If you've been following my recent videos on different approaches to differentiation then by now you should have a stock of ideas for how you can differentiate your business.
Today's video will show you how to make that differentiation pay. It will show you how to analyse your ideas for differentiation to make sure you have one that can turn into more clients at higher fees.
And it will show you the one big thing you need to do to turn your differentiation ideas into something that will impact clients.
Today's video is the third in our series on how to differentiate your business – specially tailored for service businesses.
Today we're looking at a common approach to differentating your business – highlighting the difference in how you do what you do. It's a common approach: but one that often falls flat.
In this week's video I show you the 3 key factors you need to get right to effectively differentiate using your “how”.
One of the questions I get asked the most often is “how can I stand out from the crowd?” or “how can I differentiate myself?”.
No doubt you've read lots of articles about creating a clear USP (most probably quoting Dominos as an example despite the fact that Dominos “delivery in 30 minutes or your money back” USP ceased to be effective decades ago).
The truth is, it's darned difficult for high value product and service businesses to create compelling differentiation with our competitors in a simple statement on our website or in an elevator pitch. And it's also often misguided.
In this video I show you how to use the “2-step differentiation” process to stand out from your competitors in a different way – one that's much easier to achieve for most of us; and much more effective too.
We talk a lot about differentiation in marketing. Differentiation is something that sets us apart. Unique attributes of our services that are valued by our clients but that can't be easily reproduced by our competitors.
At it's simplest level, it could be a service we can deliver that no one else can. Or perhaps we specialise in working with a particular sector so we have more experience and knowledge in that field.
Differentiation in marketing can make us the obvious “go to” person for a client who recognises they need our unique skills and capabilities.
We talk much less about differentiation in selling however. But it's just as important.
If we're face to face with a client trying to persuade them to choose us over a competitor then unless we're different in some way, the client will end up choosing on price.
Differentiation at this level is hard. By the time a client is talking to us face to face they've already discarded the firms and individuals who aren't specialised in their sector (if that's important to them) or who don't deliver the services they're looking for.
At this stage, the short list almost always comprises firms who can perfectly well help them address their problems or opportunities (or at least claim they can). They might do it in a different way to us. But at the end of the day, it's highly likely that they'll claim they can achieve the same end results.
If a client says they want to reduce their indirect procurement costs by 20% – all the consultants pitching to them will say that's what they'll deliver.
If a client says they want a smooth divorce that doesn't impact the kids, all the lawyers will say that's what they'll deliver.
If a client says they want their accounts done quickly and efficiently with minimum hassle – then pretty much every accountant they speak to will say that's exactly what they'll do.
And if everyone is saying they'll do the same thing – then the only thing that sets them apart in the client's mind is their price, right?
That's not good. Certainly not if, like me, you price at a premium because you believe you deliver a premium service.
So when it comes down to the crunch. When you're sitting 1-1 with a client and discussing what you'll do for them, how on earth do you differentiate yourself?
Well, the first thing you need to accept is that simply identifying the client's needs and then telling them you'll address them isn't enough. Everyone will do that.
Here are some ways you can differentiate yourself in these competitive selling situations:
The “Safe Pair of Hands” Strategy
You may all promise you'll deliver what the client wants. But from the client's perspective, there can be major differences in how confident they are that you'll make good on that promise. If you're able to prove through testimonials, references, or just how much you seem to understand their situation, then they'll feel more confident that you'll be able to deliver what they want. And so they'll pick you rather than selecting on price.
The “Relationship” Strategy
People choose to work with people they like and trust. They won't pick you if they don't think you can do the job. But once you've proven that, then they'll almost always choose someone they like and feel they can partner with over someone they don't.
The “Change the Game” Strategy
When you're interacting with a potential client and talking about their needs – if you can identify problems or opportunities that they haven't thought of themselves – then you can mark yourself out as being different. The quality of your diagnosis immediately marks you out as being an expert – and (rather fortuitously) can prompt the client to question the abilities of your competitors who didn't highlight these new ideas.
It can be a risky strategy if the client has fixed ideas about what they need and doesn't want to be challenged. But it can be a particularly powerful way of pulling the rug from under entrenched incumbents who have better relationships than you and are seen as safer pairs of hands.
What's Your Strategy?
These aren't the only strategies you can use in sales situations – but they're good ones. Ones which I've seen work time and time again.
Whenever you're in a competitive selling situation you absolutely must have a differentiation strategy in place. Just diagnosing the client's needs and saying you'll meet them is not enough. That's the baseline – everyone will do that.
Unless you want to end up competing on price you must have a compelling reason why they should choose you. It might be different for every client – but you need one for every client. And that means in every competitive sales situation you've got to put the time and effort into developing it.
So for those upcoming bids, pitches and sales meetings you've got: what's your strategy?
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!
It's really important to think about your competitors when developing strategy and trying to develop a unique differentiated position for your products and services.
But when you're selling – actually communicating with customers – thinking about your competitors, or even your differentiators, can be a huge mistake.
What customers are primarily interested in, of course, is what you can do for them: the end results or benefits they get.
But when you think about your competitors your focus turns instead to yourself and what you do – and how it's different from what they do. Your communication begins to move away from being customer-focused, to being seller or product-focused.
In fact, in the majority of cases, the best way to differentiate yourself is not to think about your competitors; but instead to focus purely on the value you bring to your customer.
If you can really understand that value – and communicate it clearly to your customer – then 9 times out of 10 you'll be the only one doing so. And that in itself will be a huge differentiator.