Opinion: What differentiation is and why it can be so tough to figure out.
A business is often created to pursue a new or unique idea – a desire to do something different: to fill a gap in the market or offer something in a unique way. Correctly understanding a brand’s differentiation identifies where the focus should be in terms of developing strengths and protecting from threats.
Many clients can usually tell me why their brand, product, or service is different from the competition, but that on its own is not strong differentiation. I see time and time again how businesses are challenged with identifying true differentiation – and I see, too, that aligning differentiation with vision, mission, and target audiences is critical to success.
What is differentiation?
Differentiation is not just the thing your business does best; it’s the value you deliver better than anyone else.
I like to think of differentiation as the reason someone choose one thing over another. Whether this is in the context of choosing one service or product over another or choosing to join one organization over another, differentiation helps make that decision. That’s why it is so critical that a brand’s differentiation is aligned with its target audience.
Differentiation is rarely just one thing. The exception is in a commodity market where differentiation is simple (price point, size, colour, etc.). Differentiation in a commodity market can be easily replicated in a “race to the bottom”.
I work with clients who have complex differentiation, where a combination of characteristics comprise the differentiation. On the upside, this makes differentiation harder to replicate; on the downside, it can be challenging to identify and articulate.
Getting differentiation wrong can costly! It can focus resources in the wrong places and fails to give the right audiences the right reasons to choose.
In my work, I like to see differentiation “baked-in” to a brand’s vision and mission. Vision articulates the big picture of why you’re doing what you do; mission articulates how you will go about working towards the vision; differentiation defines why the right people will care and what you have to protect along the way as you’re doing the work.
Differentiation defines why the right people will care and what you have to protect along the way as you’re doing the work.
What is differentiation not?
A USP (Unique Selling Proposition) is not differentiation. While the two share similarities, they are not interchangeable.
Differentiation is a constellation of qualities that define a brand or entity in a way that distinguishes it from others in a marketplace.
USP is a single unique quality or value associated with a product or service. It may be protected by patent or trademark. It may contribute to overall brand differentiation. More likely, the USP is possible because of the differentiation!
Only in a commodity market would a USP be the differentiation.
Where brands go wrong:
The internal view of what makes an organization or brand unique is often not aligned with the external view of what makes it unique. In other words, what the organization considers to be its ‘secret sauce” is not valued by the target audience.
At Phrase Strategy, we believe that our clients are experts in their domains, but being the thing you’re good at isn’t necessarily your differentiation. It’s imperative to dig deep to identify differentiation as part of the Essential Story. Doing so prevents wasting time and resources, it directs those resources into high-value activities, and it creates critical confidence.
It can also save you from disaster.
Yes, really. I’m thinking of a client I worked with that was about to put all of its marketing budget into a campaign to battle competition that was offering the same service at a cheaper price. In other words, my client was about to engage in a commodity market battle. However, the Essential Story Process revealed that their customers did not consider my client in the same category as the perceived competition. Rather, customers chose them for all their non-commodity needs!
Not only did this help my client avoid blowing its entire marketing budget in the wrong area, they also gained clarity and confidence about what their differentiation actually was. Then, they leaned way into that differentiation, transformed their business, and never looked back.
How to figure out your brand’s differentiation
To get to your brand’s differentiation, you need to know what you’re good at – that’s usually the easy part. You also need to understand the perspective of your ideal customers, members, partners, or other stakeholders. Finally, you need to look at the landscape in which you operate to see where points of saturation and opportunity reside.
When you’re heads-down in the thick of your business, it becomes very difficult to get out of the ocean, dry off, and just watch the waves. That’s why we lose sight of differentiation – and that’s why clients turn to Phrase Strategy to help. We love watching the waves. We’ll see things with fresh eyes and we can get your customers and stakeholders to tell us what they either won’t tell you, or wouldn’t think to tell you.
The team at Phrase Strategy has honed the Essential Story Process for over 15 years and we’re darn good at articulating complex differentiation. We can move your business forward with confidence, clarity and purpose. Please reach out for a consultation – we’ll be happy to talk.