The Differentiation Ladder
We all want our customers to think, “I can’t get it anywhere else!” when they think of us. How do we do this? How do we differentiate our companies in our customers’ minds?
Consider four different ways of differentiating your company:
- The least effective way to differentiate your company is through advertising and other traditional marketing communications. Ads are easily copied and more easily forgotten. This is the main tool of differentiation employed by advertising and marketing agencies on behalf of their clients.
- The next way to differentiate your company is through price or price-related promotions. These tools are generally more effective at driving sales than advertising, but are still weak differentiators, because they get your customer to focus on the wrong reasons for buying from you. (Unless you want your customers to focus on price, which, for most of you, is not the case.)
- Next, you can attempt to differentiate your company with superior products and services. This is increasingly difficult, because your customers, no matter who they are and no matter what you make, are convinced they can buy similar products elsewhere. Welcome to our land of plenty, where too many sellers are chasing buyers with limited spending power.
- The best way to differentiate your company in your customers’ minds is to help customers focus not on your advertising, your prices, your promotions, your products or your services, but on the relationship they have with you.
Relationships are, simply put, the most powerful differentiators. Your competitors can copy just about everything you do, but they can not copy the private relationships you have with your customers.
In your mind, flip the four bullet points written above upside down, with advertising differentiation on the bottom and relationships at the top. The higher you can climb on this ladder, i.e., the higher on this ladder are the reasons your customers buy from you, the more differentiated you will seem to your customers, and the more loyal they will be.