Wondering how to make your business stand out from the competition? A differentiation strategy will help you win the hearts and minds of your target audience and grow your business, but it requires being firm about who you are and letting go of who you’re not.
This article focuses how to stand out from competitors. You’ll get all the building blocks you need to get started, including ideas for action, examples of differentiation strategy in action, reflection questions, and plenty of inspiration.
What makes your business stand out? 🤔
If you’re new to business, you might feel a normal temptation to try to please every single potential customer, to be all things to all people, to not say no, to not rock the boat.
The pressure you put on yourself to jump-start sales, can blind you to what the business grows into. If you’re not a careful steward of your business and brand, it’s easy for it all to morph into something you didn’t intend.
Before you know it, you’re just another generic alternative amongst a sea of options available to customers.
That is, of course, unless you’ve defined and prioritized what makes your business stand out from competitors. And, that is where a differentiation strategy comes in.
What is a differentiation strategy?
It’s what makes your business stand out from the competition – your secret sauce that helps your brand hold a unique and special place in your customers’ hearts and minds.
A differentiation strategy requires that you:
- Know your customer and serve them well
- Make bold choices about how (and how not) to serve them
- Let some prospective buyers (who are not your customer) walk away
You need to shift from just playing to play, to playing to win. From being a generic and undifferentiated alternative, to having a clear brand value position.
But, it’s not just about making your brand into something special – that’s only part of it.
You also need the right behaviors to protect and strengthen your brand, like knowing when to say no, identifying what’s out of scope, or pausing to consider whether an action will align with or detract from your brand identity.
| RELATED: Start Saying No With This 1 Simple Trick
Keep that in mind as you read on – a great brand is nothing without the commitment to uphold that brand.
Learn How to Make Your Business Stand Out from the Competition 🥳
As Michael Porter famously published in Harvard Business Review: “Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value.”
In other words, make choices about where you play and where you don’t, so you can occupy a clear and compelling space in the market – something that differentiates you from your competitors.
Seth Godin advises something similar in his brief and brilliant book, This Is Marketing: “Marketers can choose to stand for something. This involves going to extremes. Finding an edge. Standing for something, not everything.”
Here’s the key thing to wrap your mind around:
Not everyone is your customer and that’s okay.
In fact, it’s part of having a healthy business and a clear mind.
It’s not about limiting the size of your business. It’s about freeing yourself to focus on your essential customers and ignoring the rest.
| RELATED: How to see Trade-offs Like an Entrepreneur
Know your customer and serve them well. Let go of the rest.
We’ll get to the steps/tactics you can use, but first, let’s sit with a few examples to help illustrate what this looks like in practice.
Differentiation Strategy Example 01: Let People Walk Away 😎
A few years ago, I watched a recruiting video for a potential new job opportunity.
The company touted itself as fast, fun, and hard working. The video showed a clip of two coworkers surprising a third with silly string over their cubicle wall. Another clip had them wearing zany hats and costumes.
And, I knew immediately that this was *not* the company for me.
What they’re selling works for some people – just not me. I need something else from my work environment. That’s okay.
In fact, that they could turn me away so early in the recruitment process is a good thing. I won’t waste their time or mine and they can focus on candidates that might better mesh with their culture.
By giving me a peek into what they were about, I was able to make a determination about whether or not I was a good fit.
The same principle applies to our businesses.
You need to send signals that will simultaneously attract the right customers and repel the wrong ones.
What signals are you sending? What stories are you telling?
That’s what makes your business stand out – let’s explore that further with one more example…
Differentiation Strategy Example 02: Dollar Shave Club 🤩
Take the case of Dollar Shave Club – a brand of men’s razors and grooming products. In 2011, it was a little startup aimed to compete with big names like Gillette.
Brands in this category command high trust and loyalty from their consumers – they have to, how else would someone willingly put a razor to their own face?
So, how do you break into a category like that? The answer is differentiation.
We’re not talking about unique designs or features – the other brands have those in spades.
Differentiation requires doing something unexpected – something that inspires curiosity.
Looking at the existing market for men’s razors, Dollar Shave Club could immediately see two problems at the time: razors were too expensive and getting them in a store was unnecessarily difficult – in some cases you had to call an associate to help you retrieve them from a locked box in the aisle.
This was a category that took itself way too seriously. And, from there, they had one profound conclusion: this whole thing is ridiculous.
So, they chose to compete on price and no-hassle purchases – and they solved these market problems with humor, calling bull$&*% on the whole system.
Dollar Shave Club launched with a now famous viral ad campaign. The quirky CEO touts the quality of their product while walking through a warehouse – in which you can see all sorts of silly things happening around him. There’s a toddler shaving someone’s head, a bear helping to pack and ship boxes.
The approach was a master stroke in how to stand out from competitors by being unabashedly different.
Again, not everyone will be attracted to a brand like this. That’s okay. It’s not for everyone and that’s the point. It was enough.
In 2016, Dollar Shave Club was acquired by Unilever for a reported $1 billion in cash.
Differentiation strategy in action.
How to Stand Out From Competitors in 3 Steps
Step 01: Know Your Customer 😇
The first step in creating clarity for your brand is to make sure you understand your ideal customer:
- Who are you targeting?
- What do they value?
- What bull$&*% are they tired of from existing players in the market?
- What problems do they need solved?
But, I would argue, that’s not enough. You also need to define the inverse:
- Who is NOT your customer?
- What do they value?
- What are they hoping, wishing, dreaming for?
- How are they being served in the market today?
These are just a sample of questions of course – there’s much more to do, but this will get you started.
But, and I can’t stress this enough, you can’t rely solely on your own biases and experiences to answer these questions. You need to hear directly from customers when you can to learn from their perspective.
Think of these details – of who your target customer is and is not – as forming a kind of boundary. Picture all of these details about your ideal customer inside a circle.
Your brand needs to stay true to everything inside the circle, so that you stay on message. But, if you branding or marketing ever steps outside of that circle, you risk diluting the brand.
Now, you can use that circle as a lens through which to see your business and brand, cutting or updating what doesn’t fit.
Use the slides below to explore this idea further:
Step 02: identify problems in the existing market 🤔
Think back to the Dollar Shave Club example above. They looked at the existing market and identified how to improve it. In a crowded market, like razor blades, that step seems obvious now.
Except it wasn’t.
The things Dollar Shave Club chose to disrupt were well-established and accepted truths.
This was a market dominated by big players – players who were so entrenched in their way of doing things that they couldn’t even see the opportunity that they themselves had created.
It takes an outsider – someone who can objectively look at a market or a customer segment and say, “nah, let’s shake this up!”
This perspective is a skill that anyone, including you, can cultivate.
Let’s say you are opening a coffee bar:
- Go to a Starbucks or some other existing coffee establishment player and observe.
- What do you notice? What are people frustrated by?
- What is great about the experience? What does it lack?
Let’s say you want to sell succulents and plants:
- What sucks about buying plants from Home Depot, for example? For me, it’s so impersonal. The sales team there isn’t always knowledgable, they’re just moving product.
- But, if you could buy from someone who actually knows their product, can teach you how to take care of it, and help you when you’re stuck, well, I’d be willing to pay a premium for that.
| SMALL BUSINESS INTERVIEW: How to Grow A Thriving Side-Hustle – with Wilding Flora
These are just a few examples of how to stand out from competitors. You need to look carefully at them, find their weak points, and flip them into your greatest strengths.
Tired of reading? Listen to the podcast.
You can also listen on Apple Podcasts & Spotify. Search for “Meditations for New Entrepreneurs.” Enjoy!
Step 03: Be Who You Are 🥰
As mentioned, there’s risk in trying to serve everyone: spreading yourself thin, diluting your brand, and becoming just another generic alternative.
You can mitigate these risks with clear brand positioning – that means naming what your brand is and is not, who your brand is for and not for.
To be clear, this isn’t about posting an “unwelcome sign” at your next pop-up market. It’s about pushing your brand identity, sales, and marketing to a clear and compelling edge.
Your brand identity needs to pull the right customers toward you like a magnet. And, conversely, that same magnet should repel the wrong customers.
If you hope to become something special, you need to give in to the fact that “special” is subjective – what one person might value might not be the same as the next person.
And, all of that is just fine – it’s not your job to please everyone.
The “wrong” customers will self-select to move on. Don’t worry about them. Wish them well as they continue on their journey. If they choose to buy, great, that’s a bonus. But, you don’t need to design for them.
It might sound silly, but your brand needs the same positive self-talk you give yourself:
- Be proud of who you are
- Don’t change just to make other people happy or feel good
- Bring your whole authentic self to whatever you’re engaged in
You Need to Know How to Make Your Business Stand Out from the Competition – Start Here. 🤓
First, if you’re sitting there thinking your differentiation strategy has to be perfect from the start, take that pressure off yourself, friend, and let go of perfectionism with my free worksheet:
Second, explore the resources I’ve put together below, including questions to get you thinking, actions to try next, and other tools and places to begin.
Take this as an opportunity to further refine what makes your business stand out.
Keep in mind, creating a differentiation strategy is one of those things that takes iteration to get right. You’re going to have to try some things and see how they work.
Again, that’s why the above worksheet might come in handy – to help you stay in a productive mindset when (likely not if) you get it wrong.
Finally, take a deep breath. Remember, it’s okay to be new at this – you’re learning, you’re stretching your comfort zone, and you’re finding your footing. That takes time and practice. It takes patience and pragmatism.
When you feel stuck, take a break. Better yet, come right back here to 321 Liftoff for more inspiration.
Take a moment to pause & reflect.
- What market problem are you trying to solve?
- What’s a really annoying thing about your industry or category? How might you flip that on its head and turn it into an advantage?
- What are your brand’s values? What are the values of your competition? Are they discernible or more or less the same?
- How would someone pick up your product and know it was yours?
Actions, experiments, and things to try next.
- Go visit a physical store where you can see brands sitting next to each other on the shelf. Consider what problems each brand might be trying to solve? Why are they in business when so many alternatives exist? What inspiration might inform how to make your business stand out from the competition?
- Consider your ideal customer and talk to them if you can. Why do some customers keep coming back for more? Why do some customers not return? Consider what parts of your brand you need to double-down to further differentiate. What makes your business stand out to them?
- READ: How to See Trade-Offs Like an Entrepreneur | 321 Liftoff
- READ: 7 Steps to Create a Brand Strategy You’ll Love | 321 Liftoff
- WATCH: Don’t Just Sell Stuff — Satisfy Needs | HBR on YouTube
You might like:
- Perfectionism getting in the way of a great differentiation strategy? What might be possible if you viewed your business as a series of experiments? Download my FREE worksheet to help you think like a scientist – an essential entrepreneurial mindset.
Make a Commitment 🙂
Hopefully, you’re leaving with several ideas of what to try next. So, take a moment to aim your effort.
- What’s one thing you’d like to do differently after reading this article?
- What commitment are you willing to make in service of your growth?
- How will you hold yourself accountable?
Questions, comments, or ideas for the blog? Sound off in the comments!
Join the conversation.
What makes your business stand out?
What ideas or questions does this topic spark for you? Share some of your reflections in the comments or send me a message.
Starting and growing a business is not a straight line.
It can feel messy – it zigs and zags, it starts and stops. It can feel frustrating even for the most seasoned business owners. And, that’s ok.
It’s also an exciting challenge. It’s going to stretch you. You’re going to learn a lot – not just about business, but about yourself.
And, that’s why it’s worth it.