Managing director of Vincent Consulting
Competing on price is problematic for most businesses. In many cases the end result is not sustainable.
All businesses must find or create a way to differentiate their business in order to demonstrate that their product and service capabilities are unique or better than competitors.
This is a critical part of the business strategy and the best way to be able to obtain a premium price.
We all want to be seen as special by clients and this in itself is not a new concept, but in reality it is quite often hard to actually do.
The object of differentiation is to convince the target market that a product or service is clearly the best choice to suit their needs.
Product differentiation is the act of distinguishing a product from its competitors on basic performance, quality, features and benefits.
Service differentiation is focused on understanding and anticipating the market (customer) needs, and attempting to meet those needs with focus, due care and attention.
An important part when selling your differentiation is to be able to demonstrate your product and/or service as the ideal solution to the clients’ needs, and show that the value of what you are selling outweighs the price you are asking.
In effect, the customer values your product or service greater than the cost.
Here is a tip that may help you in defining your differentiation (or lack of).
Ask your customers these questions:
- What made you decide to engage our company?
- What’s one thing we do better than others like us?
- What’s one thing we could do better?
- Would you refer us or do you refer us?
- If you would refer us, what would you say?
If your clients or prospects can’t tell you how you are different, they are then likely to use the only measure they recognise – and that is price.
Differentiation is attainable but requires constant attention.
Often, your competitors will copy, or even improve upon, your unique values or advantages, and therefore the advantageis soon lost.
To combat that loss of advantage or uniqueness, your business needs to be continually developing new added value and benefits in existing products or services, and/or develop new products and services to remain in a market-leading position.