Developing Your Differentiation Strategy
Updated: Apr 14, 2023
The essence of strategy is choosing what not to do. ― Michael E. Porter
When leaders create a differentiation strategy in an organization, they start with the intention of creating a product or service that has a perceived value by its customers as unique and better than the competition.
They set out to craft a blueprint that gives the company a competitive edge. In doing so, they must set aside two historically limiting beliefs– that market boundaries & industry conditions are a given and that an organization must make a strategic choice between differentiation based on value and low cost.
If leaders buy into this fallacious reasoning, it is bound to keep their organization neck-and-neck with their competition like a swim meet where winning is just barely getting ahead and only distinguishable by a photo finish.
But what about the innovators, the trendsetters, the “Unicorns”? What are they doing differently? What are they doing that you think you can not?
Here are a few of the best ideas we could come up with turn your differentiation strategy upside down so you too can become the next “Unicorn” in your industry.
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DEVELOPING YOUR DIFFERENTIATION STRATEGY: 1. IDENTIFYING YOUR STRENGTHS – THEN CAPITALIZE ON THEM
What is your company’s core strength? Whether it’s your customer service, your storytelling, the quality of your product or your latest innovation take advantage of this play and let it be known to all those you come in contact with, including your employees.
LEAD WITH IT!!! This should be the root of all company messaging and the heart of what drives the company.
For example, Nike has capitalized on their notorious tagline that has withstood the test of time “just do it”: translating a message across their organization and following of a can-do attitude where customers have come to trust the brand for being able to do anything as if almost invincible or a superhero like the countless professional athletes who have been an ambassador for the brand through the years.
DEVELOPING YOUR DIFFERENTIATION STRATEGY: 2. MAKE YOUR COMPANY A CLUB
A company that makes customers feel like they belong to something bigger than themselves has already differentiated itself.
From fitness communities that have been built a nationwide following like Orangetheory where converted fitness enthusiasts “sweat orange” for various reasons they share around the club to subscription models like The Dollar Shave Club, customers feel as if they are “in” and a part of the latest.
Even more traditional clubs ideas of clubs like the American Express card, create an experience of being more than just a customer, but a member of a select card-carrying club where you have access to exclusive customer service, exclusive tickets to big-name concerts and sporting events and other card-member perks like purchase protection, insurance, hotel upgrades and exclusive lounge access at various airports around the world.
In short, Amex makes you feel part of something exclusive, which is why you use your American Express card — even though the industry is dominated by Visa and MasterCard.
The benefits that come from this initial sense of membership are real; customers are more likely to stay loyal to the brand and invest more energy & resources to recommend the company to those in their network.
DEVELOPING YOUR DIFFERENTIATION STRATEGY: 3. INVEST IN YOUR EMPLOYEES TO CREATE A POSITIVE COMPANY CULTURE
Your employees are the face of the company, and they’re at the front-line to deliver and communicate your value proposition to the world.
Historically marketing teams used implicit language and clever messaging, but the tens of thousands inside the building need memorable and actionable guides to living and work by; a playbook for what daily activities are valued and rewarded.
They need the mantra of three to four powerful pillars that everyone knows and repeats on a daily basis, that can guide service delivery, and product development like Starbucks' six “differentiators” that made up a very directive internal playbook for change.
Once they have something to live by, work by and something that resonates with them personally, they will share it with their friends and help further campaigns faster and more effectively than traditional advertising means. After all, your employees are ALL digitally connected.
They tweet, post, comment and spread the word. Embrace this reality and make the most of it rather than fearing the “decrease in efficiency” if they are posting on social media during work hours.
The new approach actually is to sign them up as a channel: Give them a preview of your ads and messages; provide them with the social media tools to share. Create unique content that they can distribute on their own.
DEVELOPING YOUR DIFFERENTIATION STRATEGY: 4. QUESTION EVERYTHING BUT CHALLENGE SELECTIVELY
The key to a successful differentiation strategy is NOT adhering solely to industry standards and currently defined best practices, but rather questioning if there is a yet undiscovered way of doing things differently, better or smarter.
Delivering products or services as industry status quo is a surefire way to camouflage a company in the market.
Businesses truly positioned for long-term success tend to believe adamantly that they might have a better way of doing things and are willing to take the risk to try and discover those things that may still be unknown.
This can include straightforward analytics such as an increased time spent on a website, more engagements, and conversions through promoted content, increase in sales from your refined sales process and back-end marketing channels.
There is an important distinction between questioning every industry assumption and assuming that every industry practice is flawed — it is a thin line between curiosity and arrogance.
DEVELOPING YOUR DIFFERENTIATION STRATEGY 5. BE RELENTLESS ABOUT QUALITY
If you can provide a higher-quality product or service than your competitors, you can remain differentiated. Service can be anything that is either experiential, like Starbucks where they are encouraged to call customers by first name (with correct spelling) or time-related like Amazon Prime which delivers same day.
Quality standards are now relative to your demographic and current demand.
Some brands are still deemed to be of high quality since their customers are willing to pay a premium for worn cotton tees or tattered, torn denim, but the “quality” lies in the online shopping cart experience, the tags that hang on the items when they are delivered and the messaging & packaging it arrives in on the customer's doorstep.
Either way, be clear about your organization's quality standards relative to your customer and commit to only working with people and brands and partnerships invested in your standards — those who “get it” and will stand behind you.
Companies that make decisions to elevate quality above all else will rise higher than the ones that cut corners.
As countless companies have demonstrated in recent years, industry disruptions are now to be expected and a strong brand built on “value” can lie anywhere on the price spectrum and still be wildly successful.
With this new paradigm in business, creating a differentiation strategy is a truly exciting endeavor full of limitless possibilities for success.
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