You can’t turn a corner these days without bumping into a marketing consultant banging on about the importance of a Unique Selling Proposition (USP) and differentiation.
I’ve written on the topic before – and in my view, for most service businesses it’s actually far more important to focus on creating compelling client value than it is to worry about being unique or differentiating yourself.
However, it’s a topic I keep coming back to and thinking about. For while clients buy based on the value you can bring, they may well initially notice you, and remember you based on your uniqueness or differentiation.
So there’s a challenge here: being different helps you get noticed and get remembered. But if you’re different in a way that doesn’t add value to a client then you won’t get hired.
Now you can try to find ways of being unique and different that are also valuable to clients – but it’s difficult. Competition being what it is, if something is valuable to clients, other people will notice and create and provide that service too. Unless you’re very, very smart or a great reader of early trends – the chances are if you spot something that no other professional in your field is doing – it’s because clients don’t value it.
But there is another way to think about differentiation.
Too often, when we think about differentiating ourselves we think of what I call “horizontal differentiation”. We want to be viewed as doing something different to our competitors. As not occupying the same space in our niche.
But think of some of the most successful professional service firms. Do they really do something different to their competitors?
Is McKinsey the only firm that does Strategy? No.
Do Skadden, Arps, Slate, Meagher & Flom* or other top law firms really do law differently? No.
Do AECOM design different buildings from the rest of the profession? Again, no.
What sets these firms apart is not that they are differentiated horizontally. They don’t really do anything different to the other firms in their niche.
They do things better.
They’re “vertically differentiated”. Clients perceive them to be in the same horizontal space as their competitors – but above them.
That’s the perfect positioning for a professional service firm. Delivering the same services as their competitors (because they’re the services clients need). But delivering them better.
How do you differentiate vertically?
Well to some degree, the perception of superiority comes from delivering great results.
But all professional firms have a truckload of testimonials and happy clients. It’s difficult to differentiate on that.
What allows these firms to stand head and shoulders above their competitors is perceived authority.
Being a consultant, McKinsey is the firm I know best (in my career, I’ve had to come in after McKinsey projects and pick up the pieces on more than one occasion – yet their reputation is immaculate).
I’ve asked McKinsey clients about why they perceive them as being better than their competitors. And I consistently get two answers.
It’s the quality and depth of their thought leadership – and the insights their partners share when they meet with them.
Clearly these two are related. Face to face insights come from personal experience – but also from the thought leadership the firm produces. Thought leadership is usually grounded in the personal experience of the team.
But perceived authority isn’t the exclusive domain of global giants. At a local level, there are consultants, accountants, lawyers, many professionals who are viewed as authorities in their field.
They’re the ones who “really know their stuff”. Who get invited to speak at events, and who are the first to get the call when there’s a tricky or out-of-the-ordinary issue.
They get the best work, and they charge the highest prices.
So next time you’re thinking about differentiation: think about up rather than sideways.
* I could have named a different law firm – but blimey, I love that name!