factory that produces the iPhone, you would own all the suppliers that are providing individual aspects of the phone, whether it's the camera or the chips or the battery. Like you would actually own all those factories as well. But you don't just own those factories, you also own the mines, the cobalt and lithium and aluminum mines that are extracting the raw materials to create the components that go into the finished product. So that will be a fully vertically integrated company where you own every single piece of this. And the reason that creates efficiency is because then you own all the profit margin. And so if you don't own the mine, you have to pay the mine for the raw materials. They take a certain margin. They take a certain profit margin from mining that material. So if you can get it for $100, you do it yourself. You may have to buy it from them for $300 because they have to pay for their own overhead, their own people. They want to make money. And so every single piece that you can vertically integrate hypothetically creates better efficiency and better profit margins. And so you're trying to maximize profit not just on a small scale, but over your entire production process. And this works for services as well as product based businesses. And so if you have a business that does copywriting, it will typically be cheaper to bring in house your own copywriting team rather than work with freelancers and contractors. Once you reach a certain scale when you're first starting, it's a great way to get going because you don't have to pay for a lot of overhead, but over time, it'll be more advantageous and more cost effective and efficient to have that person integrated into your team. So who's a really great example of somebody who does this and creates an unfair advantage with efficiency? Amazon. Amazon is a fantastic example of a company that has leaned into efficiency as an unfair advantage. It wasn't that long ago where Amazon would actually pay shipping companies like Ups or FedEx to ship their products for them, that they would come and pick them up at the warehouse and fly them or drive them and drop them off at your doorstep. But then gradually, as the business grew, they spied an opportunity to build out their own shipping, their own fleet of planes, their own fleet of vans, so that way they could control the costs associated with delivery. And then when they're offering free two day shipping, they know what that cost is and they can bake that into their pricing model and bake that into their business. And so that created a greater efficiency both on a cost perspective but then also you're not competing for space in the van or the plane with everyone else that's shipping with FedEx and Ups. So that would be a third area that you can create an unfair advantage. So which one should you choose? If you're going to identify one particular unfair advantage to look into, which one is the best one for you? So if you are a small and growing business or if you have hit a plateau in your growth, then you're typically going to want to start with information. How do we create a differentiating factor with what we do, what we know and how we do it, or how we specialize in order to create a break from our competitors? Like how do you make it so easy to say yes to you versus somebody else? And if you couple by bringing different domain experiences together or decouple by specializing, you can create a new niche where then you've basically eliminated competition because you're the only one that's there or at the very least you've reduced the number of competitors that you have. If you're in a position where you want to scale and capture market share, then position is probably going to be the unfair advantage you want to pursue. Because if you can entrench yourself as an incumbent in your industry or niche, then that gives you an unfair advantage versus newcomers. And then if you are at a place where you have high costs to manufacture, or if your profit margins are lower and you already have the revenue where mergers and acquisitions and investing in R and D actually make sense on your PNLs, then efficiency would likely be the area that you want to lean into in 2024 to create an unfair advantage. Now, how does this all tie it back to sales and marketing where sales and marketing is simply the story of what your business does, how it helps people and what their next steps are if they want you to help them. That's all sales and marketing is. is building awareness. Sales is closing the deal. And so if you consider how your unfair advantage can position you versus the other businesses in your niche or industry or market, then it makes your marketing and sales initiatives that much more effective. Because when you're telling that story, when you're positioning your brand or your company or you're identifying the right advertising and promotion strategy to get more clients, you can align those things with the unfair advantage you want to gain. And so consider, depending on where your business is and what your goals are for 2024. Which area makes the most sense or where you see the lowest hanging fruit? The best opportunity to align with your growth goals for the coming year and consider how clarifying what you want your unfair advantage to be based on what you already have, then that's only going to make your 2024 marketing and sales plan that much more effective. Okay? Now, if you want to learn more about how to become a master strategist, I do recommend The Crux. I think it's a really good book by Richard Rumelt. It's really tailored for larger companies, so there may be some chapters in there that don't really apply to you very specifically right now, but there are some really good tidbits, and it's a book that I do recommend, and I'll leave a link to it in the show notes if you want to go and pick it up. Well, I hope you enjoyed another solo episode here on the Honest Marketing podcast. Until next week, be honest.