What’s differentiation in business? How can you stand out from your competitors?
People are attracted to the unique and extreme, so to attract customers, Mike Michalowicz says you need a product or service that stands out and is unique to you. Otherwise, customers won’t notice you among your competitors and you’ll struggle to succeed.
We’ve organized Michalowicz’s advice for differentiating from your competitors into two main strategies.
Strategy #1: Develop a Completely Unique Product or Service
One way to practice differentiation in business is by developing a unique product or service. This method eliminates all your competitors by redirecting customer demand in a new direction that no other companies are pursuing. And since you’re the only one operating in this new niche—an extremely unique position—you’ll attract customer interest and your company will grow more successful.
To do this, identify your industry’s standard operating procedures—the unspoken rules that everyone follows and expects from a company in that industry—and then do the opposite. Specifically, Michalowicz recommends identifying which common strategies and policies irritate people. If your opposite approach resolves those issues, you’ll attract customers both by being extremely unique and by improving their experience.
One example of a company that developed a unique service is Amazon. Amazon made online shopping fast, convenient, and reliable, which radically changed the way people shop. Arguably, its success is partially due to the ways it resolved the annoyances of online shopping: Long shipping times make people more reluctant to shop online, so Amazon delivers packages within a few days—or even on the same day—of an order being placed. People don’t want the hassle of buying their products through several niche stores, so Amazon offers a massive range of products. As a result, Amazon is the largest ecommerce company in the world by revenue and is on track to surpass Walmart as the largest of any company in the world.
Strategy #2: Develop a Unique Approach to Delivering Products or Services
Another way to differentiate your company is by developing a unique approach to delivering your products or services. Even if you don’t have a unique product or service, the way you deliver them can make your company stand out and grow more successful.
Michalowicz says there are three elements to consider when developing your approach:
1. The aspect of business you prioritize. Michalowicz says you can choose to prioritize either quality, price, or convenience when delivering your products or services. Instead of being mediocre in all three areas, focus your energy on becoming the best in one of them. This leverages people’s interest in the extreme that we discussed above. For instance, if you choose quality, you’d focus on providing extremely high-quality products. People will be attracted to the idea of receiving the best products, so they’re more likely to buy from you, even if your company is more expensive or less convenient than your competitors.
2. The type of task you’re most skilled at and most enjoy. Michalowicz says to focus on completing these tasks and leveraging your strengths as much as possible. Doing tasks you hate and lack the skill to properly complete wastes time and energy, so outsource those. For instance, if you hate bookkeeping and lack the skills to complete it quickly and accurately, you’ll spend a lot of time struggling with it. In contrast, if you hire a bookkeeper, you can spend your time and energy on leveraging your strengths, such as landing new customers.
3. Your experience and personality. Your past experiences and personality inform how you operate your company. Since these elements of your life are unique to you, they make your company more unique, too. For example, a reserved individual may gravitate toward digital marketing and interacting with customers online, while an outgoing person may market through in-person events and personal relationships with customers.
