Differentiation…by definition means you are different from others in your industry, or any other group. Easy definition to grasp.
However, DIFFERENTIATION IS GIVEN LIP SERVICE TODAY BY MOST COMPANIES.
Ask a company or organization if they are different and of course the answer will be a resounding YES. Ask their customers and more often than not, the vote changes to a resounding NO. Yet if you want to survive in today’s highly competitive markets and over the next few years, differentiation is the holy grail companies must achieve.
Unfortunately, companies still feel that their products and services differentiate them from their competition. And in some isolated cases this may be true. Commodities operate in this way. If you are cheaper, have better terms, better delivery system, and a few other “features” of your product or service, you might have a differentiated advantage…for now. The problem we have today is competition…the world…not our city, state or even country any longer. New entrants arrive every day and take away your differentiation…and it is more common and likely that ever before.
And if you don’t think this is happening, I would encourage you to read the stories of companies like Uber, Airbnb, and Tesla, just to name a few. Not only weren’t they in the industry before, they blew up the models that existed in the “differentiated” companies and they took billions of dollars out of the market from them almost overnight. This trend will only continue.
But today, companies have a better answer…one that will help them truly differentiate and keep this position well into the future…regardless of what happens to their commoditized products and services. Take for example, companies like Amazon (in my backyard) or Southwest Airlines or a variety of others. Sure, they can offer great prices because they have done well with their product/service models…but that isn’t their differentiation. Their differentiation is their CUSTOMER EXPERIENCE.
If they didn’t put their Customer Experience on top of their products and services, they would be just like many other companies and subjected to someone coming in and doing it cheaper or offering better services. But they figured it out early in the game…they figured out that it starts with the Customer Experience as their differentiator, not their products or services. Then they find the most economical way to further support their customers…NOT THE OTHER WAY AROUND.
They didn’t focus on the products/services to start…they focused on their customer experience and then worked hard to add the best pricing and delivery to an already ecstatic audience of customers. They have staying power because of this approach and it would be incredibly difficult, if not impossible, for someone to come in and take this away. I love the quote (paraphrased here) by Jeff Bezos from Amazon when he said, “When we started, everyone thought we were in the book business…nothing could be farther from the vision of Amazon.” They aren’t in the product business…they are in the customer experience business.
Most companies still don’t understand this model…they still think they need the cheapest products/services with the most features to win the differentiation game. And it might work…for a short while…then they will be gone. Someone will come in…usually unexpected…and wipe them out. There are tons of companies littering the business highway that followed this approach.
When research predicts 300 of the Fortune 500 will change in the next 5 years, you have to pay attention. If you are a small-medium business, they are sharing with you the future road map you should also be aware of as you build your business.
Companies that reorganize and rebuild their business with the CUSTOMER at the center of everything (and believe me when I say everything) will not only have a distinct advantage, they will create a cavern between them and their closest competitor. There is absolutely no question that the customer is in complete control today…of everything. They have hundreds of choices for anything made on the planet…and they can get it at a better price with only a few clicks. YOU CAN’T WIN THAT GAME…at least not for long.
The beauty of free commerce is that when someone sees an opportunity in an area that has either excessive profits or excessive inefficiencies, they are like a pack of ravenous wolves…they attack. And they don’t just offer something a little cheaper with a couple more bells and whistles. They change the game…they reinvent the model to be much more efficient and more profitable. This is when the status quo companies end up going out of business.
But the one area where they can’t easily enter a market and improve upon (unless it is really bad) is the customer experience. Here’s the magic bullet…EVEN IF YOU AREN’T THE MOST EFFICIENT OR LOWEST PRICE…IF YOU HAVE AN INCREDIBLY DELIGHTFUL AND REMARKABLE EXPERIENCE YOUR CUSTOMERS LOVE, YOU WILL SURVIVE. And in most cases, you will lead in the industry because this is more important today than ever before. It has become the TRUE DIFFERENTIATOR for companies today.
Go back to the beginning of this article and ask yourself the questions again. Are you truly differentiated in your customer’s eyes and would they agree with you? Or do you still hang your business on the differentiation you get from your products and services? Gut check time…but it could save your business if you honestly recognize where you are and where you want to be in the future. And the best part…it’s incredibly fun and rewarding for your employees to rally around delivering a truly awesome customer experience…just ask them.
