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The Myth of Differentiation

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Few would question this simple truth: Businesses must differentiate. Growth, profit—survival, even—hinge on their ability to set themselves apart from competition.

Professors Terrell and Middlebrooks of the Northwestern University's Kellogg School of Management and University of Chicago Graduate School of Business, respectively, say it well:

Service companies need to dare to be different. To find a leadership position in the market...and then to lead. The key strategy is to be different from competitors.... They break free from "be better," internally oriented initiatives to "be different," externally oriented strategies. Being different is grounded in providing customers with unique value that they cannot get from any other competitor.1

They go on to cite McKinsey as their first example.

The "need" for differentiation is so well accepted, it's considered simplistic to even make the case for differentiation. Why make a case for something everyone already knows?


Much of the differentiation conversation therefore centers more on how to do it and how strongly to do it. (Terrell and Middlebrooks go as far as to say you should position yourself so far opposite competitors that they coin the nifty term "oppositioning" to describe it.)

That we need to be differentiated at all... accepted without further thought.

I disagree. Put some further thought in it. Most everything I've read and heard about differentiation is wrong. I suspect the same is true for you.

On Unique Selling Propositions

Among the favorite platitudes of the high priests of business is that every business—nay, every person—must have a unique selling proposition (USP). A USP can be defined as doing or saying something about yourself or company that is unlike what anyone else does or offers. In other words, unique... one of a kind.

I deliver about 40 speeches and presentations per year. During presentations I frequently ask the members of the audience to take a few minutes to deliver their elevator pitches—the minute or so discussion they would use to describe themselves to the CEO of a company they would like to win as a client.

When they're done, I ask folks to raise their hands if their partner delivered a fabulous elevator pitch. Many hands go up. When I ask what was so great about them, I typically hear things like this: They were clear about what they do, what difference they make for their clients, and which industries they serve. Often I hear of stories told that brought their companies to life.

I then ask who has heard of the concept of a USP, and who has been told at least once in their business lives that they need to have one. Most hands go up. I then ask whose elevator pitch partner said something unique. Usually no hands go up, but here and there a bold person or two jump into the fray.

In the end, good as their elevator pitch partner's delivery might have been, most people back off their stance that their partner was unique.

The "Unique and Different" Label

Too often in elevator pitches, and in marketing messages in general, professional services firms ill-advisedly label themselves as unique and different. A quick Google search for "unique consulting firm" (with the quotes, so it would get results that only had these words in a string), yielded close to 4,000 sites. Here's one from the first page:

[Firm Name] is a rather unique consulting firm.... Our target audience is composed of those firms that seek quality rather than quantity and price. Our company specializes on small and mid size businesses, but we are looking for clients that are less worried about prices, than exclusive services and results that they will receive. Thus, a price conscious client is not really suited for our firm; our services are of high quality and slightly higher priced, but the customer service and end results are virtually almost exceeding the client's expectation.

[Author's note: I tried to find more professional-sounding copy that included the term "unique consulting firm," but they were all pretty much like this. Can't make this stuff up, folks.]

Once a firm labels itself as unique, it elicits this question from the reader: Is it really unique (or, as in the case of the firm above, "rather unique") while, at the same time, "virtually almost exceeding the client's expectation?" Ugh.

Should the answer be no, and by and large it is, the firm loses credibility. More than anything, its sounds as if they've read in some marketing textbook that they have to have a USP or differentiated message, thus they use words to that effect.

Many admit later just how amateurish they sound, and sometimes acknowledge that they thought it sounded amateurish before they launched their unique-speak publicly. Firm leaders tend to have good common-sense radar, but they seem to check common sense at the door when it comes to self-designated uniqueness.

Some firms seem to take the quest for differentiation literally, creating a spate of "we're different" messages. Consider a top Boston law firm with the following message:

At [FIRM Name], we practice law differently. While our attorneys agree that results drive our business, building relationships with our clients and providing value-added service is the key to our success.

This firm might be amazingly good—and, from what I know of their reputation, they are. However, results' driving business, building relationships, and providing value-add are pretty par for the course—both as firm goals and marketing copy.

What Clients Really Want

Much as firms might hear otherwise, being different isn't much of a factor in winning or keeping clients. Often, the "we're different" message affects them negatively. Consider the following scenario: Your tooth hurts and your dentist is out of town. You need an oral surgeon and you need one fast, so you ask a few trusted close friends, Trip and Beverly, if they know anyone.

Referral #1: Close friend Trip suggest Dr. Phlox.

He says that his aunt Deanna needed oral surgery and went to Dr. Phlox, who has been in the town next door for 20 years and has a very busy oral surgery practice. Word on the street is that he's pretty solid. When aunt Deanna went in, the doctor took the time to explain the surgery and what was going to happen, and to answer all the questions that Deanna had.

The surgery went fine (for all they knew) and Deanna hasn't had any problems since. He's a little more expensive than average, but Deanna says he's very booked and established so it's understandable.

Referral #2: Close friend Beverly suggests Dr. McCoy.

Supposedly McCoy is well known throughout the nation as a cutting-edge oral surgeon, often going where no other oral surgeon has gone before. He has a unique blend of people at his office, process for oral surgery, and tooth technology that he has pioneered. His results, says his brochure and Web site, are 22% better than all other oral surgeons', which is how he justifies his very high prices.

His uncle Pavel went to McCoy and all went well with the surgery (for all he knew), though uncle Pavel met McCoy only for about 30 seconds, as he was so busy.

At a gut level, even with uncle Pavel's satisfaction, few people would choose referral #2. This is because many of the dynamics of how clients buy business-to-business professional services is similar to how people choose dentists:

  • Should failure happen, the consequences are painful.
  • You don't need the world's greatest outcome. You just need a very good outcome.
  • Since you can't sample a service like you might sample a piece of gum, you have to rely on reputation, experience, and expertise as proxies for expected results.
  • Price is a factor, but you'd rather not skimp when the outcome is important. (Side note: if I told you that Dr. McCoy's innovations have enabled him to charge less than half of what other oral surgeons charge, would you have been more interested in buying his services, or less?)

Innovation in the sense that the doctor does something different from others, or is somehow unique, by and large won't tip the scales of purchase preference in the favor of the innovator.

So what is it that clients are, indeed, looking for? In my experience, and according to research such as How Clients Buy, most buyers want to tell service providers the following:

  • Reliability. Do what you say you are going to do, and be on time about it. (This is listed first, because it's so important. If only the service providers I've worked with in my life were better at keeping their commitments...)
  • Accessibility. Be there when I need you.
  • Impact. Help me buy the most helpful and impactful services from you, and help me translate your services into success for my business in my industry.
  • Fit. Be a good fit for the specific needs that I have. If you're not the best fit, help me find a provider that is. Don't shoehorn your service into something that, in the end, won't meet my needs as well as something else would.
  • Importance. Make me feel like we are, as a client, important to you and your team.
  • Service. Deliver great service as well as great services.
  • Prudence. Be careful and do your homework before you suggest a course of action for me.
  • Research. Stay on top of the developments and trends in your industry and in mine.
  • Listening. Understand my business, my team, and my clients so you can come up with ideas relevant to me.
  • Teaching. Help me understand what you're doing. I might not be an expert in your area, but I'm pretty bright and I make the decisions here. Help me understand what's new in your area of expertise so I can apply that knowledge in my business.
  • Business management. Run an efficient operation and constantly improve so I don't pay for your inefficiency.
  • Relationship management. Be pleasant and fair, and work with me through communication or other breakdowns on your end or mine. In essence, treat me like a person.

Different situations warrant different mixes and degrees of the above. For example, with many necessary-type services like Sarbanes-Oxley compliance, efficiency is important as well as expertise. On the other hand, buyers looking to hire product-innovation consultants will likely be concerned less about efficiency and more about the creativity and innovative thinking of your team.

Regardless of the mix of what's most important to your buyers, you probably won't see many of them inserting this into the list of client wants: "Different and Unique: Be one of a kind, offering something that no one else in the market offers."

So be different: Stop listening to the continuous pleas from consultants, marketers, and textbooks to be different... one of a kind.. .a shining beacon of newness in a sea of same-old same-old.

Focus instead on actually delivering the value to the market that you say you deliver (which, in and of itself, can be uncommon if not unique), and find ways to create a conversation with buyers around that message.

Not only is it better marketing, it's less lonely than being unique.

Endnote:

1 Terrell and Middlebrooks, Market Leadership Strategies for Service Companies. 2000 McGraw Hill. P. 31.


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Mike Schultz is president of RAIN Group, a leading sales training and consulting company. He helps companies around the world unleash the sales potential of their teams. Mike is bestselling author of Rainmaking Conversations: Influence, Persuade and Sell in Any Situation and Insight Selling: Surprising Research on What Sales Winners Do Differently. He also writes for the RAIN Selling Blog.

LinkedIn: Mike Schultz

Twitter: @mike_schultz

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Comments

  • by Craig Park Tue Jun 17, 2008 via web

    Minor point, but "One is the loneliest number" is from One by Harry Nilsson

  • by Craig Park Tue Jun 17, 2008 via web

    All good points; however, it is possible to differentiate from the "expected" norm (value) by offering the unexpected (and more valuable). As an example, an architecture/engineering firm that provides early planning/feasibility/economic models that allows client to better site or organize their buidlings/facilties.is higher value that the expected design services.

  • by Mark Nagurski Tue Jun 17, 2008 via web

    Hi Mike,

    I can't agree with the stance that differentiation is a myth, largely because I don't believe there is an inherent choice between striving to be better and striving to be different.

    Being better IS a point of differentiation.

    Moreover, the examples used don't suggest a problem with differentiation, but rather that paying lip service to being different is pointless.

    The consulting firm and law firm you mention are, in fact, doing the exact opposite - using many of the same platitudes that every other business uses - as opposed to actually positioning themselves differently.

    As bad as those platitudes sound, they don't negate differentiation as a concept - marketing is of course more than what goes on your website or print ad. No doubt the most effective differentiation comes through actions, reputation, personality and 'stories told that [bring] companies to life' - something your examples support well.

    i.e. Where Dr Phlox differentiates himself may not be in the methods he uses - he's not a different kind of dentist - but rather in his ability to make people feel at ease, trustworthy performance, track record etc....

    As you rightly point out those are the kinds of things that lead to trustworthy referrals and word-of-mouth. Why? Because in a world of fly-by-night businesses, track record is differentiation. Where customers are used to being treated like numbers, good old fashioned personal care is differentiation. Even his location (accessibility) in the next town is differentiation.

    Put them in writing and they'd sound cliched but they are what differentiates Dr Phlox - without them he'd be the same as any other dentist.

    "So what is it that clients are, indeed, looking for? "

    I'd agree with every point you make in the list but I'd also argue that each one of them provides a clear opportunity to differentiate yourself from the competition - by being better in those areas and claiming them as your ground.

    Everyone says they offer reliability - the one company that offers a 100% no questions asked money back guarantee differentiates itself from the others and 'owns' reliable.

    Differentiation is about creating a clearly defined reason(s) for your prospect to choose you over another business or the status quo.

    Surely differentiation on those terms is essential - the myth is that simply saying 'we're different' actually makes a difference.

    Mark

  • by Dusan Vrban Tue Jun 17, 2008 via web

    E X C E L L E N T ! Even though you have (intentionally?) missused the point of differentiation a bit, I love the overall "think again" concept of this article. Reminds me of some 90's overall messages in the companies statements: "Satisfied customer is our mission". Really? Is it your mission? Or have you just coppied that from somewhere and don't really know why?

  • by Mark Wed Jun 18, 2008 via web

    This article didn't convince me that everything I've read and heard about differentiation is wrong. It did demonstrate that many people do a poor job of differentiating their organization in ways that are meaningful to their target audience.

    IMHO, focusing on being unique misses the point. The point is to get the prospect to take a specific action. Prospects take action when they believe that doing business with you is a) somehow worth the time to do it and b) likely to be somehow better for him or her than doing business with your competitors.

    While the long list of bullets in this article contains all good things, using it as a checklist seems to me to have high potential to lead to more messaging dross. Most marketers would be much smarter to stop tweaking their messages and materials for a time, and instead use the time to do whatever work they need to do to understand what's valuable to their target audience. Only then can they make a clear, concrete connection between what the people in the target audience value most and what their firm offers.

    I realize that sounds very Marketing 101. But, it's an essential step that too few marketers do, and even fewer do it well.

  • by Sebastian Franck Thu Jun 19, 2008 via web

    The "rather unique" consulting firm in the quote is "World Consulting Group. Your consulting firm in Columbia Missouri". Rather small world, I'd say. My point? Beware of writing dross, because on the net, it's there for all to find.
    (http://www.publicrelationsolution.com/about.asp)

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