As businesses continue through uncertain times, I thought I would look at how differentiation could be the key to your success.
Has the word “differentiation” started to sound a little tired? If so, this is because it is both misused and over used.
We need to pause and think about what differentiation actually means to businesses. In business, when we talk about differentiation we are talking about separating ourselves from our competitors. Ideally, we want to achieve two things by doing this. Firstly, to attract customers to buy from us, and secondly, to have them buy at our price. Working with businesses from a number of sectors, I find that they don’t always realise that a key purpose for striving for differentiation is to maintain their price point; as a result they often end up selling themselves short. This doesn’t look like real success to me.
Differentiation should therefore not be seen as an end in itself but a means to an end, namely to sell on terms that make sense. Additionally we need to adapt our attempt to differentiate our businesses to today’s tough and increasingly cluttered marketplace.
In a series of 2 blogs I have looked at the 5 things you need to consider when striving for that all important differentiation.
- Know your competitors
Understanding your competitors is at the crux of differentiation – it’s only by doing this, that you can carve out your own market segment. However, this again requires a new way of thinking.
Your competitor isn’t necessarily the shop next door. You need to think wider than this. There are obvious competitors here such as similar products/services, geographies or employee pools. There are also the less obvious ones such as people who provide a very different solution but one that fixes the same problem, meets the same need as yours. There is also the frequently overlooked ‘competitor’ which is the option to do nothing or to do it in-house.
It is therefore important to think carefully about your competitors, know what they offer and know what you have to do differently to deliver a more attractive proposition for your customers.
- Authentic differentiation
We hear a great deal about developing our unique selling proposition. However, your USP, like differentiation, is a concept that can come across as trite and pedestrian in customer engagement as we all work so hard to prove how different we are from competitors and as a business. As brand-savvy consumers, expectation of differentiation had grown.
There are a couple of things to consider when it comes to crystallising your USP or point of differentiation. I quote Steve Jobs here when I say, quite simply, “Brands are themselves”. You need to know – beyond making a profit – what the purpose of your business is and what you believe in it. There has to be that authentic core at the centre of what you do, rather than merely focusing on “What will sell more?” Customers today are sophisticated and discerning – they will see through the empty promise. Working with CEOs and business owners, I constantly encourage them to go back to the seed of their business. To identify your business essence, get back in touch with yourself and your business to create that consistent and genuine proposition.