3 Things Your Differentiation Strategy Need to Succeed


After my post on business growth strategy two weeks ago, I have received several requests to expatiate on how small business owners and entrepreneurs could leverage differentiation strategy to grow their business. Peradventure you missed it, you can read the 3 Strategies that Differentiate Your Business from the Competition here.

Let me begin by acknowledging that by the sound of it, Differentiation Strategy seems like something only big companies can do. In reality, it is one strategy many successful small business owners and entrepreneurs use daily to grow their business.

The basic differentiation strategy for growing your business


1. Know your product or service

The primary essence of a differentiation strategy is to strive to offer more values in the marketplace, than your competitors. To differentiate effectively, you must have a clear understanding of the values that your products or services offer. In business parlance, this is called Value Proposition, or Unique Selling Point (USP).

To understand your product, you must be clear, first, about who you are building it for. Equally important is identifying the exact problems or gains that the product or service will solve for the customer.

Value propositions solve the customers’ problems and meet their needs. Below is a tool you can download to create your own value propositions.

differentiation strategy tool, executive coaching, business growth, Strategy Design

In answering the questions above, pay attention to the fact that your product or service is not about you. It is usually about the customer, who enjoys and pays for the value you are creating. This principle of knowing your product is so crucial for existing businesses as well as startups. In fact, not understanding the concept is the one big reason why many start-ups fail.

2. Create a competitive advantage

To build a successful business, you need to build a portfolio of loyal repeat customers. While it is good to pay attention to customers, developing relationships that make them keep coming back to your business should be your priority. To do that effectively requires creating a competitive advantage.

Your competitive advantage is the superior performance you have achieved over your competitor through your differentiation strategy. The sad reality, which, of course, makes competitive advantage crucial for business growth is that you don’t achieve it overnight. Your competitors have good products; they equally have good marketing strategies and a superior customer service. So to outperform your competition, you need to position your product in a way that appeals to your customers uniquely, and then preserve that uniqueness. Achieving that requires offering a superior value, or delivering a comparative value at lower cost, or both.

3. Segment your market

Segmentation simply means separating different types of people or prospective customers into different unique groups. The goal is to help you to understand your customers so you can meet their needs better. You can segment your market by grouping customers according to their needs, pains, or problems. The information you obtained in step 1 above will be useful for doing that. Another way you can segment your market is by grouping your customers by where they live, what they do, or their age. You could also include their orientation; whether they are male or female.  Understanding these details will help you to tailor your marketing towards satisfying their specific needs. 

Author: Nkem Mpamah
Nkem Mpamah is Nigeria's #1 business coach, leadership, and strategy consultant for the services industry. Nkem coaches successful entrepreneurs to improve performance, increase competitiveness, and expand their entrepreneurial freedoms. He is the founder of Cognition Global Concepts, and creator of the Growth Syndicate Program." Nkem is author of "The ART of Achievement and Fulfillment", and "The Entrepreneur".

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