One of the most frequent questions I get relates to competitive differentiation: how to “stand out” in a crowded marketplace. Many of my clients in professional, financial or technology services spend a good amount of time wondering how they can help clients see how their firm is different. The underlying implication is that different = better.
Sound counterintuitive ? Let me explain.
In a recent HBR-article on “How You Can Win Without Competitive Differentiation”, London Business School professor Freek Vermeulen talks about how recent thinking in corporate strategy is moving from being influenced by the field of economics to the field of organizational sociology.
“The trick is that when there is uncertainty about the quality of a product or service, firms do not have to rely on differentiation in order to obtain a competitive advantage. Whether you’re a law firm or a hairdresser, people will find it difficult – at least beforehand – to assess how good you really are. But customers, nonetheless, have to pick one.”
In short, asking yourself “how are we different ?” may be the wrong question to ask. Buyers are influenced by a seller’s (firm’s) status, prior relationships and their social network ties. Not by how “different” they are.
Is competitive differentiation overrated?
In the – excellent – Buyersphere 2013 report, a whopping 66% of buyers reported “I heard of them before we started the buying process” as the #1 reason why they selected a particular firm for their project.
And – in spite of the #1 factor why buyers chose one firm vs another being “educated me with new ideas and perspectives” – in RAIN Group’s recent research on “What Sales Winners Do Differently”, fully one third of the Top–10 factors driving buying preference were about the seller connecting with the buyer in a way that inspires trust, confidence and familiarity.
Human evolution has wired us all in a very particular way – when faced with decisions that involve even a moderate degree of complexity, we seek ways in which to reduce the risk involved and “take shortcuts” to deduce which decision is the best one.
In short, we seek what’s similar, not what’s different.
When it comes to complex, high-end services, telling buyers how you’re different may be betting on the wrong horse. Breed familiarity first.
Think competitive differentiation later.
The Fascinating Questions of a 100 Year AI Life
The Number of Americans Who Feel They Will Be Better off in a Year Is at a Record High
5 Ways M&A Can Hurt Your Brand
The Enormous Impact of Company Culture on Business Growth
Confronting the Ghosts of Your Financial Past for Future Control
5 Attitudes to Enhance Aging
One Rarely-Used Strategy to Push Your Sales Copy Over the Top
Why Your Resilience Is Worth Pursuing
The Funny Month of February: Love and Money
What Tools Americans Want When It Comes to Saving and Investing
Equities10 hours ago
The Bulls Are Getting Stronger
Markets11 hours ago
S&P 500? More Like The S&P 50
Development11 hours ago
5 Questions Prospects May Ask Before Deciding to Hire You as Their Advisor
Let's Solve It1 day ago
Is Inflation Really Dead?
Markets1 day ago
Could Cyclicals Make a Comeback in 2019
Equities1 day ago
US Technology Sector is Setting Up for A Momentum Breakout Move
FinTech3 days ago
The Next Global Financial Meltdown Is Just Around the Corner
Advisor3 days ago
Stay Away From Dumb Money: The Crowd Is Rarely Right