For your business to be successful, it needs to stand out. You need to have an answer to the question, “why you?” Offering something that your competitors don’t will incentivize your customers and drive sales.
Lots of companies differentiate themselves by focusing on their product or their service advantages, but that may not be enough. By fixating on such narrow parameters, you may be missing out on an opportunity to talk up your true differentiator.
It’s hard to closely examine and compare yourself to your competitors — you want to think you’re better than them in every way, but that’s probably just not true. You’ll need to isolate the things that clearly make you different so that you can find customers who prioritize those things above others. Here are some places to start.
Product differentiation is the most obvious — either a real or perceived difference between your product and that of your competitors. Product differentiation can come down to quality, features, performance, effectiveness, or any other criteria.
Service differentiation is all about the supporting aspects of an organization — delivery, customer service, training, installation, and ease of ordering, among others. McDonald’s doesn’t make the best burgers in their town, but it’s a consistent burger every time and it’s served in seconds. And Zappos sells shoes you could get from the manufacturer, but their customer service and return policy set them apart.
Especially with the marketing world’s shift in focus to the flywheel, customer service is more important than ever. Expect service differentiation to play an even bigger role in company success in the coming years.
Channels of distribution can differentiate your company as well, providing better coverage, better access to expertise, better ease of ordering, and better service.
Amazon carries a lot of products that you can find elsewhere, but they carry everything on one site and can deliver almost anything in two days, thanks to an enormous network of fulfillment centers and partnerships with UPS, FedEx, and USPS. Their ability to distribute more effectively than their competition lets them stand above.
Relationship differentiation isn’t nearly as commonly focused on, but can still be a major selling point for a business. It refers to the personal relationships forged between sales reps, CSRs, or technical representatives and their counterpart at the customer’s end.
Employees with customer interface roles can show competence, courtesy, and reliability in their interactions with customers, so some companies focus on training and customer interaction to stand out from the competition.
Relationship differentiation is similar to service differentiation, in that it focuses on your company’s relationship with your customers and clients, but relationship differentiation focuses on people and less on the service a company provides.
REI might provide great service, but much of it is faceless interactions online with whoever answers at the other end. Allstate, by contrast, assigns a single agent to each customer who becomes that customer’s primary point of contact for as long as they remain a customer.
In the 1920s, Claude Hopkins took a tour of the Schlitz brewery. He was shown the air-filtered rooms where the beer was cooled without adding impurities, the wood-pulp filters that guaranteed a superior filtering process, and the artesian wells that provided the cleanest possible water for making Schlitz beer.
When he asked why Schlitz wasn’t advertising their fanatic approach to purity and cleanliness, they told him, “every beer manufacturer does it this way.” Hopkins replied, “but the others have never told this story.” He went on to advertise that Schlitz cleaned their bottles with “live steam,” — something everyone else did too — but it took Schlitz from 5th to 1st in market share.
What Hopkins did then, and what many companies try to do now, was a form of image differentiation. Schlitz’ cleanliness didn’t set them apart, it was their reputation for cleanliness. Volvo has a reputation for safety. Apple has a reputation for build quality.
Image differentiation is difficult to establish but can be powerful once it’s in the minds of consumers. You can’t just talk the talk, especially in today’s world of transparent reviewers and online research — if you don’t live up to your branding, people will know. But if you can set yourself apart on not just what you do, but how you do it, you’ll create a much more lasting impression.
Differentiation For Its Own Sake
There’s one more important thing to remember when it comes to differentiation: anyone can pick something that sets them apart, but if their audience doesn’t care, it won’t matter. Your difference has to be relevant to your consumers or it won’t help you.
If you make baby clothes, differentiating by price is a good idea — new parents are almost always trying to save money. If you make luxury watches, your customers won’t care that you’re a few percentage points cheaper — they might even like you less if you are significantly cheaper than the competition.
The same goes for any of the differentiation points we discussed above. Some customers care about the environmental impact of your company more than they do about build quality. Some care more about service than about convenience. Take the time to learn who your customers are and what they value — then build your differentiators from there.