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What’s Your Point Of Differentiation?

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John Locke is a SEO consultant from Sacramento, CA. He helps manufacturing businesses rank higher through his web agency, Lockedown SEO.

There are three main points of differentiation for a business. Be cheapest, be fastest / have best service, or be highest overall quality.

It’s possible to do two, I have a hard time thinking of any company that consistently does all three.

This means you have to make choices, and decide who you serve, and how you will serve them.

There are pros and cons to each of these business differentiators.

Differentiating On Price

To be cheapest, you have to cut other areas of the business. You may pay employees less, cut customer service, or delivery lower quality.

The materials or craftsmanship of your offering is going to be less than your competitors with a higher price point. Consumers will see this, and perceive your brand as lower quality.

It will also be hard to find good employees. A low price point means something has to give, and that usually means the employees are the ones giving something up.

If you do find good people, holding onto them will be an impossible task. Anyone with self-esteem will quickly shed the shackles of cut-rate wages. Your hiring process will never end.

You will also get a larger segment of the market by cutting price, but sustainability will be difficult. You will always need to do more in sheer volume, just to make the same profit as your competitors.

Low prices means low profit margins. That means vulnerability in the market, because there is always someone willing to try and sell at a lower price.

Focusing on price also means what you offer is a commodity, straight up. Your offering can be found anywhere.

If low price is your only point of differentiation, that means there is nothing else unique about what you are offering.

Differentiating on Speed or Service

To be the fastest or best in customer service, you must hire more help. You can also be fastest if you invest heavily in new innovation. The innovation route is not common.

Focusing on customer service and speed of delivery is a solid strategy, but you have to focus on hiring the right people at the right wage.

Your people will be your greatest asset if you focus on service. Your people, your processes and your infrastructure will be critical factors if you focus on speed.

Good people are hard to keep at a low wage, so you’ll always be fighting employee turnover unless you pay competitively. But customer service is a superior strategy to competing on low price.

By making people feel good about doing business with you, they will want to come back, again and again.

Likewise, if you can deliver your product more quickly than your competition, you are giving customers something different. Low price vendors usually have long wait times, because they are understaffed. By saving your customers time, you’ve given them more of their most valuable resource.

Being Different Through Quality

To be highest quality takes time and dedication to your craft. There is no shortcut to achieving and maintaining higher standards. There will be fewer competitors who also focus on quality. Most of your market will be unable to duplicate what you are offering.

Differentiating on quality usually comes with a higher price point. This will exclude any customers who make decisions based solely on price. That’s not a bad thing, though.

Focusing on a higher quality products means fewer, but more profitable customers, which gives you more time to focus on business development.

By focusing on quality and extra value add, you can charge a premium price. This means you will more profitable. It means you need less customers to make the same amount of money. It means your competitors cannot easily replicate what you are selling.

Your customers will be willing to pay this premium price — provided you can explain the extra value they are getting.

Believe it or not, quality is something you will still have to sell to your customers.

You will have to put extra effort into your marketing and the copy on your web pages. You will have to point out the benefits of your product as opposed to the others on the market.

If you can do this successfully, you will reap the rewards of choosing the more difficult path.

You see, selling Quality doesn’t have to mean just the quality of your product. It also means the quality of life you are helping your customers to achieve. It means the internal culture you are providing your employees [1], because your model is sustainable.

Premium brands don’t merely sell products. They sell how the product makes their customers feel about themselves.

Implications Of Choosing A Differentiation Point

A business is no good to its customers if it goes broke or has to shut its doors.

Those customers have to find a new service provider. The replacement service may or may not be as good as the first one, but it doesn’t matter — because they are the one that survived.

Cash is like oxygen for a business. Without steady revenue, your business is done.

You can try to win customers by having the lowest prices — but that is committing yourself to a world of pain.

You can make customers happy by focusing on customer service, or speed of delivery, and that’s always a great idea.

If you can deliver a higher quality offering than your competitors, and know how to explain the difference to your customers, you’ll be in good shape.

[1] There are well-known companies that provide quality to consumers, but have terrible internal conditions for their employees. To me, this doesn’t mean they are better quality, it means they know how to exploit vulnerable people.

Avatar for John Locke

John Locke is a SEO consultant from Sacramento, CA. He helps manufacturing businesses rank higher through his web agency, Lockedown SEO.

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