On a scale from 0 to 10, where would you rate the importance of differentiation in your company’s success? Did you answer 9 or 10? Great. Keep reading. If you answered any less than that, you might as well quit reading right now. This article isn’t for you.
So is differentiation important for a company’s success? Yes. In fact, it is KEY to your company’s success. Otherwise, you’ll find yourself competing on price alone. If your company is just like your competitors’ then your customers can easily make an apples-to-apples comparison. When they compare everything side-by-side and see that you stack up just like your competition, they’ll have no other option but to make up their mind based on price. Unfortunately, many companies also try to compete on price too which ultimately takes the last decision factor away from your customer and can actually force them to freeze up. If your offering is identical because you match all of your competitors’ prices, your customers will have such a tough time making up their minds that they just might choose to “think it over” and not make a decision because they don’t have any clear reason to make a choice.
On the other end of the spectrum from looking just like the competition, is the end where you don’t look like any other competitors. In fact, you’re so far from looking like the competition that there is no competition. No one offers what you do so you don’t have to compete. You can name your price. If they want what you have to offer, they have to get it from you. They can’t go elsewhere.
What if you could increase your prices? Imagine if you were able to only work with the people that you wanted to work with? Would that turn your business around? How about your life?
You could spend years trying to improve your product so that you can increase your prices, but in all likelihood, that will only increase your costs which will result in lower margins and you’ll be back in the same boat, higher revenue offset by higher costs. On the other hand, if you’re able to find another way to differentiate your business without increasing your costs, you can increase your prices and increase your profit margins. There are a number of great books out there that talk about the topic of differentiation but I would recommend that you pick up a copy of Seth Godin’s Purple Cow if you’re looking for ways to really make your business remarkable. It’s a great book and he’s a marketing genius. Hope that helps.