The 3 Types of Differentiators & How They Influence Customers
An organization’s differentiators ultimately answer the question “Why [your company]?” However, these characteristics or capabilities are often lumped together as simply the things that set you apart from your competition when, in reality, they are actually far more nuanced than that.
What truly differentiates you from alternative ideas and offerings? Remember: you don’t only need to differentiate from your competitors, but from the other alternatives available to your customers. Commercial laundries, for instance, must differentiate from other local and national laundries, in addition to do-it-yourself solutions like at-home laundering or dry cleaning. To be effective, sales and marketing teams must be able to clearly defend the organization and articulate its value compared to all of these things.
In the sales and marketing process, it is often difficult for customers to sort through the various claims made by competitors to determine what actually makes one company different or better than the other. By creating structure in this area, we can shift the conversation to a value-based dialogue and in turn, help to shape the criteria by which customers select a vendor.
How Differentiation Works
Many organizations fail to differentiate themselves well because they believe differentiation is about them when, in fact, it is all about their customer. A business can be as different as it wants, but if they are unable to connect the dots on why that makes a difference in their customer’s business or operations, then those things simply do not matter.
The trick to effective differentiation is always communicating them in relationship to the customers’ business goals—how does a certain capability save a prospect money, time or effort? How does it translate into increased revenue or efficiency? Indeed, knowing these answers requires a rich understanding of a customer and their needs, which sales and marketing teams should always be focused on deepening. The better you know your customer, the better you can anticipate what is valuable to them.
Of course, differentiating is also about knowing the competition; both obvious, and not so obvious. It is impossible to know how you are different from those around you without a firm understanding of their offerings. Successful organizations invest in regular competitive intelligence, SWOT analysis, and information gathering to remain up to date on the capabilities in their marketplace.
Let’s now review the three kinds of differentiators, why each matter, and how they influence your customer.
Holistic differentiators are capabilities your company has that several other competitors in the marketplace also have, such as a fleet of trucks, company size, or overall reliability. These are often overlooked as simply table stakes, but taking the time to identify these allows your organization to uncover new areas of innovation and opportunity—sure, most of your competitors may have a fleet of trucks, but how could your business’ fleet create new value for your customers, setting itself apart from the other fleets on the road?
For example, do you leverage fuel efficient vehicles that reduce negative environmental implications? Or possible leverage route management software that enables faster and more effective deliveries. Taking that deeper step allows you to unveil ways that set your capabilities apart.
It is important to stay aware of the holistic differentiators in the marketplace to identify these opportunities and remain up to date with the trends in your competitive landscape.
A comparative differentiator is a characteristic or capability of your company that is superior (in some specific way) to a comparable capability of a competing offering. Let’s return to the fleets example: while almost every competitor may have its own trucks, only a small portion may include technology that allows for real-time interaction with the driver, so that routes can be adjusted on the fly to ensure on-time, accurate delivery or swift response to customer issues.
Suddenly, a holistic differentiator has become a comparative one: one that creates clear and defensible value (reliability, speed of response, on-time delivery) for your customers.
These differentiators are the ones many think of first when it comes to this topic: a value-based capability that is not available from any other competitive offering. Also known as “knockout criteria” in the sales process, these differentiators allow you to command a premium for your product or service—but only if the value of them is properly articulated and aligned to the customer.
It is critical to remember here that differentiation is done through the eye of your customer –what is unique to one prospect may not be to another. A regional organization may have substantially better service than competitors in their local geography, but if it is pitching a large, national brand, their unique differentiators as a local provider may not be able to satiate the needs of the prospect, who needs services outside of that area. In this scenario, a salesperson would be required to reposition their differentiators in order to remain competitive for that business.
Ultimately, the power of the differentiation lies in your organization’s ability to articulate the ways in which these capabilities create value for the customer. If able to explain how the investment you have made in a particular process or characteristic ultimately translates into money made or money saved for your customer, these become the standards by which that customer will measure the competitors — leading the customer to realize you are superior each and every time.