Change the game in your industry

Seven things you should know about differentiation

How to improve revenue and profitability without adding more resources

Globalisation and technological development drive commoditisation; this combined with increased competition puts pressure on prices and profitability.

Seven things you should know about differentiation

We have identified seven characteristics of companies that grow more than market average by means of differentiation. The challenge of many companies is to increase revenue and profitability with the constraint of keeping investments and costs at the same level or even lower. One way to achieve this is by increasing competitiveness through differentiation.

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Creating a differentiated market position and thereby the ability to charge premium price over competition is only possible by improving the customers’ perception of the value delivered to them. Our experience is that developing, communicating and delivering a superior value proposition requires a systemic approach involving the entire commercial organisation. Isolated initiatives in Marketing and Sales will only have small and short-term effect.

Over the last years, Implement Consulting Group has worked with commercial executives from Nordic companies that have performed well above their peers as well as with those that have not. What characterises companies which grow more than industry average is their ability to show remarkable results in terms of more qualified leads, increased order sizes, improved win rates and reduced cycle lengths. We have found that these companies have succeeded with differentiation by working systematically with the following seven elements:

  1. They truly understand the business of their customers.
    They possess a detailed understanding of both commercial and technical challenges at segment as well as customer level.
  2. They articulate clear value propositions.
    They have clearly defined how their offerings differentiate from competition in the market and how they add value.
  3. They know who they want to work for.
    They have a clear segmentation and prioritisation which have direct impact on how and what they offer – as well as on how they allocate sales and marketing resources.
  4. They know how to create value for each customer and stakeholder.
    Key customers and stakeholders within their focus segments are defined and aligned with customerand stakeholder-specific value propositions.
  5. They have aligned sales and marketing efforts.
    Sales and Marketing have in-depth understanding of each other’s roles, responsibilities and value creation.
  6. They are able to challenge customers and stimulate demand.
    They challenge customers with insights, engage customers in evaluation of offerings and disengage from opportunities when needed.
  7. They have strong commercial leadership.
    Leaders use seniority to open doors, take interest in and challenge on strategically important opportunities

Understand the business of your customers

You need a solid understanding of the operational and technical challenges of your customers – and how these affect their business. Seek to understand how value is created as well as the negative impact of the existing challenges. This will lead to a better understanding of behaviour, needs and buying criteria. Obtain insight in terms of what a great customer experience is, and what value different players on the market seek to provide. Get an understanding of the expected development in customers’ industry and future demand. Find out how this will influence the buying criteria going forward. Start by analysing relevant industry dynamics, market trends as well as what drives value for your customers.

At a more operational level, you need to understand what key stakeholders in relevant functions are concerned about. Understand what counts and preoccupies them in their daily work. Do you understand what your key stakeholders’ true worries are? Systematically observe and gain insight into the stakeholders’ fears, frustrations and obstacles in relation to reaching their targets.

Articulate clear value propositions

Use the above insight to create and improve the power and uniqueness of your value propositions. Challenge yourself and your team on how your business is configured, how your offerings are designed and how you might change the game in your industry.

Look for unique differentiators within the different elements of your solutions. What are the offerings and services that not only create superior value for your customers but also are unique? Start by assessing your most mature customers. What do they dream of? Often, significant differentiators and potential “game changers” are found in the way offerings are communicated, sold or delivered – and not in the core product itself...

The above text is an extract – go to the top of this page to download the entire article.