Differentiation is the key to building a successful business.
Consumers have many options for solving their personal and business needs.
A simple Google search can result in hundreds if not thousands, of options — from direct, indirect, and replacement competitors.
Creating a unique and differentiated offer is the only way to truly stand out and capture the attention of your ideal customers.
Yet, most businesses struggle to understand what makes them different.
They look like, sound like, and bring a similar offer to the market — and then wonder why it’s so hard to get their ideal customers to buy.
We will tackle that challenge and show you how to uncover your differentiation in this article.
So buckle up and let’s go.
Understanding the Concept of Differentiation
Before we dive into how to find your differentiation, we need to understand this concept of differentiation.
Most people hear ‘differentiation’ and think ‘being different.’
So they look for any way their business can be different — design, personality, empathy, the awards they’ve won — and call that their differentiation.
To some extent, this understanding is accurate.
Your business can’t be differentiated if it isn’t different in some way.
But differentiation is far more than just being different.
It’s being different in a way that your ideal customers care about and that you can build your entire business around.
The Core of a Differentiated Business
Your differentiation is found at the intersection of:
- What your business does exceptionally well
- What your competition can’t or won’t do
- What your customers want or need
That piece about your ideal customers is vitally important.
Your differentiation gives your ideal customers a reason to buy from your business when they could buy from someone else.
It’s all about getting them to choose YOU.
That differentiation, then, needs to be something that they:
- Care about
- Want to experience
- Need to solve their problems
- Find valuable enough to pay for
Personality, design, empathy, awards, and certifications may make you different in the market, but likely aren’t enough to get people to immediately choose YOU over the competition.
Differentiation needs to be something deeper.
Don’t Settle for Surface Level
I’ve alluded to this a few times already, but I’ll say it more clearly here.
Your business’ differentiation is NOT:
- Your personality
- Your founder
- Your team
Those may make your business different from the competition, but rarely in a way that your ideal customers want or need.
They should support your differentiation, not be your differentiation.
Your differentiation is something that everything in your business should revolve around.
This means your sales process, marketing, product, service, operations, human resources, finance, pricing, customer support, distribution — everything you do in your business and every interaction someone has with your business should communicate that differentiation.
If your differentiation is a personality or your team or awards you’ve won, it’ll be hard to embed that throughout your company.
Plus, teams change, personalities change, certifications expire, new awards are granted, and your founder isn’t as available as the business grows.
A differentiation that changes every year is not a differentiation.
Find a Deeper Differentiation
You’ll need to dig deeper to find your real differentiation.
Often, it’s something you’re already doing and is so core to your business that you don’t even see it as a differentiation.
Every customer we’ve worked with at SHFT already had a differentiation.
They didn’t see it as something that set them apart from the competition — and weren’t communicating it clearly.
So, where does your differentiation come from?
I would start by looking at your:
- Repeated Results
When you build your differentiation on what you DO or what you DELIVER, it’s almost 99.99% guaranteed that your ideal customers will care about it — which is the cornerstone of a great differentiator.
Find Your Differentiation: A Proven Process
So, how do you figure out what makes your company different in a way your ideal customers care about?
It starts with research.
Step 1: Research Your Competitors
Differentiation, at its core, is about being different from your competitors.
That means the best place to start is by researching your competition.
You’ll want to find:
- What they can’t do (can’t afford, don’t have the team for, aren’t structured to do)
- What they won’t do (too crazy, too bold, too different, too expensive)
- What they suck at (where they drop the ball with their customers)
- What they don’t provide (packages, offers, services)
Channel your inner Mean Girl and find everything wrong with your competitors.
Look at their websites, reviews, offers, packages, pricing (if you can find it), marketing campaigns, and sales processes.
Download their lead magnets to see their nurturing campaigns.
Review their messaging to see what they highlight as a reason to buy.
Talk to a former customer of theirs to dig into their operations.
The more intel you can gather, the easier the later steps in this process will be.
Our Competitive Analysis Template will help you research your competition.
Can’t or Won’t Do
A little caveat for you here.
A good differentiation is something your competitors can’t or won’t do.
Look for things they might find:
- too bold
- too crazy
- too difficult
- too expensive
- too time intensive
- too much of a change
- too much of an investment
- too far outside their wheelhouse
If your competition can’t or won’t do it, you’re onto something.
Because if they can’t or won’t replicate it, and you’re the only company doing it, guess who your ideal customers will choose?
Keep digging until you find what they can’t or won’t do.
All, Some, None Exercise
Struggling to uncover what your competition can’t or won’t do?
Here’s an exercise I run with our brand strategy customers to help determine their differentiation.
It’s called the All, Some, None exercise.
Here’s how to do it:
Step 1: Create a Worksheet
Create 3 columns on a sheet of paper and label your columns: All, Some, and None.
It should look like this:
Or you can download our template here.
Step 2: Research Your Competition & Take Notes
While you’re doing your competitive research, make notes in each column:
- All – everyone in the industry does it (non-negotiable)
- Some – a few in the industry do it (premium offers)
- None – only you do it (differentiated)
Here’s an example of what those notes might look like for SHFT.
Step 3: Review the None Column
Review the NONE column and look for ideas that:
- Your business can deliver on 99.99% of the time
- Your team is passionate about
- You can afford
Any idea that meets those criteria, circle.
It is a potential differentiator for your business.
Step 2: Research Your Ideal Customers
As I mentioned above, your differentiated idea should matter to your ideal customers.
If they don’t care about it, you aren’t going to stand out in a way that attracts, converts, delights, or keeps them.
It makes sense then to figure out what matters to your ideal customers.
Identify Your Ideal Customers
Start by defining your ideal customers.
A bit of clarity here: ideal customers and target market (or buyer persona) are different.
- Ideal customers are those you WANT to work with.
- Your target market is any business you CAN work with.
The difference seems subtle, but with a brand strategy, it’s enormous.
Your ideal customers are a subset of your target market and can be found by:
- Looking at your current customers
- Asking yourself: which of these would I want 100 more of?
Those are your ideal customers and the people you want to build your differentiation around.
Go Beyond Demographics
When researching your ideal customers, go beyond simple demographic or psychographic information.
You’ll want to uncover:
- Their deeply felt pain points
- Their desired outcomes
- Their desired experience
- Their non-negotiables
- Their motivations
- How they buy
That information will help you narrow down a differentiation that matters to them.
You can learn more about defining and getting to know your ideal customers in this post.
And download our Customer Persona Template to capture your insights.
Step 3: Research Your Company
The next step in this process is to do a deep dive into your company.
Specifically, you want to look for:
- What you do exceptionally well
- What you can deliver 99.99% of the time
- What your team is passionate about
- What your current/former customers raved about
- Your processes and deliverables
Remember, your differentiation is often found in something you’re already doing, so look intently at everything in your business:
- Recurring Results
Somewhere in that mix is a differentiated idea.
Be Brutally Honest
As a business owner, I know how easy it is to sugarcoat everything you do.
Every offer is amazing.
Every process is top-notch.
No one can copy what you bring to the table.
While that may feed your ego, it will ruin your ability to uncover your differentiation.
Take off the rose-colored goggles and be honest with yourself.
It will hurt, but it will pay off in the long term.
Involve Your Team
Don’t go through this process yourself.
Involve every team member or, at minimum, your leadership team.
Allow them to be honest about the business without getting defensive.
Often, what we think is great about our businesses can use some work. And what we don’t think is all that great is the reason why people buy.
Run a solopreneur business?
Ask your vendors, VAs, or fellow business owners to help you.
Step 4: Document Your Findings & Find the Overlaps
Once you’ve done your research, it’s time to document your findings and insights.
I use a Venn Diagram to make this process easier.
Create 3 circles and label them: Our Brand, Competitors, and Customers.
It should look something like this:
Add your findings into the appropriate circles:
- What your competition can’t or won’t do = Competitors
- What your customers want or need = Customers
- What your business does exceptionally well = Our Brand
Next, you’ll want to find the insights that overlap between your circles.
I recommend starting where there are two overlaps:
- Us + Competitors = what you do well but your competitors don’t do
- Us + Customers = how you solve your customer’s needs
- Customers + Competitors = how your competitors do NOT solve their needs
See this diagram for some clarity:
Step 5: Find Your Differentiation
If you did the research and were honest with yourself, you should have a clear sense of what goes into the center overlap.
Now, you may find 2 or 3 ideas that COULD fit as your differentiation — and that’s great!
I encourage you to choose 1 main differentiator to wrap your brand around.
Choose One Main Differentiator
From a psychological standpoint, it’s much easier to embed ONE differentiation in the back of the minds of your ideal customers rather than two or three.
Focus is key.
That doesn’t mean you should ignore the other two.
- Add them as “reasons to work with us”.
- Share them in sales pitches.
- Include them on your website.
But wrap your messaging, touchpoints, operations, sales, and marketing around that key differentiator.
Remember: your differentiation aims to get your ideal customers to buy from you.
The easier you make it for them to understand and remember that differentiation, the easier it will be for you to convert them into paying customers.
Can’t Pick Just One Differentiator?
Can’t choose between your ideas?
Here are a few questions to run your ideas through to help choose your main differentiator:
- Does this apply to all your customers, or only those of a specific offer?
- Can you implement it through your operations and processes?
- Is your team most passionate about it?
I ask the last question because your differentiation should be something you embed throughout your entire company.
If your team isn’t passionate about it, your differentiation won’t work.
Not sure what a differentiation should look like?
Here are a few examples we’ve uncovered for our clients at SHFT.
“2 qualified candidates in 10 business days”
This differentiation also became our customer’s main brand message.
They developed a database and qualification system that allows them to provide every customer with two qualified candidates in 10 business days for every position — something their ideal customers care deeply about.
“We only hire food science experts for sales”
Imagine instead of dealing with a salesperson, you get to work with an application specialist who can recommend the right equipment for precisely what you need — and help you improve your product.
That’s the commitment one business made in an industry saturated with high-pressure sales.
“We only hire senior-level developers with business experience”
There’s nothing worse than paying $100K or more for software development and being expected to know what will truly work for your business.
This customer committed to only hiring experienced developers who know how to solve business problems with software.
“Work with employees, rather than founders, to develop profitable processes”
Imagine hiring a consultant to build processes that allow you, a founder, to step out of the day-to-day of your company — and they require 20 hours with you each week.
This company flipped the script and works with company employees to develop processes, review job descriptions, and make the company run without the founder.
“Provide TurboTax-like wizards for cloud deployment”
One of our customers developed a way to deploy AI and ML applications to the could using simple wizards.
Answer a few questions, and you can be fully deployed in the cloud in seconds, eliminating the need for a large operations team.
Uncover Your Differentiation
Working through the steps I outlined in this article will help you find a differentiation you can build your business around.
Remember, you want to find something that:
- Your business excels at
- Your competitors can’t or won’t do
- Your ideal customers want or need
If you can find an idea that hits all 3, you have a strong differentiation that will make your business stand out in a crowded market…
…which is the cornerstone of a successful business.
Once you do, it’s time to implement that differentiation throughout your business with a solid brand strategy.
More on that in future articles.