Real Differentiation
How can you tell when your distinction is real?
This question comes up often in strategic planning meetings because real differentiation is extremely important in almost all markets. It’s also an important question because we tend towards a kind of self-delusion that comes up in strategic planning. By making ourselves think we are better than we are, we can downplay the difficulty of the tasks. This self-delusion, however, just makes strategy execution more difficult, because we build strategy on top of bad assumptions.
Figuring out how real your differentiation is can be a daunting task.
When the differentiation is based on measurable, objective data, it can be easy, of course. If your airline has the best on-time record, according to the FAA, that’s a fact. If your car gets the best mileage, that’s also a fact. But when your distinction is less measurable, like design or innovation, you’re going to have to figure out how to establish objective measurement for basically subjective characteristics.
Naturally, the real test of these subjective characteristics is the market, so it makes sense to ask your customers.
To really make the measurement objective, though, you also must ask people who are not your customers. When your customers say, for example, that you have better service, they may be judging your service by a yardstick that you haven’t considered. Non-customers may think your service is terrible – and they aren’t customers partly because they look at service differently.
The biggest difficulty in understanding these distinctions is not just understanding who to ask.
It’s starting with a qualitative analysis, and then figuring out a way to ask the question quantitatively. This means you must get deeper answers from customers and non-customers about why they choose you – or not. Ask the question “why did you choose us?” directly in conversation with customers, and not just in a written survey. People try to save time answering written surveys, so they don’t get into the details of their decision making process. What you want is a clear, detailed breakdown of the customer decision making process.
Here’s an example:
Sometimes, I drink soda. Frequently, when I do, I am given a choice of sodas. Certainly, this happens when I buy soda at the grocery store, but it also happens in restaurants and at bars. How do I decide? Certainly, there are some tastes I like or don’t like. I’m not a big fan of lemon-lime, so no Sprite or 7-Up. Unusually, I do have some preference for cherry and root beer flavors, so I may order those if available.
However, if I’m buying soda for a party, I know that more people would like cola, so I get Coke.
How I choose Coke over Pepsi is probably something that would take a paragraph or two to explain. There are reasons and they would be important, if you ran one of those brands. A soft drink marketing person would probably categorize me as a customer who prefers more niche-oriented flavors. That would certainly help to understand a lot, in that market. The same approach can be taken for any market. In this case, though, one of the critical takeaways would be that availability of niche flavors is critical for me.
All that, and more, would be of interest to someone selling those products.
You would not gain that insight from a survey, and you might not gain it from looking at sales numbers. Sales numbers are affected by availability. You must ask, and you have to really listen to what customers say. The difficulty we often have with listening to customers is that the task usually falls to people in sales. While good people in sales are sometimes curious, they are always more interested in selling than listening. If you want to understand your qualitative distinctions, you have to have a good listener talk to your market.
How do you figure out the reality of your differentiation?
Do you have an interesting story behind it? I’d love to hear what you have done. Drop me a line at rbradford@cssp.com, and I’ll answer any questions you may have, as well. Consider holding a one-day workshop on Simplified Strategic Planning.
For more on Differentiation, click here.
Robert Bradford is President & CEO of the Center for Simplified Strategic Planning, Inc. He can be reached at rbradford@cssp.com.
M. Dana Baldwin is Senior Strategist with Center for Simplified Strategic Planning, Inc. He can be reached by email at: baldwin@cssp.com
Co-Author, M. Dana Baldwin
Co-Author, Robert Bradford