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 love ready your posts Dave. Absolutely spot on, as always!
I spend my professional life working with organizations on harnessing and delivering value. I passionately agree with you that differentiation is almost always found in areas beyond pure product or service attributes. 9 times out of 10 we find that differentiation is found in non-functional, non-rational areas such as the helpful attitude of the customer service agent, or the engaging way the sales professional worked with the customer to find the right solution.
The easy stuff is quantifying the rational benefits and adding numbers to them. The challenge is uncovering and evidencing the softer, emotional things, adding these to rational things and building this into a fully-rounded total value proposition. What I’ve learnt over the 10 years of doing this is the key is in the hierarchy of how all of this is presented back to the customer.
Should say ‘reading’ your posts!
Great Post! I agree that customer service can be as great a differentiator as anything else. It often comes down to how can we make our customer look good in front of his or her boss. How do we make our solution, their path of least resistance. This often has nothing to do with price or features. It could be advice, data analysis, responsiveness, or the ability to get them out of a jam when needed. Competitors can certainly copy this just like they can with technology, but once you have a strong trust factor with your customer it becomes difficult for a competitor to get in.
Mark: Great points, the key issue is that differentiation just doesn’t come from our products, but from the whole process of engaging and working with them. The differentiation may simply be how they feel about us. Thanks for joining the discussion. Regards, Dave