Every marketer has their pet marketing advice — something they’ve seen work so well it becomes their go-to method. They’ve studied it, they believe in it, and they insist that anyone they work with use it. For some it’s conversion rate optimization, viral content, building a community of advocates, or any of hundreds of tactics.
For me, it’s differentiation — communicating how your solution is better than all the others.
It’s not sexy, growth-hacky marketing advice that makes for clickable post titles. It’s not a simple trick you can “implement in 10 minutes” and achieve “an overnight 231% increase in <insert key metric here>.”
I’d argue that implementing those easy tips and quick wins without defining a strong differentiation strategy is like building a race car without bothering to give it a powerful engine. You can make it look like a race car, with a fancy paint job and roll bars, you may even be a great driver, but without a fast engine, you’re not going to win races. Your ability to compete will always be undermined by your failure to invest in a single, absolutely critical component. You’re gonna get lapped over and over by people that didn’t make that mistake.
Having a better differentiation strategy than your competitors is like having the fastest engine on the track. You aren’t guaranteed to win, but you have the best possible chance. Tweet this
It might sound like a silly analogy. Who would build a race car but not give it a powerful engine? But, it’s all too common for businesses to attempt competing in crowded, cutthroat markets without giving their target market clear, compelling reasons to choose them over the hundreds of alternatives!
This is extremely unfortunate because it’s foundational to a marketing strategy and, in fact, a business strategy because…
It’s your company’s reason for existing!
It all begins here. If your company’s solution (product or service) isn’t offering something unique and valuable to the market, you’re going to have a really hard time attracting customers. Your best chance at making a sale is that customers find you first and then don’t bother to do any comparison shopping. Certainly not a solid plan considering comparison shopping is faster, easier, and more common than ever:
36% of consumers spend 30+ minutes comparison shopping before making a decision on purchasing a commodity product; 65% spend 16+ minutes doing so
And, good luck being found first if there isn’t any particular reason for you to be found in the first place! Who would recommend you to their friends? What would they say? “This solution is just like <competitor 1>’s and <competitor 2>’s. You should buy it!” What search engine would “want” to rank you first? How are you going to afford advertising if competing companies are giving compelling reasons to choose their solution over yours? They’ll outspend you and make more money doing it!
Escape the price wars
Without differentiation you’re forced to compete on something you don’t want to compete on: price.
In the absence of differentiating factors, you can gain marketshare by being the cheapest way to solve a problem. That’s always an option. But, who wants a business that succeeds on rock-bottom pricing? You’d be entering a competition to see which company can survive on the thinnest margins. Not a contest most people would want to enter and probably the most difficult way to compete!
Differentiation allows you to completely avoid pricing wars. The term was actually coined in 1933 by Edward Chamberlain to describe how it’s possible to charge a premium and compete in monopolies. Effective differentiation gives customers compelling reasons to choose you in spite of the fact you’re not the cheapest solution.
How to successfully differentiate
Differentiation is communicating what makes your solution better.
“Better” is the key word here. The most common mistake people make with differentiation is to simply list all the things that make their company different. That’s not necessarily differentiation.
It’s not enough that your solution is unique. There are a lot of worthless ways you could make your solution different. To differentiate, what makes your solution unique needs to be valued by your target market. What makes you different needs to matter to them.
The differentiation sweet spot is the green overlap that exists between “what you do well” and “what your target market values” and excludes “what your competitors do well.”
The banana industry is ripe for innovation. I could put a new spin on bananas — perhaps by genetically engineering them to come in different colors — but I’m not sure my fledgling banana operation (Brian’s Bananas) would take off. The novelty of eating a purple or blue banana would wear off quickly (and it’s not likely to appeal to many people to begin with). But, if I could create a better-tasting banana, with more nutrients, that stayed fresh twice as long, that would probably work because those are attributes banana buyers value. Those differentiating factors might be so valued that I could charge considerably more for Brian’s Bananas. My bananas aren’t just different, they’re better bananas.
Creating a league of your own
The result of a successful differentiation strategy is that it reduces direct competition. You’re able to position your product so that it occupies an entirely different category in a prospect’s mind. The more differently you can position it, and the more effectively you communicate why those differences are important, the more distance you create between your position and your competitor’s positions. As long as that distance is created by product attributes that are valued, you increase the chances a consumer will choose you.
Here at ActiveCampaign we’re all too familiar with the need to differentiate. Between email marketing, marketing automation, sales automation, and CRM providers, we have hundreds of competitors! How do we stand out and create so much value that customers choose us? How were we able to steal so much marketshare from bigger, more well-known, and deeply-entrenched competitors?
There’s quite a few things we do different and better than our competition. One fundamental difference is our approach to creating a marketing stack. Many of our competitors have chosen to go the “all in one” route. They’ve rolled as many solutions into their platform as possible. They have tried to be the “jack of all trades.” The idea of having all your tools in one platform sounds appealing at first but the flaws of this approach become more apparent and more troublesome as time goes on. As customers become disillusioned with this approach, they start to seek out alternatives that are less limiting and more powerful.
Rather than trying to be everything to everybody, we’ve taken a wholly different approach. We’ve specialized and focused on three core solutions (email marketing, marketing automation, and sales CRM automation). We do what we do really well and we let other companies do what they do really well. We believe it’s better for most marketers to assemble a custom stack of best-of-breed point solutions that have the features they need at the pricing that works.
Need a landing page builder? Integrate ActiveCampaign with any of the dozens of excellent landing page solutions, like Instapage.
Need to process payments? Integrate ActiveCampaign with any of the dozens of excellent ecommerce solutions, like Shopify.
Need to create a partner program? Integrate ActiveCampaign with AffiliateWP or any of the other excellent affiliate solutions.
In our opinion, your marketing automation platform should be the foundation of a custom stack. It’s where all data is consolidated to drive marketing processes. In support of this differentiating attribute, we’re developing Deep Data Integrations that make stacking more powerful and appealing than ever.
Even though we offer a marketing & sales automation solution like our competitors, with this marketing we’re pointing out that we occupy a different category of marketing & sales automation solution. By explaining how a marketing stack of specialized apps is a superior approach, and pointing out the weakness of the all in one approach, we give customers an incentive to choose our category of marketing & sales automation rather than our competitors.
As we go on to point out that our platform is easier to use, that we develop innovative features much faster, and our time to positive ROI is less than half the industry standard, we create more and more distance between our “marketing automation position” and “our competitors marketing automation position.” Eventually, enough distance is created that it becomes clear we are the best choice… and at that moment we earn a new customer.
Why should you drop everything and focus on differentiating?
If you take the time to create a solid differentiation strategy now, everything after that becomes easier and more effective:
- Your marketing messages become easier to write because you have clarity on what you should be communicating. You’re communicating what makes you unique, and why those differences are valuable, so your sales copy becomes more effective.
- It’s now possible to increase your pricing because you’re doing a better job of creating value in your customer’s mind and positioning your solution as superior to the alternatives. Customers are less likely to choose a competitor because they’d be missing out on the unique advantages of your solution.
- As a result of your improved conversion rate from your improved copy and your wider margins from your premium pricing, your ad spend’s ROI improves. It’s now possible to invest more into advertising so you’re reaching more prospects and creating more customers.
- Word of mouth and referrals will increase because, first, you have more customers, but also, because people have a reason to recommend you. Your talking points become their talking points.
- You put more pressure on your competitors and decrease the effectiveness of their own marketing & advertising by explaining how your solution is better. Due to your unique position, you’re able to compete against larger, more established companies. Your differentiating factors are the key to competing with, and even beating, the 800-pound gorilla that exists in your space.
All of this means you’ll gain marketshare faster and easier.
If you’re interested in learning more about how to successfully differentiate, please let me know in the comments. I’ve got plans for a follow up post with specific guidance on how to identify opportunities for product differentiation and then successfully communicate those differentiators to position your solution.