Marketing March 7, 2016 Last updated July 28th, 2020 1,339 Reads share

There Are Only Two Ways to Compete: Focus on Number Two, Differentiation

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Price competition is as old as capitalism itself, but it wasn’t until around 1980 that a


In the headline for this article, I’m insisting that you focus on “number two” – which is differentiation – because if you focus on price, you’re putting yourself on the road to turning your product or service into a commodity, and that’s a dead end path for most companies.

So let’s look at two of the best, basic and most accessible ways for smaller businesses to compete via differentiation.

#1. Look and feel

Whether you’re online or brick-and-mortar, the look and feel of your business or your product is more important today than it has ever been.

Whether you’re online or brick-and-mortar, the look and feel of your business or your product is more important today than it has ever been. The elements that make look and feel are being studied and quantified in ways that were unheard of just a few years ago. In the online world, the discipline that goes by the title of User Experience (UX) has gained preeminence.

You probably know some restaurants or bars in your town that do a great business in large part due to their atmosphere; it’s certainly true that plenty of restaurants that cooked good food have gone out of business because people didn’t enjoy the atmosphere.

With advance apologies for stating the obvious: To take advantage of the differentiation attribute in your product or service, it has to be noticeably different than the competition. Sometimes the best way to do this is to take a “contrarian” point of view in your product development.

A good – and well documented – example of this is found among game apps. The competition is stiff for creating a popular iOS/Android game, so when the team at 888 Ladies started to develop what is now called “Treasure Fair” they spent a lot of time upfront studying the competition in similarly themed games. Here’s what they found, as recorded in a step-by-step account of the game’s development:

More extensive research was conducted into the circus-themed slots offered by the competition, and it became clear that their offerings were similar in look and feel: bright colors, playful imagery, and the fun and frolic of the “big top.” So the challenge was to create something to stand out against this competitive landscape.”

The first lesson here is that if they created another game with a look and feel dominated by bright colors and the like, it would have been impossible to take advantage of the element of differentiation.

So they went the opposite – contrarian – direction: “Instead of creating yet another bright, playful circus tent, (we said,) ‘Let’s create something darker, more mysterious, more intimate, more complex.’”

If you’re going to create a unique look and feel to your product or the place you conduct business, you first need to appreciate the entire competitive landscape and understand the look and feel your competitors are offering.

#2. Customer service/employees.

I’ve combined customer service and employees for a very specific reason: The key to offering industry-leading customer service is by having a great group of talented and motivated employees. Further, the most important thing in assembling and maintaining that kind of team is to treat your employees right.

Putting your employees above everyone else – including shareholders – is the key to the success of Southwest Airlines. As customer experience (CX) expert Shep Hyken relates in his book, “The Amazement Revolution”: “When you build a company around the idea of taking care of employees, then taking care of customers becomes easier for everyone.”

Hyken then relates a story told by Southwest Airlines co-founder Herb Kelleher: “When I started out, business school professors liked to pose a conundrum: Which do you put first, your employees, your customers, or your shareholders? As if that were an unanswerable question. My answer was very easy: You put your employees first. If you truly treat your employees that way, they will treat your customers well, your customers will come back, and that’s what makes your shareholders happy.”

This is simple, but it takes forethought and follow-through. Assembling and keeping a team of this caliber is hard work. I’m sure we know businesses that we initially fell in love with, but turned against after the loss of some key employees.

The point is that you can differentiate your business by having the most helpful, knowledgeable and personable employees. In fact, customers will pay a premium for the privilege of doing business with these kinds of people.


Before I leave these topics, I want to tie together the two major points I’ve made above in a way that you may not have picked up on yet. When you boil the look and feel, and the customer service/employee attributes down, they both impart a “feel” to your customers. Yes, there are also some very practical aspects of these as well, but sometimes it’s the “feel” that lingers with us and that’s critical to understand. (Notice how each shares an “X” for “experience” in its hashtag and every “experience” imparts a “feeling.”)

If people don’t have a good feeling about doing business with you, few other things matter. If you have the lowest price by a mile, people may tolerate a business that doesn’t leave them feeling all that good about the transaction – but the savings has to be quite big.

There’s a truism that is often applied in show business and I think it applies to your business as well: Leave them wanting to come back for more.

If your product, service, place of business has a wonderful look and feel and it’s backed up by great employees who support world-class customer service, you will have differentiated yourself in ways that will be a strong foundation for long-term success and profitability.

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Megan Wright

Megan Wright

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