The Five Kinds of Differentiation

• June 10, 2019

Sales professionals know to find and leverage differentiation.  The problem: far too few know that not all differentiation is equal.  Yep, differentiation is differentiated

Remember, differentiation only becomes value once a customer understands it and connects to a customer-desired outcome. It only turns into differentiated value — that moves a buying decision – when that value is offered by only one seller…when it’s different.

A key point that many sales and marketing professionals often miss is that non-differentiating information drowns out your unique aspects. If you squirt a little valued differentiation within a geyser of “same as everyone else” features and benefits, you’re asking your customer to play “Where’s Waldo” with your value.  What do you expect them to do with that…buy?

Perhaps most importantly, my clients learn that a single product advantage often drives value in multiple value “landing points” throughout an organization. For example, several departments (not just the one with a budget to buy) care that your product lasts longer, and for different reasons. Unfortunately, most sellers work to leverage only the most conventional and expected of these “landing points” in their selling strategies, and never discuss or leverage the other value points.

A quote from my upcoming book:

If you differentiate using the same properties as your competitors, you aren’t differentiating as much as you think. 

If you differentiate only in ways your competitors have countered before, you aren’t doing much better…

Companies – and sales professionals – fight commoditization with differentiation.  They often lose sight of the fact that some differentiation is more effective with a customer than others.

Five Layers of Differentiation: 

The graphic above represents different ways that organizations differentiate their value. I refer to them as layers. Let’s go through them from left to right.  As you read these, give yourself a good hard look in the mirror.  Do you recognize and use all of these layers?  Purposefully?

Table Stakes Differentiation

Confirming the basic function of your product or service often a part of selling; for example, in RFI/Q/P responses.  There are personas (Buying Influences) who need to verify that your offer “checks the boxes”.  Such requirements are only “differentiation” insofar as they prevent you from being excluded; hence the term “table stakes”.  They have little role in a final buying decision, because they don’t differentiate you in the final decision.

To keep from having all other buying personas “geysered” in decision-clouding sameness, partition your sales approach whenever you can.  Enter sales conversations and demonstrations with table-stakes personas separately if possible – including offering to take those specific questions offline.  Best practice:  get these out of the way early, so that you can report to other personas that your offer meets basic requirements.  “Yada yada” these differentiators as much as you can, then move quickly to decision-moving value.

“3 Sellers, 3 companies, Same Product”: False Differentiation

This kind of differentiation is like being a hipster: you’re different…just like everyone else.

I often hear customers (and insightful sales leaders) complain that the main competitors all claim the same advantage.  A customer once told me  “I have three different reps’ business cards on my desk, but they all sell the exact same product”. Brochures and websites are often big culprits: “decades of experience” and being “an award-winning leader in this market”, aren’t differentiation when multiple companies can claim the same basic thing.

A leading provider of sales training to Realtors tells students to claim some version of “leading producer” or “most experienced” at the same point in every client’s script.  I once got 39 calls from 39 different people who were all the best realtor in Arizona…in less than three hours.  By all being some version of “the best”, none of them differentiated themselves.

Sellers lulled into using False Differentiation messages harm their chance in two ways:

• False differentiation communicates a dangerous message to a prospect. Best case, it’s “I’m proving to you that I don’t offer any real advantages. Feel free to grind me down on price.  We both know that’s my only hope.”
• At best, false differentiation crowds any true differentiation out, forcing the customer to pick your genuine value out of a pile of sameness. You’re making them play “Where’s Waldo” with your value. That’s making them work too hard to buy from you.

False differentiation actually harms your chances…it has a negative value in your selling process. Stop. It.

Fist fighting In a Phone Booth: Conventional Differentiation

The middle layer represents selling to obvious/conventional advantages.

• The obvious advantage: customers easily absorb conventional pitches because they’re well-trained in them. You don’t have to work very hard to get even a newbie purchasing agent to comprehend them.
• The pitfall: Your competitors are usually expert in countering conventional differentiation. When all competitors use a predictable approach, selling has the feel of fist fighting in a phone booth. Nobody can land a solid punch, and buyers start using price to decide.

You can win sales in this area, but seldom at satisfactory margins, because “value premiums” of the different offers are small enough to be vulnerable to competitor discounting.

It gets even worse.  In complex selling, sellers often try to find a person or people in the buying organization to provide leverage/insight into the group buying dynamic. These people are called guides, coaches, champions and the like. Question: If your differentiation is merely “in the phone booth”, who at the customer cares enough about small differences to become your guide that they’ll risk their internal credibility on you?  (cue the crickets sound effect here.) Without strong internal advocates, your tough sale gets even tougher.

That’s the trap of the middle layer:  easy to sell, hard to differentiate. Its yellow color denotes the hazards of selling in the phone booth.  This is your basic, least imaginative…yes, mediocre…value proposition. It is one level better than table stakes: the minimum acceptable requirements to play, but at least it fights through the delusion of false differentiation.  You can win deals in this layer, but seldom at impressive margins, or with high customer preference for your offer.

Trusted Advisor: Predictably Finding Unconventional Value

The fourth layer is where greatness starts. Elite selling organizations build the muscles to operate consistently in this differentiation layer.

In this layer, sellers leverage unconventional, yet predictably-found differentiation. Combining general business acumen with an understanding of their offer’s differentiation, sellers find more “landing points” for value. Value networks (an entire chapter in my upcoming book) help sellers predict ways in which their product or service’s unique attributes affect a customer’s business. Some landing points will be conventional and fit in the layer described above. Many, though, address previously undisclosed (at least by your competitors) value. This layer is all about uncovering fresh selling approaches that your sellers can use predictably, with many of your customers. Any tool which makes unconventional value discovery more systematic and predictable will help your sellers improve results.

Because uncovering unconventional value puts a seller’s general business acumen on display, they build credibility as a trusted advisor, someone who can provide insight and perspective into the customer’s broader business issues. This creates a cycle of credibility-building for both the seller and the selling organization.

Differentiators that produce compelling value for the customer invite somebody in the buying ecosystem to become a decision lever. Thus, you can build marketing and predictive sales strategies around them.

Elite Selling:  Personalized and Situation-Specific Value.  

Far right layer refers to differentiation and insight that wins opportunities, but rather than predictable, systematically replicated value propositions like in layer four, sellers uncover and leverage personalized, or situation-specific differentiation.  Often, these differentiators are personal rewards or wins.

An example: A commercial real estate loan was structured to save a business owner almost $80,000 in resolving a particular estate-planning issue. Obviously, this had nothing to do with his business, the property, the underwriting criteria or the structure of the loan, but had a huge personal impact on one (highly important) persona.

Individually, this category of differentiators aren’t anything to build a repeatable business on, but, sellers who know how to consistently uncover and recognize them are able to take advantage and use them to win opportunities. They are just as leverageable as layer four impacts when they are uncovered, but uncovering them takes slightly different skills. These highly individualized value drivers further cement the seller’s credibility as a true partner:  somebody with deep insight into the business as well as the individual interests of those involved in the decision dynamic…and who brings value to the client.

So…How Are You Differentiating?

A Seller’s job is to find value that competitors don’t, and sellers with a keen “nose for value” regularly go into upper layers to bolster the Full Value Picture (read the book), and achieve higher win-win prices with stronger customer preference.

The interplay between these differentiation layers and business acumen. That is sellers who rapidly assess high-probability value hunting spots can efficiently position themselves as trusted advisors and true partners.  Each selling company has its own hi/low/obvious layers, and you and your company need to figure those out (although I’m happy to help you work through it).

Share your thoughts below, and reach out if you would like to discuss if more detail.

To your success!