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I’m amazed at how many brands and agencies think their competitors are only the ones who operate within their category. I’m even more amazed that brands and agencies tend to focus on one competitor as the one to watch.

Toyota vs Honda.

American Airlines vs Delta.

Colgate vs Crest.

Clearly, brands love to create this one enemy that will focus energy of the team and makes it easier for the public to create a faux war of brands: (Who is better? Michael Jackson or Prince?) While I see the benefits, I tend to believe that it’s not good enough to know who you consider as a competitor. You need to understand who considers you as a competitor.

Barnes & Noble vs Borders

While both brands were engaged in an intense turf war, Amazon stole their lunch. Forcing one into bankruptcy and the other brand to wonder: How did that happen?

Toyota was regarding GM as their biggest competitor. Honda saw Toyota the same way. Who’s outselling Honda now? Hyundai.

All the big networks were engaging in a battle for viewers while cable networks started to develop their own drama shows. Oh, and this little company called Netflix changed the game even more dramatically.

Your competition is anything that causes your customers not to buy your product/service. It’s anything that erodes or explodes your competitive advantage. It may not even exist today, but it could mean you won’t exist tomorrow.

In the end, you need to focus on improving your product/service every day and ensure that your source of competitive advantage remains robust and relevant. If you focus on the ‘competition’, you may forget to focus on your customers, and it is they who ultimately manage your brand. Brands often make choices that are more influenced by what their competitors are doing rather than what their customers want. Too many people regard differentiation as being different from their competitors, but it’s not much use if in your quest to forge your own identity, you do things people don’t want, don’t desire, don’t buy.

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FoE Book Cover

This insightful book argues that success of any enterprise is built on a foundation that goes deeper than what we do and how we do it. In Firms of Endearment, terms like purpose, meaning, appreciation, joy, and yes, even love are not only acceptable, they are critical in the corporate language and culture. And they are not reserved for internal use or marketing efforts; these attributes are applied to all stakeholders, including customers.

Some people might think it’s about a 60’s revival or some do-gooders. Exactly the opposite is true. The book features an in-depth study of firms that have outperformed  their peers and the market as a whole. Publicly traded Firms of Endearment enterprises returned 750% over 10 years while the S&P overall provided a 128% return. Even more interesting, these companies provided a 205% return, while the S&P lost 13%. We’re talking about household names like Amazon, Best Buy, Google, Honda, IKEA, Patagonia, Timberland, Whole Foods – just to name a few.

Why do emotional connections between stakeholders make such a difference?

It’s fairly straightforward. Think about the relationships in your life: Some are rewarding because you really feel appreciated. Some are pure transactions. Interactions often drain energy while feeling appreciated gives us more energy. And they encourage us to have more interactions with the brand. Same is true when your turn it around: You feel more energetic when you are being appreciative of what you are doing and whom you are interacting with than if you were feeling dread about it.

The focus on emotional connections decreases the turnover rate, increases internal and external loyalty and, ultimately, improves profitability. Companies have to do better than just declaring people are their most important assets. They have to live it.