Over the past few weeks, I’ve written a number of posts about Value Propositions and Pricing. They’ve generated a lot of conversation in various venues. One of the things that’s struck me is the lack of discussion on differentiation.
I think it’s an area too many of us assume the customer understands, or we simply fail to demonstrate.
To capture the customer’s attention and compete, we know we have to have a powerful value proposition–expressed in terms of what the customer values. We know that we have to provide powerful business justification, aligned with the financial and strategic objectives of the organization.
But to win, the value we present and our business justification has to be differentiated and superior. Without this, how does the customer decide? (I’m trying to avoid the “P” word here.)
The concept is easy. Differentiation and superiority is what sets us apart in the customer’s mind. It’s not about being faster, bigger, better–unless those are key value elements the customer is looking for. It’s not having superior performance, more features and functions–unless the customer has said those are important.
Differentiation is about separating your solution from all the alternatives the customer is considering. It’s about demonstrating your superiority on those value elements most critical to the customer. You don’t have to be differentiated in every aspect of your solution, just 2-3 most critical to the customer.
Differentiation may be at various levels. Our technology may be superior to the alternatives—this is rarely sustainable, tomorrow, our competitors may leapfrog us. Likewise, our products are rarely differentiated. As superior as we think our products are, as much as our product managers may provide us endless lists of features and functions. ( A client once showed me a 287 page treatise on the product manager’s view of a software product’s differentiation and superiority. The first entry was, “Why our date field is superior to the date fields of our competitors’ offerings.” I stopped reading there.)
Certainly price is a differentiator–absent anything else, it becomes the key differentiator.
But there are many other areas of differentiation as critical as price. It may be the customer’s confidence in our ability to meet our commitments—difficult to defend if we are late to meetings with them. It may be the insight we bring them–again, difficult to defend as superior unless it is specific and unique to them–their company, their function, to them as individuals. Differentiation may be how much they trust us–as a company and as individuals, the relationship they have with us, our attitudes toward them—are they just another commission check or do we care about what they achieve. Differentiation may be how we work with them on a day to day basis, how we help them align everyone in their organization, how we help them reach an informed decision.
Differentiation may be as simple as caring more than anyone else–caring so much that you don’t want to see them miss an opportunity or make a mistake.
It’s funny, usually the things we think are most obvious about our differentiation–our products and services, are seldom the most important to the customer. Most often, it’s the little things of how we sell and how we help them buy that make all the difference.
Are you differentiating yourself, your solution, your company in ways that are meaningful to the customer? Do they recognize that differentiation?
I would really like to hear about how others are differentiating, and creating the appropriate perceptions on the part of customers, plus dealing with the issue of getting what’s important to customers from their POV.
Sadly, we probably won’t get discussion, since it seems like social ain’t social (why aren’t people talking about how few comments are offered up on great topics?) but thanks for the post, Dave. At least it got me thinking.
It’s a great question Robert, let me start, hopefully others will jump in.
Differentiation comes from many sources. It actually starts before we first talk to the customer–it’s their perceptions of our brands, company, etc. They learn about us and some of our differentiation is established by others–before the customer talks to us. What are people saying about us on the web, what do our customers say in private conversations, etc.
Then their whole experience of interacting with “us” creates possibility of differentiation. How do we respond, how do we create meaning, etc.
Then it continues through their buying experience and how we and others engage and interact with them.
My point here, is that differentiation is not just the responsibility of sales, but it is what the company stands for and how it presents itself through every channel. We have the opportunity to differentiate ourselves in so many ways.
I completely agree, Dave, but the devil is in the detail, I suppose. I think we (I, actually) certainly need to know how to translate the strategy (the over-arching approach) into specific tactics. I don’t know a lot about the differentiation process, so perhaps all that information is out there somewhere.
Robert, it’s a fair question, a little difficult to get into at a detail level. Perhaps it’s easier to look at major components of differentiation. Each of these can have any number of sub levels and increasing detail.
1. Product: This is the most obvious and common. How is my product different, better than yours.
2. Company: This we use a lot as well. My company is better than the competitions—bigger, better, faster, etc. Here’s also where you might look at market leadership, quality, customer service, responsiveness, etc. Basically all the non product components of the product, but surround the product itself.
3. Sales person: This is extraordinarily powerful, but not consistently leveraged, but it’s what each sales person brings to the situation, “I trust you Robert, you’ve never steered me wrong.” Relationship, trustworthiness, confidence, leadership in providing insight, or simply “caring” more than everyone else.
4. Customer experience: Some may put this in the company category, but what’s the total experience we have with the organization—directly and reputation in the markets, etc. How do we hold and value the customer?
5. Social: This may be a nuance to the company, product, and customer experience, but how are you perceived and differentiated in the “community.”
6. Differentiation created in the process: This is a combination of sales person, customer experience, and perhaps social. But it focuses on what we do and how we engage in the process, how we set ourselves apart and create value. Increasingly this takes on elements of value co-creation.
Each situation has different combinations of these. It’ dynamic and may change with each person involved in the process, and over the duration of the process.
Just some quick reactions, hope this is helpful. Regards, Dave