by Kelly Deis of SoundPoint Consulting
The odds are that there are a lot of other businesses in your market providing similar products or services. After all, the world cannot survive on just one pizza joint, accounting firm, beverage wholesaler or equipment manufacturer. So what is compelling about your firm that sets you apart from your competition and entices potential customers to buy from you?
Many business owners will answer with the “soft” differentiators, such as reputation, good service and high quality. These are all great characteristics (and absolutely necessary!), but do they really and truly set you apart? I’ll bet that if you ask your competition what sets them apart, you will get similar answers.
The fact is that highly differentiated firms are generally more profitable than their counterparts. Yes, their overall market may be smaller than a firm with a broader strategy, but they have more of it (the proverbial big fish in little pond). And, they most likely charge more and spend less on advertising and marketing.
Here’s a couple of things to consider as you ponder what truly sets you apart from others in the market.
- Is the differentiator true?
- Can you prove it?
- Is it important to your customer or client?
Developing a differentiation strategy doesn’t just happen (although many business owners wish that it would!). It requires a conscious decision on how you want to showcase your firm followed by management decisions that support and further the strategy.
A differentiation strategy can be based on opportunities you’ve identified after assessing the marketplace and competition. It can also be based on strengths or attributes that your firm already has. It’s possible you are already well differentiated, but just haven’t capitalized on the benefits of a differentiation strategy.
If you are thinking of ways to differentiate, here are some ideas. But remember, to be worth pursuing they must be true, supportable and important to your customers.
1. Focus on understanding a particular target audience.
Many brands define themselves by the markets they target, be it retiring baby boomers, nature-loving millennials, or women entrepreneurs.
2. Specialize in an industry
This is often a successful differentiator as customers generally value working with specialists in their industry, such as the accountant focused on dental practices or the pump manufacturer specializing in the oil and gas industry.
3. Specialize in customers that share a common characteristic
Many companies focus on customers that share a common characteristic, such as non-profits, high-growth companies, or start-ups. It is presumed that these firms face similar challenges.
4. Specialize in customers of a certain size.
This is another common differentiator for those providing goods and services to businesses. Perhaps you work best with large corporations. Contrast that with those serving mid-market companies, small businesses or solo-preneurs.
5. Have a specific geographic focus
Again, a very traditional differentiator. This can be important where local knowledge or face-to-face interaction with customers is important. It can also be important if you are reaching out to a traditionally under-served market.
6. Promote a social value
Promoting a social value that is important to you can be a good differentiator, be it the use of environmentally-friendly products, using suppliers with fair employment standards, or selling “Made in America” products. These values can differentiate your firm and attract a like-minded customer base.
7. Do business with a distinctive level of service
In most cases, good customer service is a given. Without it, you won’t survive in today’s market. So for this to become a differentiator, it must truly be extraordinary, such as a physician making house calls or customer service answering within 2 minutes.
8. Offer unique pricing
If everyone in your business bills by the hour or by service call, then consider offering a fixed fee or charging only after a successful outcome. Consider bundling products or services for a one-time charge or subscription-based pricing.
9. Offer a unique product or service
Offer a unique set of services that are hard to find. Services might be combined with a credential that is also a differentiator. Unique product offerings might include having exclusive distribution rights for a particular brand or being certified in Six Sigma.
10. Look or act differently than your competitors
If all of your competitors are staid, then a more relaxed and irreverent approach would be a differentiator. A different look and feel from your competitors might feel risky, but it might also be a welcome change for your customers.
Other differentiators you might consider include focusing on:
- Size of your firm: “We are the largest…. in the area”
- Relationships with partners: “We work with…. to provide the best….”
- The customers or clients you have: “Our customers include the most prestigious in the field including…. “
- The benefit the customer will receive: “Our products are proven to help you….”
Kelly Deis is president of Soundpoint Consulting. She earned an MBA at the Wharton School, and offers services as a Certified Valuation Analyst and Certified Exit Planning Analyst. She also helps clients develop a differentiating strategy.