3 Strategies that Differentiate your Business from the Competition
- Posted by: Nkem Mpamah
- Category: Leadership Development
How you differentiate your business in a crowded market will make a huge impact on your success or failure. Differentiation is the foundation of every business strategy and the determinant of business success.
Your business is successful only when you are delivering better value than your competitor. So, being aware of what your competition is doing, and how they are doing them is useful for your differentiation strategy. As in the military, your strategy implementation cannot be complete without considering what your opponent is doing. Therefore, understanding why people buy from your competitors will help your positioning in the marketplace.
Why you need to differentiate your business
Your ability to challenge your status quo and think differently could be everything you need to disrupt your industry. Challenging the status quo is a crucial process for differentiating your business and creating a sustainable competitive advantage.
Let me explain.
When customers want to buy goods or services, they make buying decisions based on differentiation. This is important because they want to know “Why” they must buy from you. They want to know what makes you different from everyone else, and it takes only about 1 to 2 minutes to think through it.
As customers get more sophisticated and enlightened, they continue seeking:
- the highest value at the lowest price,
- the highest value at reasonable prices delivered at the speed of light, or,
- all of the above, plus a superb customer service.
It is equally important to know that the customers need not go far to look for this information anymore. With a smartphone and an Internet connection, they can access the information in minutes.
How to differentiate your business from competitors and gain a competitive advantage
Differentiation is not for the “big boys” only. Small businesses differentiate also. If you want to build a successful business, you need to understand what it takes to differentiate your business in the marketplace. This is so crucial because survival in your industry requires the ability to cut through the noise to get to the heart of your prospective clients.
To do so, you need to begin by developing a unique message that addresses the need of your niche. Such message needs to be different from the uaual “I am a consultant,” or I’m CEO and Founder of XYZ Company” found on many business cards. From my experience of coaching top producers, neither of those statements can arouse a prospect’s interest in your offerings.
Being clear about what you do or say is important in positioning your business positively in the minds of your prospective customers. Below are the three fundamental strategies you can adopt to differentiate your business.
1. Define your competitive advantage
In business, differentiation is the highest competitive advantage you can build on. So, your competitive advantage can be anything that you do or say that makes people see you differently from others. You do not need to jump from a 10-story building to be seen as such, though. In fact, it could be anything as little as being honest; your everyday behaviour, attitude, or way of doing business that sets you apart. For a business like Apple, it is the simplicity of use of their devices that differentiate it in the market.
In differentiating, think of something you can do or create that could potentially add more value, more respect, and more meaning to your customer. In my executive coaching and strategic advisory business, I work with top producing entrepreneurs and CEOs to achieve 3 Cs: Clarity, Confidence, and Capability. Each of the 3Cs is crucial for my clients to execute actions with discipline and achieve their biggest goals. That’s the type of value I bring into the marketplace. Now, how can you describe your value proposition in terms of your product or service?
2. Develop strong Capability
A capability is something you do that someone else will find difficult to copy or imitate. That is your area of excellence or superiority in the marketplace, with is often embedded in your daily actions.
Again, let’s consider my business for example. Many coaches in the strategic business coaching niche offer a hybrid of consultancy and business growth advisory services to their clients. After several years of working hard to understand the specific pains of my target customers, I refined my service to resolve those pains. Thereafter, I started receiving positive feedback from several of my clients about how working with me gives them “Peace of Mind.” That was how I discovered my competence and area of excellence and superiority in my work?
Achieving business excellence takes consistent effort because you do not achieve it once and own it forever. To create business excellence requires three factors. First, you must focus on what you do that makes a difference. Then, you must discipline yourself to commit your time, effort, and resources towards achieving it. Finally, you must take a consistent action in ensuring that you are on top of your game.
3. Define your Unique Selling Proposition (USP)
Understanding what makes your business unique can literally transform your company from struggling to the next big business in town. That thing is your Unique Selling Proposition; something that you offer that appeals to the needs of your customers.
When you understand your USP, it drives your motivation and becomes the single most important marketing message or story that anyone in your organization can tell.
Let me explain.
Your USP is the strongest promise that you make to your customers through your product or service. Think of it in terms of the solution you offer to alleviate your customers’ pains or needs. For example, the 3Cs – Clarity, Confidence, and Capability are the USPs that my service offers to my clients. A strong USP speaks to customer’s specific needs and creates the basis for them to remember your business.
The bottom line is, whether you are managing a multi-million dollar business or a sole trading outfit, identifying the key factors that differentiate your business from the competition will increase your chances of growth. Take some time off now and brainstorm the three strategies above to discover what sets you and your business apart.