Discovering Your True Points of Differentiation

Q & A: Discovering Your True Points of Differentiation

Posted March 6, 2013

Question:

Our company provides genuine “points of differentiation” in our value-added arsenal of products and services. Problem is, our end users view these services as a commodity. Have you worked in an industry where a similar dilemma exists? If so, what types of sales tactics/strategies have you employed successfully to break through and effectively impact traction or velocity?

Answer:

Communicating points of differentiation can feel like a losing battle, since it’s to the customer’s advantage to act as if your product is a commodity. The trick is to find those niches where your differentiation does truly make a difference in the customer’s buying decision.

How can you find this out? Market research may not give you the answers to these questions – customers (especially the purchasing function) often can’t, or won’t, tell you why you are different and better.

Follow a three-step process to identify and exploit true points of differentiation.

Step One:

Look at customer churn and profitability data for each product and customer group, as well as win/loss data.

Are there certain customer groups that are more loyal than others?
Are there products and services that have earned higher margins than others?
When you win business, why do you win?

It’s this kind of data that can tell you where you are truly differentiated, and often the answer is not what you expect based on corporate lore.

Step Two:

Now that you’ve identified those customer and product niches where you’ve been more successful, enlist a cross-functional team to spend focused time exploring what’s different.

How are these more profitable or loyal customers different from others? Are they in a different business? Do they have different needs?
Is your product performing differently for these customers, or are they using it in a different way?
Have you provided these loyal, profitable customers with a different type or level of service? Why are they willing to pay more?
Watch the customer using your product. Talk with a broad sample of their people, not just the purchasing function. What makes your product valuable to them?
Look downstream at “your customer’s customers.” What about your product or service allows your customers to deliver differentiated value to their customers?

Step Three:

Work to shift your customer and product mix toward those customers who need you most, and those products and services where you really are differentiated.

Focus your sales efforts on acquiring more customers who fit the profile of your most profitable and loyal segments.
Shift engineering, operations and customer service talent to focus on growing these segments and products.
Communicate “what’s working” for these customers within your sales and marketing communications, so that other customers begin to understand the differentiated value that you offer.

Amanda Setili is founder and managing partner of Setili & Associates, a firm that works with Fortune 500 companies to improve business performance. Her clients include The Home Depot, Delta Air Lines, Wachovia and The Coca-Cola Company, as well as growth companies. As an experienced thought partner, Setili & Associates helps clients leverage their distinct assets and capabilities to produce lasting competitive advantage, zeroing in on key actions that will improve profit, performance and growth.