As a business owner, understanding how to differentiate your brand from competitors is crucial. Business differentiation gives you the upper hand; it’s how you distinguish yourself from your rivals in a way that piques interest and keeps customers happy.
We’ll outline seven ways to differentiate your offerings from the competition’s, explain more about product differentiation and share examples of businesses that have successfully separated themselves from the competition.
How to differentiate your products and services
You can rise above the competition in many ways. Consider the following suggestions to go the extra mile, ensure customer happiness and set yourself apart from your rivals.
1. Offer unbeatable customer service.
Research from workforce performance company Calabrio shows that nearly 60 percent of consumers won’t hesitate to switch brands when customer service doesn’t live up to their expectations. So, if you think you can cut business expenses by reducing customer service spending, you should reconsider.
Consider the following ways to focus on excellent customer service as your business differentiator:
- Spend more on customer service. Allocate more resources toward customer service as your business grows. An emphasis on customer service will help your brand stand out as you gain a reputation for high-level customer care. As time passes, the correlation between customer service and your business’s success will grow stronger.
- Prioritize customer feedback. Take customer feedback seriously. Treat each customer like they’re your most important buyer, and demonstrate that their experience is your top priority. Consider sending text or email communications to gather survey data and act on viable suggestions. Your responsiveness will show customers you care.
- Monitor brand mentions on social media. Monitor social media platforms to see what people are saying about your brand. What do they like and dislike? Apply what you learn from social media comments and feedback to improve your product or service and create a more positive overall experience.
- Monitor online reviews. A few bad reviews could mean significantly less revenue, so pay attention to online reviews on sites like Google and Yelp. Respond to your online reviews to resolve disputes, show customers you care and demonstrate that you value your reputation.
Tip
Use Twitter as a customer support channel by monitoring brand mentions and jumping in to address customer issues immediately.
2. Lean into your niche.
There’s no possible way to appeal to everyone. Consumers have different interests, needs and reasons that drive their purchases. It’s not cost-effective to be so general in your approach that people are confused about your message.
Instead, you should “niche down” and focus on your target audience. Be an expert in a sea of generics. Catering to a niche market allows you to market how your brand is different – and better – than your competitors.
Tips for leaning into your niche include the following:
- Identify your niche audience’s needs. Identify what your target customers need from you and what matters most to them. They may prioritize resolving issues quickly, a flexible return policy or friendly engagement. For example, if your niche audience includes parents of young children, make product safety paramount.
- Go above and beyond to meet those needs. Do more than expected to fulfill your target audience’s needs and desires. Become an expert in the areas that matter to them. When you excel at making your customers happy, you’ll create loyal customers, boost customer retention and enhance word-of-mouth marketing.
3. Add a personal touch to marketing, purchasing and support.
You must emotionally connect with customers to stand out. When they feel a personal connection, they’re more likely to stick around and stay loyal to your brand. And personalizing your interactions is a great way to differentiate yourself from the competition.
To use personalization to grow customer relationships, consider the following:
- Personalize your marketing efforts. A personal touch matters in marketing. Whether you sell high-ticket items or general consumer goods, you can add a personal touch to your marketing efforts. For example, the best email marketing services help you personalize correspondence and group email messages by customer segment. Text message marketing efforts are also easy to personalize.
- Personalize customer interactions. To add a personal touch to your customer interactions, you can add thank-you messages to product packaging, send birthday discounts, provide loyalty program rewards and more. The idea is to continue building and maintaining customer relationships.
- Personalize customer service. When customers come to you for help, you have a unique opportunity to exceed their expectations with personalized service. Treat each customer with respect, and endeavor to solve their issues quickly and efficiently. Don’t hesitate to apologize if your business made a mistake. Having ample customer service options – including chatbots – is another great way to speed up resolutions and leave customers happy with the interaction.
FYI
Email personalization is more than adding a customer's name to your correspondence. It includes catered content that appeals to a specific audience niche and information that addresses their pain points.
4. Use price as a distinguishing factor.
Product or service pricing can be an effective business differentiator. However, using price to distinguish yourself doesn’t always mean offering the lowest price. Today’s market allows various pricing models, including freemium and subscribe-and-save.
Your prices should be competitive, but a race to the bottom doesn’t benefit anyone. You may even consider higher prices in exchange for offering a higher-quality product than your competition.
Tip
To raise prices without angering customers, consider raising prices in stages instead of all at once. Consider adding additional value to help your customers justify the expense.
5. Give your customers options to customize their experience.
According to the 2023 Deloitte Consumer Products Industry Outlook, personalizing the customer experience is vital to profitable growth. The vast majority (86 percent) of profitably growing companies have invested in personalizing the consumer experience, compared to 54 percent overall.
Customization is key to creating a unique experience for consumers. Allowing your customers to customize their products and the marketing communications they receive can be the deciding factor in choosing you over the competition.
Did You Know?
Companies that sell customized products have fewer returns than companies that sell more generic products.
6. Be socially responsible.
Social responsibility can be an excellent and worthwhile business differentiator. According to McKinsey and NielsenIQ, more than 60 percent of consumers are willing to pay more for products in sustainable packaging. Additionally, products that make ESG (environmental, social and governance) claims had sales growth that averaged 28 percent, compared to 20 percent for comparable products without such claims.
Social responsibility can take many forms, including charitable donations, sustainable manufacturing, community programs, and fair benefits and wages for your employees. It shows you’re concerned about people instead of just the bottom line. Patrons want to purchase from companies they feel good about.
7. Use speed to your advantage.
Delivering products faster than the competition is a product differentiator that gives you a distinct advantage. Delivery speed is often a deciding factor in consumer purchases – particularly with online shopping. Customers want their products quickly, and they’ll choose the company that can deliver.
What is product differentiation?
Product differentiation, also called business differentiation, comprises the elements, functions or qualities that make your items or services unique. You may utilize amazing new technology, provide specialty support, create an exceptionally great customer experience, have unprecedented product quality – the list goes on.
The goal of product differentiation is to identify and focus on the specific aspects of your offering that make customers want to buy from you.
Product differentiation is crucial for three primary reasons:
- Product differentiation helps you gain a competitive advantage. It’s only natural that customers compare your product to similar ones on the market. Be prepared for these comparisons by knowing what makes your product or service special.
- Product differentiation helps you build brand awareness. All aspects of your brand identity, including your logo, brand storytelling, company mission and your product’s unique value, can help build brand awareness. A unique product or service is memorable and can more easily become the topic of conversation.
- Product differentiation helps build consumer relationships. When you differentiate your product or service, you’ll appeal to a specific audience’s needs and desires, helping you create and sustain a relationship.
FYI
Successful product differentiation can promote customer loyalty and help ensure word-of-mouth recommendations.
Types of product differentiation
There are three types of product differentiation: vertical, horizontal and mix.
- Vertical differentiation: Customers rank their options based on an objective factor, such as feature availability, price or quality. These lists are often sorted from best to worst, or vice versa.
- Horizontal differentiation: Customers sort their options based on a subjective factor, such as personal viewpoint or taste. Choosing a product based on available color or flavor is an example of horizontal differentiation.
- Mixed differentiation: This combines objective and subjective factors. This differentiation type means that consumers are evaluating pricing and features with their own wants and needs. For example, buying a computer involves a mix of vertical and horizontal differentiation. A customer will take into account objective factors, like price and necessary features, and subjective factors, like the color of the computer.
Examples of successful product differentiation
Learn from the example of these companies that have successfully differentiated their products, leading to a loyal customer base and stellar sales.
Lush
Differentiators: Sustainable and ethical ingredients, authenticity
Lush is a beauty manufacturer and retailer that sells body lotions, makeup, and skin care and bath products. Its products are never tested on animals, and the ingredients are 100 percent plant-based. In addition, 90 percent of its packaging is recyclable.
Lush eschews the slick packaging and marketing of most beauty brands, opting instead to present a homemade, down-to-earth image. Its stores encourage visitors to try products, demonstrating the company’s confidence in product quality and that it cares about customer needs.
Trader Joe’s
Differentiators: Unique products, excellent customer care
Trader Joe’s grocery stores have a very different feel from other grocery chains, and it’s working. From August 2022 to May 2023, visits to Trader Joe’s were 6.3 percent higher, while the grocery industry as a whole had 5 percent fewer visits. One reason is its unique convenience foods, which are difficult or impossible to find at competitors’ stores. Most of these beloved products are private label; customers keep coming back for them because they meet their needs for healthy and delicious meals that are easy to prepare.
Trader Joe’s stores have a small footprint, making it easy for customers to find someone to help them. The company’s culture encourages employees to be friendly and helpful to customers. This customer engagement is responsible for Trader Joe’s ranking fourth among the most trusted companies in the United States.
Dr. Squatch
Differentiators: All-natural ingredients, marketed toward men
Unlike most personal care brands specifically targeting women, Dr. Squatch targets men exclusively. This is evidenced by its strong scents, such as Cypress Coast, Bay Rum, and Fresh Falls. The company’s mission is “Raising the bar on men’s personal care products.”
To appeal to Dr. Squatch’s demographic, the company uses humorous long-form videos that have gone viral. Its YouTube channel has over 80,000 subscribers; some videos have over 120 million views. As a secondary point of differentiation, the company stresses that its ingredients are 98 to 100 percent natural, with no harmful ingredients or estrogenics like soybean oil or parabens.
Amazon
Differentiators: Huge selection of products, low prices, fast delivery
When Amazon started as an online bookstore, its key differentiator was the number of titles it carried. As it expanded into other product lines, Amazon continued to present customers with a wide range of prices for the same or similar products, largely from third-party sellers. Since sellers compete on the platform and there is less overhead than with a physical store, this drives prices down for customers.
Amazon upped its game in 2005 when it introduced Prime with two-day delivery. Since then, it has offered Prime free one-day delivery on more than 10 million products and even same-day delivery in over 90 U.S. cities. Same-day delivery is free to Prime members on orders over $25. This offers unparalleled convenience to customers.
Jennifer Dublino contributed to this article.
