Rules for Creating Undeniable Differentiation
“Being First Is a Differentiating Idea”
Get into your prospect’s mind first with a new product or benefit and your competition will have trouble catching up. People like to think they’ve made the right decision — and so they stick with what they’ve got. If your product or service is what they’ve got, you have a huge competitive advantage. Customers will continue to buy from you. You can do this by being first to market with a new solution — even if that means you’re not able to implement all the features and functionalities you dreamed up in the first edition. You can also be the first in your area to promote a unique benefit of your product or service — and win locally when you can’t win everywhere else.
“Attribute Ownership Is a Way to Differentiate”
First let’s clarify what an attribute is. Trout and Rivkin state, “An attribute is a characteristic, peculiarity, or distinctive feature of a person or thing. Next, persons or things are a mixture of attributes.” If your product is nails, it has size, strength, sharpness, color, and other attributes. If you were known for producing the strongest nails, nails that never bend when you’re hammering them in, you could own the market for nails — assuming you found that a large portion of the market was looking for strong nails. The key is to find an attribute that customers think is important. The attribute you choose needs to be very simple (strongest nails) and benefit-oriented (won’t bend) for it to resonate well and have significant impact.
“Leadership Is a Way to Differentiate”
Leadership is tough because you can’t just declare yourself the leader. But if you find a way in which you are truly a leader this is a powerful way to differentiate your business. Leadership works on a concept called “social proof” — people copy what other people are already doing because they think, “If it works for them, it’ll probably work for me too.” Three common types of leadership are sales leadership (best selling), technology leadership (track-record of the newest technologies), and performance leadership (works better for customers). If you find that you lead in one of these three areas — especially if endorsed by a third party — you can often increase sales by differentiating in this way.
“Heritage Is a Differentiating Idea”
We all crave tradition — this is why heritage is an effective way to differentiate your business. Also, if a business has been around for many years, we make an automatic assumption that they know how to do their business well. If you have a family history in the business… If your business has been around longer than most — if not all — of your competitors… If your business has an interesting history or founder’s story… If your business comes from an area known for producing your product… If your business has a history in your community… Each of these are leverage points for using heritage to differentiate your business. Tell this story and you will build customer trust and your business.
“Market Specialty Is a Differentiating Idea”
This is the secret behind niche marketing and the success of businesses that choose to market to one specific niche. The assumption we make when we find a business marketing to a particular niche is that they are the expert on that niche. By choosing a niche and sticking to it, customers recognize us as the go-to authority in that niche. When others mention that niche, the customer thinks of us. If you choose to differentiate yourself this way, be careful of the natural inclination to branch out. This can destroy customers’ trust in your specialty — then they won’t choose you for either your niche or your new venture.
“Preference Is a Differentiating Idea”
This idea falls close to leadership — but instead of statistics such as sales, preference is defined by what a sample of your market thinks is correct or better. This goes back to social proof. If you do a taste test and your cola comes out on top, you can say that customers prefer your cola. An even stronger form of preference is getting endorsements from celebrities and members of the media — people want to use the same products used by the people they look up to. One warning — if you use preference to differentiate your business, be sure that it is legitimate and that it stands up to scrutiny. There is nothing worse for your brand than to declare consumer preference and be made a fool when someone proves you wrong through more exhaustive research.
“How a Product Is Made Can Be a Differentiating Idea”
If your product has a “magic ingredient” or special process you use to make it, you can feature this and successfully differentiate your business. If possible, give this unique ingredient or process a catchy trademarked or service marked name. Competitors won’t legally be able to copy this, and it can make your business stand out as having something the other guys don’t. Also, if you put extra care into making your product, if you don’t take shortcuts, or if you make things the “old-fashioned way,” you can use this as a differentiating factor.
“Being the Latest Can Be a Differentiating Idea”
As humans, we have an endless fascination with the latest big thing — rightfully or not we also consider the latest to be the greatest. Constantly innovating your product so you add new features and functionalities is one way of always having the latest product. If you’re doing it, it’ll be hard for your competition to keep up. And you can wear the “latest and greatest” banner with pride. Be sure in your quest to always have the latest that every feature and functionality you add is actually needed by your customers — people are smart, and if you’re just selling a flashier version of what you had before, customers will see right through it and you’ll lose reputation.
“Hotness Is a Way to Differentiate”
Hotness is the third and final differentiating idea that links to the concept of social proof. If everybody else is doing something right now, we want to be involved too. We don’t want to miss out. Because hotness is such a transient concept though, it’s hard to come up with a long-term differentiation strategy based on it alone. But you can leverage the media through PR and create hotness that can set your brand apart and gain customers quickly. This strategy can be used as a way to get your differentiating ideas to a wider audience, after which you will benefit from the lingering effect on customer awareness and your increased list of prospects and customers.
Here are five things to avoid when trying to differentiate your business.
“Quality and Customer Orientation Are Rarely Differentiating Ideas”
All other businesses in your category have to be failing at these to make either Quality or Customer Orientation a basis of differentiation. Otherwise, most customers are generally happy with the quality of the products and services available. And most categories have at least a couple competitors that are focused on customer needs and do that well. Unless every competing business in your category is failing at either of these attributes, avoid these factors when you’re differentiating your business.
“Creativity is Not a Differentiating Idea”
This idea refers to being creative in your advertisements — being creative is a good way to draw attention, but won’t sell products. A creative approach to getting the attention of your prospects must be coupled with an explanation of what truly differentiates your business from competitors. Otherwise everyone will remember your advertisement without remembering what you’re selling. Remember, small businesses — and most large ones too — can’t really afford to make pure entertainment for advertising. Advertisements have to sell to be successful.
“Price Is Rarely a Differentiating Idea”
When you live by the price sword, you’ll die by the price sword. Cutting your prices to below what your competitors charge destroys your margins, and is hard to maintain. For this reason, price is called the enemy of differentiation. Wal-Mart pulls it off with “Every Day Low Prices” but that is because they buy in massive quantities and control the supply chain where possible. Most businesses die quickly if they’re always trying to undercut the rest of the market on price, without having a significant buying advantage. Instead find a reason why your customers choose to do business with you above all others. This will make them willing to pay more if that’s what is necessary. One exception is to differentiate on high price — a high price creates exclusivity and tells customers looking for luxury that “the price is high because the product is worth a lot.” This works best when the product is something you manufacture or a special service you provide where competitors can’t come in with the same product and steal customers on a slightly lower price.
“Breadth of Line Is a Difficult Way to Differentiate”
The amount of products in your store or catalog can be a blessing or a curse. Many department stores and retailers who sought to give the customers the widest selection have failed. But others have chosen a niche, then provided a large selection within that niche, and gone on to be successful. Think Toys’R'Us for toys, specialty clothing retailers (western, business wear, etc.), or sports superstores. These are successful businesses because they focus on one area and become the “expert” source in that area. These large specialist stores find success, but over the last 100 years few generalist department stores have been able to stay out of financial trouble.
“Growth Can Destroy Differentiation”
If you’ve either purposefully or accidentally differentiated yourself as a specialist, growth can be your worst enemy. As you work to add more products or services to meet more customers’ needs, your focus becomes blurred — both in your business priorities and in the mind of your customers. When this happens, any differentiation you’ve created as a specialist goes away and you’ll fight to keep customers. You’re better off continuing to focus on your specialty, finding unique ways to repackage your products or services or finding new customers within your current niche. The one alternative to this is multi-branding — if you can’t help yourself from creating new products or going after new markets, create a new company and a new brand for your new offering, then throw new resources at it so you don’t dilute your core business.