Back in 1962, Avis, an American car rental company, was on its knees.
With a measly 11% market share, the company was losing ground fast, even though they were one of the pioneers of the industry. Avis were the people who originally put rental cars at airports – and their main competitor, Hertz, copied that idea, as they did all the others.
Still, Hertz had 35% of the market share while Avis’ market share kept going down.
In a last-ditch effort to reverse their downward spiral, Avis did something no one would have imagined.
They took what the public saw as their greatest weakness – Their number #2 position on the market, and used that weakness to launch a 50 year long, insanely successful marketing campaign.
Iconic campaign slogans such as:
- ‘We’re only #2 – we can’t afford not to be nice’,
- ‘Avis can’t afford to make you wait’, and
- ‘Avis can’t afford dirty ashtrays’,
– were paired with an honest (and brilliant) tagline that said:
By 1965, Avis’ market share went up from 11% to 34%. That’s more than a 300% increase, all thanks to smart positioning and differentiation.
Avis ended up changing their tagline in 2012. Today’s marketplace is considerably different than it was back when they started using it.
However, considering that they’ve used it for 50 years, I’m going to say that they’ve definitely gotten their money’s worth from it.
A big part of the reason why Avis’ old tagline doesn’t pack enough punch these days is the fact that their niche is over-run. In the past, there was Hertz and maybe 2-3 other guys they needed to care about.
Today, they’re competing with hundreds of other businesses, not to mention the “uber-ization” of taxi services.
The fact is, almost every niche is overcrowded these days. There’s no exact statistic, but the number of companies in the world has been found to average around ~190 million.
There are roughly 7.5 billion people crawling around on the planet today. That means that there is approximately 1 company for every 40 people.
According to statistics, 1 in 40 people own a company yet no one stands out.
That’s a pretty insane thing to think about – That out of every 40 people, 1 owns a business.
So, question is – How do all those companies make money!?
The cold hard truth is: They don’t.
Not every business is a successful business. Some go under in 5 days, while some barely scrape by and everyday is a constant struggle for them. (Some of you might probably know what I’m talking about – struggling with day – to day cash flow.)
I’ll be so bold to say that I believe that 50% of companies that are up and running right now are nothing more than sinking ships, even though they might not know it yet.
If you’re not a shark, and if you’re not constantly innovating and moving forward, your competition is going to eat you up.
Companies that are making money are the ones doing just that – they are constantly moving forward and pushing the envelope.
They are also doing one other key thing – They are differentiating.
They are doing it through their products, their services, their operations, and everything else they can think of.
For a company to be successful today, it’s crucial to stand out – or you’ll end up drowning amongst the uncountable number of businesses out there.
I’m pretty sure you’ve heard of differentiation before – People everywhere are always touting the need to be “different” and “stand out” – but how do you do this exactly?
There are a lot of ways you can differentiate yourself, and your company – so let’s get down to business and look at 5 of the best ways to differentiate your business that the top players use.
1 .Product/Service Differentiation
The first one sounds like a no – brainer, right?
Let’s say that I told you that all you needed to do to stand out is to create a product or a service that no one else is offering, but there’s a demand for.
Sounds easy, right? Simply sell something that no one else is selling.
However, if you think about this deeper, this is easier said than done.
Let’s do a short exercise – Try thinking of something no one’s invented before in 3…2…1.
You’d probably not be able to think of any (I couldn’t!), and even if you did – do a quick search and you’ll probably find that it has already been done.
Thing is – pretty much everything anybody needs or wants has been invented by now, and its harder and harder to find ground-breaking ideas anymore.
So – what you need to do instead is to add that special “extra” something to the products or services that you’re already offering.
You’re probably thinking: “What’s that supposed to mean, Nick?”
A great example here would be fast food delivery. We’ve all eaten a Domino’s pizza before right? Well, for 20 years, they guaranteed pizza delivery under less than 30 minutes of placing the order.
They basically said ‘If we don’t deliver your pizza in 30 minutes, you won’t pay for it’.
No one else had such a daring claim, and some even called Domino’s insane.
Their guarantee lasted from 1973 to 1993, a good 20 years, after which they had to drop it due to legal reasons, but in that time they’ve managed to corner the market by tying a very attractive unique selling proposition to their service.
Today, Domino’s is still known for having one of the quickest delivery’s around – And have you noticed that no matter whether they’re late or early, they still give you a discount coupon on every trip anyway? But, why would they do that? (Hint: Differentiation)
A unique USP sets you apart from the rest.
2. Target Market Differentiation
Going after the whole target market makes sense if you’re selling a commodity, or commonly used item. If you’re selling sugar, salt, soap, or something people use every day, by all means – cast your net as wide as you can.
However, this approach doesn’t make much sense if you already know that what you’re selling will appeal more to a certain target market, and not everyone else.
As a small business owner, you already know that your business is targeted at a certain segment of people who need your product / service.
Each and every one of those segments consists of well-defined “customer profiles”, each with their own pains, pleasures, needs, and wants, making it impossible to reach all of them with one and the same promotional message.
Ask any expert, and they’ll tell you that there’s no one-size-fits-all approach in marketing. (Those who tell you otherwise are either really bad marketers, or trying to smoke you for lazy marketing.)
Successful businesses tailor their promotional messages differently when going after different specific market segments.
Think of L’Oreal. We all know them as a cosmetics brand, but here’s what’s important – Do they go around simply marketing “cosmetics” and “face creams”? They definitely don’t.
They market one face cream specifically to women over 50 who want to get rid of bags under their eyes. They also market a face cream for women in their twenties, and a couple of others, including some for men.
The crucial point is – they are reaching out to different segments of their market and making sure that they are speaking the language each segment can understand easily, and solving the problems that each of these segments are facing.
This makes them different in the eyes of their customers, and the only logical choice to buy from.
3. Customer Experience Differentiation
Always remember this – As a business owner in 2016, the power is in the customers hands these days. Every product has a substitute and everyone is replaceable.
One razor-sharp Facebook comment lashing out at your business can cause a massive dip in your revenue, and a series of bad online reviews will be the end of your business.
And why this is even more important for you as a small business owner is – Thing is, customers don’t search for reviews on more established companies.
Its the small, unknown businesses that they depend on reviews for.
Just like yours.
I’m going to say this part again cause it’s extremely important – Customer experience is crucial.
You have to be reachable, open, honest, and quick to admit your flaws.
Good customer service will most likely win you a customer for life. People are more likely to tell other people about you if they’ve had an issue that was quickly resolved in a more than satisfying manner for them.
(Because they naturally care for the people they love, and want them to have a great experience too.)
Also, good customer service goes beyond simply taking care of the issues customers have.
Here’s a cute little example that drives this crucial point home:
Little Lily Robinson (3 and a ½ years old) got Sainsbury’s to change the name of a type of bread after her letter to their customer service went viral. Sainsbury’s took this opportunity to create some good will with their customers, as well as to capitalize on free PR.
(Plus, Lily was definitely right – Google tiger bread and you’ll find they look like giraffe blotches instead, not tiger stripes.)
Who said little kids can’t bring about change?
4. Technical Expertise Differentiation
When I say technical expertise, I don’t mean technology. This has more to do with how good you are at what you do, and how valuable your knowledge /expertise is.
Thing is, if you’re the best in your game, people will want to do business with you – straight up.
If you need to send a package, you’ll probably think of FedEx. If you want to do some quick research on anything under the sun, you will turn to Google.
These companies managed to mark their brand name into their respective industries, which they are both now dominating.
Think about it: Uber, Amazon, Citibank – I’m just throwing out the current big players that are currently dominating their niches.
In all these cases, people prefer doing business with providers that are known for their expertise, are reliable, and have created a name for themselves thanks to their credibility.
This works for small business too (we’ve seen it happen to us).
In the small business scene, there are a ton of companies doing the same thing. However, it’s pretty easy to tell apart the “real” players from the “fake” players.
The difference in the quality of work, service, and most importantly – results, is huge.
This is why, to me, being able to differentiate yourself using expertise and knowledge can be one of the biggest advantages a small business owner can have. (Perhaps the most important on this list.)
5. Convenience Differentiation
People are lazy by nature, and you can use that to your advantage. (Personal example: I’ve taken a cab from my house to the train station 400metres away before.)
Every one of us wants as much as we can get with minimum effort on our part. Think about your product or service – What can you do with it, what can you add, that would make people choose you?
This can be a great number of things –online payment methods, extended warranty, free return policy – you name it. If you want people to do business with you, you need to make the entire process easy, hassle free, and risk free.
A good example of this is RedMart. RedMart is a grocery delivery service based in Singapore. All you need to do is scroll through and select your groceries online, and you’ll get them delivered right to your doorstep that same day.
People love it – having their groceries delivered to their doorstep without so much as lifting a finger, and RedMart cashes in on that laziness. Everyone walks away happy.
One person’s laziness is another company’s profit margin.
So, What You Can Do to Differentiate Your Business from the Competition?
Now, that you’ve studied the above examples and see what you can implement into your daily business, I’ve prepared a couple more focused tips that will help you get started on your differentiation journey.
– Consider Your Pricing
The quickest way to differentiate your product or a service in a congested market is to adjust your pricing.
Generally, there are 3 different pricing routes you can take:
- Low pricing
- Premium pricing
- Unique pricing structure
Imagine you’re looking to buy a house and you go to 2 different real-estate agencies. They are both trying to sell you the same exact house but one offer is $10,000 lower than the other.
Remember, it’s the same house.
Of course, you’re going to go with a better deal! Everything else remaining the same (quality, convenience, perceived value, expertise, etc.), we’re all going to pick a cheaper product or a service because that’s the only differentiating factor.
IMPORTANT NOTE: But slashing your prices isn’t always the right way to go. You have to know when to do this properly, or you’ll teach your customers to buy at low prices, eventually killing your profit margins.
So let’s talk about charging premium next.
Charging premium price usually signals that the product or a service is different than what the competition is offering in terms of quality, support, brand name, or something else.
Over the years of business, we’ve found that people buy things not based on price, but on value.
Think about this – If your customer is paying for something thats cheap, but not giving them the results they want – it ends up being expensive to them, because they’re wasting their money.
On, the flip side, if your premium priced product / service delivers what you promise, and solves their problems, they wouldn’t think twice about purchasing from you.
If you’re able to communicate why your premium priced product / service is set at that level, you’ll be able to snuff out competition by being the “most premium” option in your market.
Lastly, unique pricing structure aims to diversify the price based on the type and the scope of services you are getting.
A good example would be pricing plans for most SaaS services, such as email automation systems. The price you are willing to pay depends on the level of service you require and will be different from individuals to large businesses.
It makes sense to offer different pricing structures to different clients
– Become a Brand Yourself
A lot of online businesses today are successful because the people who started them worked their ass off to position themselves as experts in the field.
Neil Patel did that with Kissmetrics – users flock to Kissmetrics these days because Neil positioned himself as a ground-breaking thought leader in the industry. He’s pretty much the go to guy for anyone who needs a marketing expert.
Also, another good example would be Adam Khoo. (You guys have definitely heard of him.) Adam, a self-made millionaire, is the chairman of Adam Khoo Learning Technologies Group, Asia’s largest private learning institution. Block by block over the past 14 years, he’s created an educational empire that now serves over 80,000 people annually, and he named it after himself.
You can’t be the best in absolutely everything, and if you’re a jack of all trades but master of none, you’re going to be beaten out by people who can do what you can do 10 times better.
Hone in on a specific problem in your niche. Make sure that you’re the go-to guy for that.
Cut down cost, lower your delivery time, and brand yourself as the quickest, most efficient solution to a very specific problem, and you’ll find yourself in extremely high demand.
– Capitalise on Your Weakness (Admit Your Flaws)
The Avis story I told you guys at the start of this article shows how well this can work. Avis turned their weakness into their strength, and it wasn’t crippling but just enough to set them apart.
Another good example is the Volkswagen Beetle. The Beetle is a small car and it’s pretty ugly if you ask me.
However, it covers more ground on a full tank, the tires last for tens of thousands of miles, and parking is never an issue. All because of that one “weakness” everyone thought they had – their small size.
Volkswagen hit the nail on the head with this series of ads back in the 1960’s.
– Go Against What Everyone Else Is Doing
When everyone zigs, you zag. When they go one way, you go the other.
Doing what everyone else is doing is the easiest way to get lost in the crowd and noise. Find smart ways to do exactly the opposite to draw attention to yourself- just make sure that whatever you do can guarantee you a return on your investment.
NOTE: Don’t just go against the flow for the sake of it. You have to understand what you are doing it for, and what exactly you are trying to disrupt.
Netflix used this tactic to take over the pay-per-view market. Back in the day, everyone was competing with the new blockbuster films, trying to offer newest releases first and getting eaten up by that established provider. Competition was extremely high, when everyone was fighting over a piece of the same pie. And it was a really small pie.
Netflix did the exact opposite – they didn’t go after people who were hungry for new releases.
Instead, they went after true movie lovers and aficionados, offering old programs and movies for peanuts.
Once they had a large volume of titles and subscribers they started moving upwards, adding new releases and eventually dominating the pay – per – view industry, putting the older, more established companies out of business.
– Be Ready and Willing To Pivot (Change Direction When You Need To)
A lot of businesses have gone out of business because they’ve insisted on banging their head against a solid brick wall over and over again stubbornly.
We’ve been guilty of this ourselves sometimes.
If you’re not making any progress with your product or your service in its current version, don’t be afraid to change direction. Sometimes the change that is needed isn’t big; it’s simply a small tweak in your course.
If you read my last post, you’d remember me talking about how we didn’t make a single sale for 3 months – and then we did 6-figures in one week. For an entire month. If you missed it, you can check it out here. (It’s a quick 10-minute interview with one of Singapore’s top profit strategists.)
And the thing is – all we had to do was take a step back, re-focus, and make small tweaks to change our direction.
A big change can be intimidating, but if you have the clarity to pull it off, it could turn out to be the 180-degree U-turn to success that your business needed.
Sometimes, making a U turn is the only way to save your business
The bottom line here is that if you’re not different – You’re invisible. No one’s going to care, or buy from your business.
Your target market audience doesn’t care that you’re working hard, or that you’re a really nice guy – they care about what makes you different and what’s in it for them.
Remember: Be outrageous and bold and communicate with them – there’s no point in being different if people don’t know about it!
You can do something every day to set yourself and your business apart – and the best part is, you can start right now.
Drop me a comment and let me know what you did today (or implemented recently) that has given you a competitive advantage in your industry – I’d love to hear what you guys managed to think of!
Oh, and you’d probably want to download our free checklist below, if you haven’t done so already. (It covers what we’ve talked about today – plus other crucial areas you’ll want to tackle for a successful business.)[thrive_leads id=’13848′]