In a world where everything is becoming commoditized, the key to success becomes differentiation. That's becoming more difficult to achieve, and one of the reasons is that it's relatively easy to put up a Web site.
An entrepreneur is looking to launch a subscription-based dental plan in Atlanta. An Internet search for "Dental Plans - Fee Based - Atlanta" produces 82,000 hits. There are major competitors and startups. Looking at subscription fees, they are all just about the same. Of course, most of the plans work with the same providers and the savings are the same as well. So what's going to make this entrepreneur's plan stand out and succeed?
Perhaps the biggest differentiation in building a business is service. That retains customers, gets them to buy again and inspires them to become apostles for you.
But what kind of differentiation helps you acquire customers in the first place if your product or service appears to be a commodity?
Offer—You can differentiate with your offer.
Sweepstakes are a means of differentiation that, in most cases, have no tie to the product or service. They'll raise your response rate considerably, but expect lower conversions and less loyalty.
Unusual guarantees are differentiating. If your competitors are offering 30-day guarantees and yours is 120 days, yours stands out. Lifetime guarantees are even more clutter-busting.
If your product or service is a commodity, your offer may involve a tie-in to a product, service or institution that stands by itself. Partnering with a Tiffany or Sharper Image could make a big difference in your success in acquiring customers.
You may also want to consider partnering with a nonprofit and donating a portion of revenue from every new customer to that nonprofit. That puts a "good guy" spin on the company, and it is differentiating. But it won't necessarily increase response rates. A direct mail test conducted several years ago for software relating to charitable deductions promised a contribution to one of three charities. This offer didn't bring in a single more subscription than the test cell without this offer.
Media—Media utilization may be differentiating in a few senses. Obviously, if you are in media that your competitors aren't using, you stand out. Again, that doesn't mean higher response—sometimes when you pioneer new media, you're reaching your audience out of context.
Media weight—Media weight certainly differentiates. The question is what does it do to cost per acquired customer? If not handled smartly, it can skyrocket acquisition costs. But some marketers, like MBNA with credit cards, use the weight to lower their acquisition costs.
Creative—You can also differentiate with your creative. This can't be self-reflexive creative, calling attention to itself. It has to be creative that makes prospects/customers heroes in an unusual way. Dangerous as it is, humor can also work to differentiate when there's a commodity product or service involved.
GEICO makes an interesting case study. After it emerged from being a company purely for government employees, GEICO first differentiated itself by the channel it used—direct. At that time, it was highly unusual to purchase auto insurance without an agent or broker. Copy in direct mail pieces, inserts and freestanding inserts tried to convince people that buying insurance this way was OK.
The natural progression was to differentiate by offer—save 15 percent with a 15-minute phone call. Problem was that this differentiation was not sustainable—some auto companies offer much more than 15 percent, and virtually everyone has the call down to 15 minutes or less.
When Warren Buffet became involved in the company, the next step in differentiation was media weight. GEICO outspends every one in the category many times over.
Of course, GEICO is one of the best examples of using humor to differentiate. But take a closer look at their direct mail. Most of the time, they steer away from humor and take a classic approach. You could substitute another company's name and not know the piece was from GEICO.
Away from the direct response arena, however, humor rules. Because of the way it is done and the weight it is given, it works. When you receive a GEICO piece in the mail, you have a different attitude toward it.
So what does our entrepreneur in Atlanta do to differentiate his new dental plan? It surely will not involve media weight, nor a tie-in with a Tiffany-type company. There won't be a sweepstakes, nor an unusual guarantee.
Ah, marketing's real work begins.
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