Don’t confuse the two. To be different does not mean differentiating. Being different is a single characteristic; differentiation is a process involving growth. One helps you sell more to your prospects and clients, the other makes you explain more to your prospects and clients—”Why are your products better than your competitors?”
Semantics? Yes, and as you know, semantics do matter. The reason it’s important is this: if you are only different, you obtain none of the advantages that differentiation offers. Worse than that, you may allow yourself to believe that you have differentiated your company, when in fact, you’ve just given your competitor more ammo.
How to get into differentiation?
The textbook stuff on this usually focuses on how to differentiate from the competition. That’s a good place to start but how you extend it to your customers will determine your success and whether you’re talking more or selling more. Here’ a few points to identify differences and how to get to differentiation.
What makes you different?
Typically, you’ll start by looking at your company in comparison to your competition and finding out what it is you do better, what you do that they don’t or what they may do better than you. When you do this, you’ll probably wind up with characteristics in five categories:
You’ll find differences in products
This is also called product differentiation. Perhaps yours is pink and everyone else’s is green. Maybe yours is faster, bigger, stronger, runs longer, weighs less. Make a list of your product’s characteristics that are different from your competitors.
You’ll find differences in customers
You may know your customers better, you may have more, larger, smaller, more international, longer relationships, etc. Make a list of characteristics about your customers that are different.
You’ll find differences in service
Customer service, delivery times, tech support, friendliness, extremes you’ll go through to solve a problem. Make a list of these differences.
You’ll find differences in price
Low end, high end, middle of the road. Make a list of price points.
You’ll find differences in brand
This is called brand differentiation. Better name recognition, more co-branding efforts, more mind share in the target audience.
Differentiation in regard to customers
Before you decide which area to differentiate in, you need to figure out which of these characteristics are important to your prospects and customers. If you see that no other competitor is strong on service, make sure your prospects and customers value service before you commit resources to that characteristic.
By valuing it, they are willing to pay for it, directly or indirectly. Or, can they be made to see that service is important? Can you show them a compelling value proposition around service?
Too often competitive differentiation exercises stop at competitive differences and not customer desires. If you stop here, you’ll effectively differentiate yourself from the competition, but not in the minds of your customers or in the target market: the goal is to stand out not away.
When dealing with a lead, prospect or customer, if you focus on the differences between you and your competitors, you’ll be left with nothing but a reactive game that changes as your competitors change. You’ll have done nothing to focus the customer on your uniqueness and the game evolves towards commoditization.
A true differentiation factor is something that a competitor cannot easily copy. It’s something that is integrated into your strengths, across all categories, and supported by your core competencies.
Differences are momentary. If the customer wants a pink product, your competitor will buy pink paint. If that’s your differentiation factor, what are you going to do? Buy all the pink paint?
What is the definition of product differentiation?
What distinguishes a product from the competition? This is the essential question underlying product differentiation, the method by which one item is distinguished from another on the market. This function is sometimes referred to as your unique selling proposition.
Whatever you name it, strong product differentiation entails defining the distinctive benefits of the product you’re offering and communicating those benefits to prospective customers. The objective is not to focus exclusively on competitive advantage, but rather on what makes your product unique and why clients should select you.
What is the significance of product differentiation?
B2B customers now have more choices than ever. Buyers might rapidly become overwhelmed when confronted with this many options. Rather than spending considerable time investigating each product, potential customers may simply choose the one with the highest brand recognition or lowest cost.
Alternatively, they may leave without buying your product at all. This is why it is critical to define and communicate the unique benefits of your product. By generating product differentiation strategies, you are informing people about what you are giving, how it can benefit them, and why they should purchase it.
Having a good strategy for product differentiation enables you to establish a competitive advantage. This indicates that your target market regards your product or service as preferable to those offered by your competitors.
When prospective customers grasp what differentiates your product (and how it will address their needs), they are more receptive to giving it a try. As a result, this can result in improved sales, brand loyalty, and long-term profitability for your business.
How to achieve differentiation
Differentiation is a process. That means it’s not a one-time decision that you’ll make and the single element that you’ll continually position in the minds of the customers.
Differentiation involves growth and development…it means you’re learning more about the variables that impact how you sell. Those variables are what your customers want and need, what your competitors are providing and what you can provide. Differentiating means getting so close to these variables that there is only one compelling product available — your product.
The process of differentiation begins with a look at those five categories of differences. You’ve analyzed which ones are important to customers, where your strengths are and where your competitors’ weaknesses are. You’ll have to decide if you choose to go with one feature (#1 in quality) or a combination of complementary features.
If you find a dominant position in a product feature, one that is sustainable by you and of value to your customers, you may choose to achieve differentiation on that element. The risk is that a competitor leapfrogs you in that area, say quality, or customer tastes change and your quality product is no longer meeting customer needs. Your singular message may at some point not match your customers needs.
Sustainable differentiation strategy
The more likely scenario is that you’ll find yourself strong but not the best in several categories. You’re not different and your customers are indifferent. This is where your sales effort supports your differentiation strategy.
The key to a sustainable differentiation strategy is weaving what you are really good at (your core competency) into an offer that is uniquely compelling. You may find your offer is the differentiator and it’s sustained through the uniqueness of your company’s strengths matching the uniqueness of the customer’s needs.
This is not to say that every customer has a custom product, but rather you are making an offer only you can make…it’s a derivative of the Godfather offer. It may be modified across customer segments to create greater value for them. It’s the one true differentiator that you have. It’s your unique combination of value that is packaged, communicated and branded to your customers.
Differentiation requires a consultative sales process and it requires that you create for the customer, the perceived value of your unique combination of products and services. It is, however, a differentiator that subsumes all others; at its core is the customer’s needs and not the individual differences among competitors.
Your competitors will be left competing on various components of the offer, but not the entire offer altogether. They may craft a similar product offer, which has them playing your game and not theirs.
The trend towards commoditization forces companies to play “me too” games, barrage customers with unimportant differences or make the customer an offer they can’t refuse. Now that’s difference and differentiation.