Many companies offer services similar to yours, so why have you gained your success? What gives you a competitive edge? What makes your company different? The crux of creating an effective business strategy lies in knowing and defining your differentiators.
Differentiators enable you to build a compelling case to your prospective customers. To be effective, you must communicate to prospects exactly what sets you apart in clear, memorable terms.
How exactly do you define your differentiators? First, it’s important to understand your unique marketplace position. Your differentiating qualities and capabilities need not be complicated. Differentiators are usually, in and of themselves, quite simple. Too often, leadership teams waste a good deal of time on the impossible: trying to come up with a differentiator that is new, innovative, or unheard of in the marketplace. The fact is, your differentiator can be as simple as your company always answering your customers’ calls.
As you define your differentiators, keep in mind that customers buy for specific reasons. The ultimate purpose of your differentiators is to help you attract and retain customers. For that reason, you need to have a deep and precise understanding of why your customers are buying from you, and why your competitors’ customers are buying from them. This analysis requires both clarity and emotional separation. You may need to let go of preconceived notions as to why people choose you to really get to the root of your success. Compare the following situations:
- The board of a private golf club determined that it could differentiate its club through a combination of excellent service and the superior condition of the course. The staff had previously cut corners on cost and, in turn, sacrificed excellence. When the board saw other clubs cutting the same corners, it made the strategic decision to invest in more staffing, higher-quality service, and improvements to the grounds. Membership grew in response.
- A private 9-hole course assumed that its members wanted a “country club experience.” Therefore, the board added a fancy new dining pavilion and expensive golf carts, and raised dues to cover those expenses. Membership declined. Members later shared that they had actually enjoyed the relaxed, informal feeling of the club along with its low cost. The board misunderstood its customer base and chose the wrong differentiators.
Defining your differentiators enhances your unique position in the marketplace, raising a barrier against your competition and allowing you to capture your highest growth opportunities at the greatest margin. You must correctly identify your differentiators and have a solid understanding of what your company brings to the table and what makes your customers loyal; without that, you’ll just end up with a fancy new dining pavilion and no diners.
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