Why? Let’s pretend that you are in an industry with no differentiation. Here is what happens when there is no differentiation between competitors:
- The product for sale is viewed as a commodity. (Hint: This is what purchasing agents get paid to do.)
- When products are viewed as commodities, the only factor considered in the value equation is price.
The way to avoid the situation of competing on price alone is through differentiation. In other words, you need to provide a value proposition that the competition can’t. Let’s examine some ways to differentiate your business.
Differentiation vs. Expectations
The biggest mistake we see people making is mistaking an expectation for a strong differentiating factor. Here is an example of an expectation: an ad for a computer services company said that the company’s differentiating factor was that “they provided the best service.” How can you claim to have the best service when that is a matter of opinion and will vary from customer to customer? Additionally, good service should not be a differentiator; it is an expected component of any company.
What this company should have relayed as a differentiator is something like this: “Our real-time preventative maintenance software allows us to find problems before they happen so that you don’t have to worry about any downtime or lost work.” This relays a clear message of how hiring this company would benefit your business over a competitor’s. Which company would you choose to work with? The answer is pretty obvious.
Remember, when you are meeting with customers in person or over the phone, they are always wondering, “Why should I do business with your company rather than someone else?” Make their job easier; give them a clear reason for why you deserve the business and why you are different!
How to Develop or Determine Your Differentiating Factor
Now that you know the importance of differentiation, you need the tools to implement your differentiation factor. The easiest way to accomplish this is to ask yourself, “What do I do better than my competition?” or “Why do my customers choose to do business with me?” Your answer may indeed be that you provide a better service; however, what your customers need to know is what value better service provides to them.
There are three ways by which you can provide value to your customer base:
- Your company
- Your product or service
In sales, differentiation is one of the simplest concepts to apply, but ironically, it’s also one that is often overlooked. By having strong differentiating factors, not only will you be giving yourself an edge over the competition, but you will also avoid falling into the price-competition trap.
About the Author
Henry Pellerin is the president and founder of VantaEDGE™ Inc. and co-author of The Strategic Selling Process. VantaEDGE™, Inc., provides customized sales training, consultation, and facilitation services. Henry personally has had more than 17 years of experience in sales, sales management, and business development, and he shares his expertise with clients to help them receive the same results he has attained year after year.
You may want to sign up for the VantaEDGE™ monthly sales tips newsletter, VantaEDGE Monthly, from which you’ll receive valuable selling tips each month along with the special report “Avoid the Top 10 Selling Mistakes That Lose Sales.” To do so, visit www.vantaedge.com. Henry can be reached at 864-254-9300 or via email at firstname.lastname@example.org.