If you haven’t noticed already, we have been looking at each principle of the Proposition Mantra, which summarises the four principles of compelling commercial propositions. In the two previous posts, we covered the Relevance to customers and Focus on strong capability principles, and today we will talking about the third one, Differentiate from competition.
We all know from economics class that differentiation has a critical role in competitive advantage. Here we will not be talking about barriers to entry, sustaining advantages, and signalling criteria, but concentrate on the differentiation lens which proposition teams use to create a compelling proposition.
How your commercial proposition can differentiate from competition?
Contrary to what marketers tell about the ‘uniqueness’ of the value proposition, commercial propositions focus more on the value it brings to the customers and how to make it hard for competitors to replicate that value.
It is perfectly OK for the proposition to not be unique or exceptional – let’s be honest, most goods and services we use and purchase have a myriad of versions which compete against each other.
Proposition teams use three questions to establish whether their idea or business opportunity can be difficult to replicate:
Do we offer something new?
Undoubtedly, the paramount shout against competition is to bring to market a completely new capability – new feature, new flavour, new style.
But newness does not carry you far if it is not relevant to customers as we have analysed before, or if it is so far ahead of its time that mass market adoption is light years away. I am two thumbs up for innovation if it makes lives easier and happier and if it can be delivered at an acceptable cost.
In commercial propositions, we use ‘new’ to the extent it gives us an edge against competitors.
Do your research and benchmark whether the new opportunity is already present in existing competitive offerings. Investigate how competitors market it in terms of channel, price and advertising methods. Go over sales data to analyse whether this capability gives competitors identifiable advantage ahead of your products or services.
If what you offer is entirely new, if it is relevant and desired by customers and no other competitors offer it, you are spot on. Even more, you can move to the second step:
Can we do it better?
This question usually stirs the innovation juices most, no matter if you are a Follower or an Innovator. Is your proposition giving extra value which customers truly care about and your competitors cannot offer it to the same extent?
In my experience, 95% of all compelling propositions are about smaller improvements, rather than earth-shattering innovations which dazzle the markets. In my book, “better” means three things:
- Improved experience for the customer – from finding and purchasing the product or service, though using and interacting with it, to disposing or stopping to use your service.
- Rich and immediate service – how to set the product up or activate the service, how make the most of it, how to repair it, how to return it – end to end.
- Transparency of communication with the customer –
Can we do it cheaper?
Speaking of value, a third way to differentiate is to make your offering better value for money.
I am not talking about temporary promotions or sales offers on your products – this is a great commercial tool, but when your products enable customers to save time or money (or both!). That is using novel production techniques or innovative technology platforms to completely revamp your offering and drastically reduce its price, or increase appeal and efficiency. Household examples nowadays are cost of processing power, virtualisation, Cloud storage.
Using such improvements to pass the cost and efficiency benefits back to the customers in the form of slicker, faster, cheaper services creates great advantage which is hard to replicate, at least temporarily.
How to uncover and shout about your difference?
With help from marketing and customer service teams, make sure you talk to your customers, interview them on why they stay with you, why they recommend your company and products? Once you have nailed the current competitive angle and the key call outs, align the rest of the organisation to support the shout.
Every business has a tendency to move to the next big thing – it is so tempting! Yet, propositions teams should be one of the guardians of those evolving competitive differences. These need patience to stick around and to grow in customers minds to make differentiation truly lasting.
To conclude, I recommend a reading which vividly illustrates how well-known brands have differentiated against the competition, Bethany Sheppard’s piece in HubSpot.
How does your business approach differentiation? If you want to share stories and lessons learned, please feel free to send me your comments.
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