Differentiation is how your brand is set apart from competition. Without differentiator consumers have no basis for choosing you over competitors (or maybe just price?). “Differentiation is the essence of strategy, the prime source of competitive advantage.1 “High-growth firms are 3x more likely to have a strong differentiator”.2
To have an impact on growth, differentiation must be perceived. It only becomes a Unique Selling Proposition (USP) if you’re able to communicate it.
But before we talk ‘being different’, we need to tick all the boxes of “Relevance”. Do you have what it takes to play in this category? To be relevant as a car brand, today we expect as an Olympic minimum ABS, airbags, electric windows, Air conditioning… If your product is relevant, then you may enter the race. No need to invest in “Auto-pilot” as a differentiator if your Tesla is not even seen as relevant to car-buyers (The strength of Tesla by the way, has been to surpass ALL existing car brands on ALL the “relevance-boxes” AND differentiate on sustainability/speed/image, etc.)
Once you’ve joined the race, the question becomes: Why should I pick you?
II. The 11 WHY's
Why be different? Incremental innovation – doing things a bit better vs. the others: isn’t that enough? Sure, it gives you arguments in the battle of prices, but it’s just buying time.
Mature brands regress when losing clear points of differentiation. Me-too copying of competitors leads to uniformization of the offer. On the other hand, an old brand can rejuvenate by giving a new answer to emerging consumer needs.
Transparency offered by e-commerce accelerates this commoditization.
Selling on price alone/Generic price-leadership gets volume but destroys margin and requires damn good cost-efficiency.
Choice-panic caused by overcrowded categories and information overload. Proliferation confuses people. Brands must help customers by clearly outlining reasons to buy them.
No time, scanning fast: Stand-out to break online search patterns. For many low involvement categories, people decide in 1.2 seconds & pay relatively little attention to every single feature.
Focus your innovation efforts: The more precise your understanding of your model & sources of its success, the more you can reinforce that pillar of your mix. If that pillar is not key in the decision process, you need to make that dimension of the category more visible.
Loyalty needs a reason to stick with you: you might attract 1st time buyers with a promotion, but if you want to keep them…
Customer expectations are rising: Experience needs to be above-average to be shared: average is merely expected, it got normal. If you’re different and over deliver, you pass the rising bar of expectations, become extraordinary and will generate peer-to-peer talk.
Go beyond buzz words: “superior service”, “committed to excellence”, “better quality” or “customer-centric” doesn’t count. Why? Over-use of these buzz words has diluted their meaning and credibility to zero, they just fly over customers’ heads… To be credible, you need to be specific on your point of difference: “to show you that we’re committed to service, we deliver your package for free by tomorrow 9am”.
People don’t buy products. As Simon Sinek rightly points out: “people buy WHY you do things”. A unique purpose attracts millennials: the reason why you exist, your WHY is compelling to our soul: “think different”, “accelerate towards a sustainable future”. This unique value positions us on a different territory in consumers’ brains.
Avoid helping your competitor due to confusion: If your differentiation is not clear, prospects may misattribute your strengths to a competitor.
III. 9 CRITERIA TO MARKET YOUR DIFFERENTIATORS
While a specific differentiator can be copied, a brand can be actively marketed to create a lasting differentiating positioning in customer’s mind.
Let’s start with defining criteria for a good differentiator: Start from current mix of features and challenge them vs. market requirements to see if they’re just ticking the relevance-box or if they’ve got potential to be radically differentiating.
Differentiate on what matters: There’s no real point to be excellent on nice-to-have criteria. What are decision-drivers in your industry? Unfortunately, the fact that my bank uses recycled paper will not make me switch brands... Avoid these “So what?”-reactions. Consumer research will help to find what resonates with customers and uncover their desired WIIFM (“what’s in it for me?”).
Authentic: Stay close to your core. A differentiator that is coherent with your brand positioning strikes two times: it reinforces your brand & makes it stick out.
Credible: Label your differentiator to make it unique & add credibility to it. The unconscious message to consumers is that your company believes it’s worth the commitment of branding it. A branded technology makes it easier for consumers to remember, and enables more effective communication. Baptising it reinforces your first-mover advantage, making it more difficult to replicate.
Distinctive: USP stands for unique. Can you create an ecosystem of differentiators? A territory where your claims are reinforcing one another?
Stopping power: Don’t be intrusive but stand out. Break the clutter, innovate the way you communicate. Differentiation = out of the ordinary.
Step change: Differences must be clear. we always start with a category decoding: we split the relevance codes. Then we choose which codes to break, which ones to lend from parallel industries.
Managed over time: if a feature becomes a differentiator, it must stay central to your mix. Invest to avoid it to become stagnant or diluted. Keep ahead of competitors.
Communicated: An extensive HBR study3 showed 80% of managers thought their companies were strongly differentiated, but less than 10% of customers agreed. Once you identified the USP you will identify your brand/company with, you need to put the marketing plan in place to deliver that perception.
Visible: Apple is always considering how they can accelerate adoption of a new product. When they put white earplugs into the iPod, any early adopter could be spotted immediately, and hence follower-friends would quickly be jealous and buy one too. ‘Sent with my iPhone’ at the bottom of every email stems from the same visibility-objective. In B2B, SAP did a memorable visibility campaign when they convinced key customers to accept to co-brand in their campaign “Big brands runs SAP”. Being the partner of big brands boosted their credibility, which was a great reassurance to B2B buyers.
IV. 6 HOW's TO START
How do you start differentiation-projects in the middle of short-term priorities and KPI’s? Being different is not urgent. Well, true, strategy never is.
Listen: How is the market segmented? For each segment, identify current and emerging customer needs. What possible branded differentiators drives decisions?
Map the existent: Analyse the conversion chain & every component of CX. You can differentiate on every touch point; the goal is to collect an inventory of potential differentiation points. Are there existing unique features that can be branded? Complex and silo companies tend to forget what they’re good at. Business model innovation - business model canvas offers a process that specifically addresses the need of clarifying and delivering differentiation.
Add a service: known way to differentiate in mature categories is to add a service.
Beyond product & services: data allows you to differentiate further on experience. Hyper-personal, contextual, above-average follow-up. As a princess, I feel pampered (you understand me, you anticipate on my desires, you surprise me). You make me feel unique. And hence, I believe you’re the only one able to fulfil my needs. Once we have a relationship, you lock me in. Excellent anti-churn.
Have an opinion! An angle! A belief. Don’t sell products/services, sell a clear vision, a manifesto of how life should be. And create a movement. Nike doesn’t just sell shoes, they sell determination to win.
Link these specific aspects of your brand with decision-driving customer benefits.
These broad conceptual steps can get your thinking going.
This obviously needs to be adapted to your specific maturity, to a specific industry, to specific research results, to your specific competitor aggressivity, to your specific budget, to your specific urgency to improve, and many other specific specifications…
You got us, you’re different, no way we can point out your compelling differentiator for you in an anonymous newsletter! So we’ll start with the first step : we’ll listen!
In the mean time, remember Mr Wilde’s wise words, valid both personally, poetically and professionally: “Be yourself, everyone else is already taken”.
Thomas Mees & Gregory Berleur