Differentiation informs your prospects the difference between your company and its closest competitors. These four steps will help you begin to develop your differentiation strategy and achieve a competitive advantage.

Differentiation is fundamental to long-term market success.  It is the foundation of a competitive advantage. Differentiation is at the heart and soul of your positioning. Effective differentiation positions you as the preferred choice for your customers and prospects. A poor differentiation strategy leaves you buried in the middle of the pack.

Four Steps to Competitive Differentiation

When customers and prospects cannot tell the difference between your company and its closest competitors it’s time for an overhaul.  Follow these four steps will help you begin to develop your differentiation strategy.

  1. What makes your company and solutions different? If you don’t know what makes you different, neither do your customers.  Time for some serious evaluation. Start by evaluating competitors messaging and positioning. How? Ah, the merits of the World Wide Web. Make a visit to  each and everyone of your competitors. Comb their sites and start a list of their marketing messages. Read their press release boiler plate and their customer case studies. Note the 1-2 key cornerstones of for each of your competitors. Next, take a look at your own messaging platform and positioning statement.  If it isn’t unique, time for a remodel.
  2. How is your different better? Different is good only if it matters to your customer. Discover what customers find important. Differentiation is what separates you from your competitors. This means you need to understand what prospects and customers value. This is an excellent time to engage your customer advisory board(s). If you don’t have a board, engage in customer research to learn  how well you and your competition perform against your customer’s criteria. Once you have this information, you can define what separates you from the competitors.
  3. Develop your strategy. Understand how your differentiation creates your competitive advantage. Employ it in everything you do. It serves as the basis for your strategy. From your Marketing, to how your price, package, and go to market.
  4. Keep your promise. Differentiation is the core of your brand. It is your promise or pledge to the market. Your ability to sustain your differentiation consistently and meet your customer’s expectation is what will impact whether customers continue to do business with you or turn to a competitor.

Your differentiation is the framework for your positioning statement and key marketing messages. Your differentiation, and hence your positioning guides your marketing efforts. Your positioning statement contains the essence of your differentiation and important points to support your differentiation. Your key messages educate and inform your target market and explain the benefits of your offer over competitors. Your key messages should be focused, crystal-clear and speak to the needs of your prospects and customers. These messages should link back to how your capabilities support the purchasing criteria you gleaned from your research. Your differentiation, positioning, and key messages communicate what you want customers to think and feel about your company and your solutions relative to the competition. 

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Identify What Truly Makes You Different

The essence of competitive differentiation requires identifying what truly distinguishes your company from competitors. It is the only way to avoid competing on price and the commoditization trap. Want proof? The proof is in your coffee.  Starbucks has taught us all a valuable lesson when a commodity such as coffee became something people were willing to wait in long lines to purchase.

The only way to avoid the commoditization game is to focus on a source of value as a competitive advantage. Determining this value isn’t something you do sitting around the coffee table. It requires a keen understanding of your customers decision-making process and learning the different reasons a customer chooses one company and/or product over another. 

To assess your competitive advantage, conduct both an Internal Audit and Market Research. For the Internal Audit, the Accelance Effectiveness Audit will enable you to assess your own value creation advantage. The goal of an Internal Audit and Market Research is to identify the one area where you are superior to your competitors, the importance to your market and customers, and to identify what differentiates you from the competition. By understanding your value advantage you can focus your Marketing on reaching customers who respond favorably to this advantage. The more competitive your market, the more important it will be to find a way to differentiate yourself on something other than price.

Repurpose Your Resources for Differentiation

On the topic of differentiation and a strategy framework it has been noted that the ideas of core and context play a role in strategy.  Geoffrey Moore explains how core and context and the role they play in strategy. Core is defined as what differentiates and creates a sustainable competitive advantage. Companies with a strong core enjoy revenue growth due to customer preference and higher price premiums because their offers are more valued. Context is defined as everything else, those things a company wants to do well but not for the purpose of differentiation, but for the purpose of meeting market standards.

The way to think about these two ideas is that the goal of core is differentiation whereas the goal of context is productivity. Why do we care? We care because core is not stable, it decays over time as competitors copy and catch up. Core has to be continually reinvented. What happens to what was core? Well, it becomes context. And this is where the rub is. The resources that were allocated to what was core are now allocated to context, making it very difficult for a company to refocus on core. What is the downside of not being able to do this? A build up occurs and ties up the company’s resources in non-differentiating assets. This results in too much capital being invested in meeting market standards rather than funding innovation. What should a company do if they find themselves in this situation? They need to extract the resources from context and repurpose them to core.

These five steps will help extract resources from context and repurpose them to core.

1. Centralize. A key step to being able to extract resources and redeploy them back into core activities requires control. Centralization is the first step to gaining control.

2. Impose standards.

3. Simplify.

4. Automate.

5. Out task.

By deploying these five steps, the inventors in your company, core managers, and the mission critical managers can put their energies back into efforts that will enable the organization to refocus on creating a competitive advantage.

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