— November 7, 2017
Business differentiation is the act of a business positioning itself to stand out from other businesses. This could be highlighting service offerings or maybe the execution of those service offerings.
Now, those two examples aren’t an exhaustive list of what can be used to differentiate one business from another. In fact, there are countless strategies that could be used to differentiate.
As a business, it can be hard to think of ways to stand out, so I’d like to inspire some creative thought with some examples that I really appreciate.
Before we go full-on inspirational example mode, let’s briefly touch on why differentiation even matters.
Why is Business Differentiation Important Anyway?
Quick answer: it diminishes the intensity of competition.
The whole point of differentiation is to make a business seem different from other businesses. This makes the competitive landscape uneven.
By making the competitive landscape uneven, we’ve removed at least some portion of direct competitors.
“Oh, we’re not competing with that company, they’re in a totally different ball game. We’re [doing/attracting/being] this, they’re [doing/attracting/being] that.”
Naturally, this can even lead to an increase in brand equity, which can lead to being less substitutable, resulting in higher price elasticity. This can create room to increase prices without reducing demand.
Let’s look at a couple examples to get the inspiration flowing.
Salted Stone: Full-Service Agency Who Aren’t Jerks
Salted Stone’s statement on their about page:
We’re a full-service digital agency and we’re not jerks about it.
The phrase “We’re a full-service digital agency” is very much the opposite of a differentiating factor. Just about every agency is a full-service agency.
However, adding “and we’re not jerks about it” turns this statement on its head. It almost makes fun of how many agencies call themselves “Full-Service” only to end up being pushy, and maybe a bit aggressive.
I’m sure there are plenty of business owners who have signed on with a marketing agency, experienced that, and would appreciate this positioning statement.
As an added bonus they have a part of their about us page devoted to the canine department, “Salted Bone”.
Nice job removing several competitors guys.
Archetype Differences of the Super Similar Paycom and Paychex
Paycom and Paychex have very similar service offerings. Actually, their search result listings are almost identical and feature very similar terminology.
So, product differentiation is probably not very feasible.
Turn to their websites and we see two very apparently different archetypes. Paychex is the Everyperson and could be described as “in honor of the common man and woman”.
Meanwhile, Paycom is a Hero and is positioned as software that does more for everyone. They’re working towards a greater good and they show a man whose time is being saved by their application.
Alright, the idea of Paycom being a hero might seem a little hokey, but then again maybe the Paychex being an Everyperson might be a little bland.
Even though these two positions might fall flat with some, they will resonate with others.
By successfully differentiating themselves, they corner their segment of the market. And then, by default, they aren’t competing for all the same business. Mission accomplished.
That said, they are still competitors, but the competitive landscape with them isn’t the same for every potential customer. Some people will be more attracted to the Hero archetype and others the Everyperson.
Product Differentiation Constraints
Obviously, if a company has a product that is truly unlike anything in the world today, then that can be the differentiation point. Unfortunately, that’s not always feasible.