Put a CEO on the spot and ask what makes the company different, and the answer usually comes fast. Service, people, relationships. What comes slowly, if it comes at all, is the evidence. Do customers actually say that? Does anyone check?
Jaynie Smith has spent decades asking those questions. She is the CEO of Smart Advantage, a consultancy in Fort Lauderdale. Her research covers 25 years, 250 companies and 30,000+ customer interviews. What she found, again and again, is that companies talk confidently about their differentiation without much proof that buyers agree. For anyone serious about creating competitive advantage, that is the first problem to fix.
What counts as an advantage
Smith’s definition is short: a competitive advantage is the reason people do business with you. Notice who gets the final say. It isn’t management. A company can be proud of its engineering or its responsiveness, and that makes it a strength. It only turns into an advantage when buyers weigh it in a purchase as a top buying value and the company beats the alternatives on it, and can prove it with their performance metrics. Smith calls these CRIs (Customer Relevant Indicators)
The gap matters in daily work. Picture a website that opens with “best quality” when every competitor claims the same. Or a sales team that spends twenty minutes on a company milestone the prospect never asked about, such as we have been in business for over 50 years. When a company can’t say what it does better in terms a buyer cares about, the conversation drifts to price. Smith makes this argument in her book Creating Competitive Advantage (Doubleday, 2006). It’s been in print for 20 years!
Loose wording adds to the trouble. “Great customer service” can mean fast callbacks to one executive and free shipping to another. Smith has pointed out in interviews that a label like that hides several different behaviors. If nobody can define the claim, nobody can measure it. And a claim not measured is hard to defend when a skeptical buyer pushes back. This is where business differentiation usually falls apart.
What customers know that insiders don’t
Everyone inside a company sees only part of it. The CEO sees strategy. Sales hears the objections. The people on the warehouse floor know what delivery really takes. Nobody has the whole view.
Customers decide using their own list of customer buying criteria: how fast a vendor responds, how accurate the order is, how much the supplier knows, how much risk they take on. Proper customer research asks everyone the same questions, reaches enough people to mean something, and works best when the interviewer has no stake in the answers as in double blind research. What comes back is comparable. You can see which attributes matter most, and now can assess your own performance on those values.
The numbers behind Smith’s work are from real companies, and they shouldn’t be read as one single study. They describe a pattern across many industries and all size companies. Her own website presents her as a competitive advantage expert with 25+ years of consulting behind her.
Four blind spots
Leaders guess wrong about buyers. Smith’s research reports that 95 percent of businesses do not know their customers’ top buying criteria. That is her finding about the companies she has conducted customer surveys for, and it reveals top buying values from customer vs. internal team guesses on what is valued most.
Most companies have no metrics for what matters. Suppose the leadership team did know the top buying criteria. Many would still have nothing to measure them with. Companies track what’s easy to count, like call volume, throughput and sales by region. A firm can follow a dozen internal numbers and not one of them touches the reasons customers buy. Smith calls the alternative Customer Relevant Indicators. These are performance metrics built around what customers have shown they value. To be useful, one needs a clear definition, data people trust and a visible link to a buying reason.
Executives don’t agree with each other. Smith says there is little to zero agreement inside most companies about their own competitive advantages. Try it yourself. Ask the CEO, the head of sales, the marketing lead and an operations manager separately, and compare notes. When the answers differ, you get mixed messages in the market: marketing promises speed, sales discounts, and operations is told to cut cost. Customer evidence helps because it replaces a debate over opinions with a set of facts everyone can read.
Key metrics are infrequently audited. Many companies haven’t audited their important performance measures, Smith says, and she has found most of them are sitting on landmines or goldmines. A landmine is a hidden hazard in the data. Think of one term defined three ways by three departments, a spreadsheet nobody has updated in years, or an average that conceals a steady decline. A goldmine is the reverse: a strength the company has but doesn’t recognize, perhaps a measure where it beats competitors on something buyers rank highly, buried in a report nobody reads.
These problems reinforce each other. Leaders who don’t know the buying criteria pick the wrong metrics. Without shared evidence they argue. And with no agreement on what matters, nobody audits the data.
An example
A regional equipment distributor believes fast delivery is its edge. Look closer and three departments report three different on-time rates. One counts from the order date, another from the ship date, and the third measures against the date the customer requested. The company has been promising a figure it can’t reproduce.
Now suppose customer research shows buyers care more about technical advice while choosing equipment than about speed, and the distributor’s field engineers solve those questions on the first contact more often than anyone has tracked. The company has been sitting on a real strength and advertising a shaky one. Once both facts are known, the website, the sales pitch and the dashboard would all need to change.
Turning findings into decisions
Evidence like this can affect most parts of a business, but nobody should expect a guaranteed financial return from it.
A website should open with the attributes buyers rank highest and the company can document. Sales presentations can start with proof rather than adjectives. Marketing spend can follow the criteria that really drive choice. Product and service teams get a simple test: does this improve something customers value? Operations can add dashboard measures tied to those priorities, and leaders can brief the whole company from one set of facts. A sound competitive advantage strategy also helps with resource decisions, because money going into a supposed strength can be weighed against how much buyers care about it.
A seven-step approach
- Write down what leadership believes about why customers choose the company, with each department answering separately.
- Find out which buying attributes matter most to real customers and prospects with some solid, double blind research.
- Test your beliefs against credible customer research and mark where they differ.
- Audit the definitions, reliability and usefulness of the metrics linked to those attributes.
- Line departments up behind the differentiators the evidence supports.
- Turn the findings into specific sales, marketing and operations actions, each with an owner.
- Come back to the evidence regularly, because customer priorities change.
Where AI fits
More companies are now pouring their data into AI tools, and the tools use whatever they’re handed. If definitions are inconsistent or records are incomplete, the output can sound polished and still rest on weak numbers. Smith makes the point that AI inherits whatever discipline a company’s systems already have. Practically, that means agreeing on definitions and checking data before automating any decision, with people left in charge of questioning the results.
The advantage you can prove
Anyone can claim an advantage. Proving one takes work: learning what customers value, measuring performance against it with data that holds up, and getting the leadership team to act on what the evidence says. Some companies will find that a favorite strength barely registers with buyers. Others will turn up strengths they had overlooked. Both outcomes are more useful than the assumption that came first.
