To begin, strategic differentiation is the process of creating a difference between your business and others in your industry that customers will recognize and appreciate. For example, in crowded industries, a lot of businesses are going to have very similar products, price structures, and messaging. As a result, customers may start to look at businesses as simply having their own “discount” or being convenient, and ultimately, those types of factors lead to customers switching back-and-forth between businesses rather than sticking with one for the long term. Differentiation addresses these issues by providing an additional factor that will cause customers to select one business over all others.
As stated earlier, there are four potential ways to create a difference between your business and others in the same space. Those include your product, your service model, your positioning or branding, and your customer experience. Ultimately, the goal is to create a meaningful difference; not just a slight improvement.
1. Identify Your Target Customer and Their Problems Clearly
Most businesses attempt to appeal to as many customers as possible. However, in crowded spaces, this leads to ambiguous messaging and a lack of demand. By identifying a narrow set of customers and problems to address, you create a focused message and improve demand.
A well-defined message improves demand and provides a framework for making product and marketing decisions for your team.
Some key clarity questions include:
- Who is your ideal customer, and what do they care about most?
- What is the most pressing or expensive problem they are facing?
- What alternatives are they using now, and why?
When you know who your customers are and what problems they face, you can start to ignore your competition.
2. Create a Unique Value Proposition That Is Easy To Validate
Your value proposition should be simple, specific and believable. Most businesses utilize large claims that appear to be the same (e.g., high-quality, best service). Although these do not provide differentiation, they are difficult to validate.
Proof is far more important than slogans. Some of the best forms of differentiation include proof that customers can see or measure.
Some methods to make your value more tangible include:
- Utilizing quantifiable data (time saved, errors eliminated, etc.)
- Offering guarantees or service level agreements
- Providing “before and after” examples with real customers
- Highlighting a method or process that your competitors do not possess
A good value proposition does not only explain what you offer, but also explains why it is superior.
3. Differentiate On Experience Rather Than Features
Although features can be replicated, customer experience is far more difficult to replicate because it involves people, processes and habits. In many markets, customers remember the experience they had with a brand more so than the features included with the product.
In many markets, the customer experience includes elements of speed, support, simplicity and trust. Therefore, it is typically easier to differentiate on these areas than on features alone.
The key drivers of the customer experience include:
- Speed of onboarding or setup with less friction
- Better response times from support staff and improved communication
- Personalized support versus generic service
- Consistent quality across all touch points
If the customer experience is superior, customers will continue to purchase from your company regardless of whether your competitor offers similar features.
4. Communicate Your Positioning Using Strong Messaging and Consistency
Ultimately, a successful position can be undermined if customers are unable to easily identify it. Positioning needs to be consistent across your web site, advertising, packaging and sales conversations.
Positioning should avoid attempting to communicate too much information. A successful positioning strategy uses a single primary idea that the market can associate with your brand.
Messaging strategies that help to solidify positioning:
- Short category statements: “This is for ____ who want ____.”
- Comparison statements: “Unlike ____ , this ____.”
- Simple language that avoids buzzwords and vague claims
- Consistent visual and tone that matches the promise
The more consistently a message is communicated, the higher the likelihood that it will be recalled by customers. Recall is a major driver of preference.
Conclusion
To stand out in crowded markets, a business must strategically differentiate itself in a manner that customers can quickly identify and believe. The first step is to clearly define both the target customer and the specific problem(s) that the customer has. Once defined, the second step is to build a unique value proposition that is simple, specific, and believable and can be proven. Thirdly, the value proposition must be integrated into the customer experience, and not just the product features.
Lastly, the positioning must be communicated with strong, consistent messaging to drive recall and ultimately influence purchasing behavior. Businesses that view differentiation as a system, and not just a slogan, will receive attention, loyalty, and pricing power.