Strategic differentiation with a customer focus
Friday, July 13, 2018
I recently worked on a proposal that required — not an executive summary — but an introduction that called out the vendor’s differentiators.
Perhaps one of the hardest aspects of our industry is coming up with real differentiators to cite in our proposals. In his book, "Collapse of Distinction. Stand out and move up while your competition fails," Scott McKain suggests we spend too much time trying to duplicate and outdo our competitors.
When we compete rather than emerge as a differentiated leader in our field, we are driven by the competition and not by the customer. McKain says that to have an advantage, we must pay more attention to what the customer wants than to what the competition is doing.
Has this happened in your organization? The competition creates a point of distinction, so you duplicate it and try to do it even better.
Each competitor introduces incremental changes to outdo the other. You end up mutually destroying points of differentiation. You are competing against each other rather than for the customer.
Then a new player joins the game with a new technology or service. Not only are you undifferentiated from the existing competition, but now there are new players in the game offering something better, faster and cheaper!
Another destroyer of differentiation is customer boredom. You believe the customer can’t live without you; that you have a good relationship and successful past performance.
McKain warns that familiarity breeds complacency. Complacency is the plague of the incumbent. The customer becomes bored with the same approach and technique. When someone offers something new and exciting, the customer is intrigued and moves on.
When we take something for granted, we are no longer growing and cultivating it.
Having the lowest price is the single worst point of differentiation for any organization in any industry. All goods and services are differentiable. You might think of services as "intangibles." But there can be points of distinction with intangibles, too.
McKain suggests you must create your own points of differentiation. You must be a leader in solving the customer’s problem in some unique way.
What have you done differently for your customer in the past year? Find out what is behind the curtain — what keeps the customer up at night? Then, create small, solid points that are recognized as different and important from the customer’s perspective.
In "Competitive Advantage: Creating and Sustaining Superior Performance," Michael Porter says differentiation involves creating a point of uniqueness that, in turn, creates viable benefits diverse from the benefits of your competitors.
McKain suggests it is better to compete with yourself than have someone else do it. The company that is not always striving for the next innovation, the next improvement over what it already does will eventually fall behind. Extinction comes when we believe we control a market.
How many of us write proposals that promise to "meet customer requirements"?
Yet, how many companies know what those customer requirements really are, let alone how to meet them? What we are really promising is to meet engineering standards, apply best practices, etc.
That is actually conforming to requirements. It is not differentiation. It is not distinction.
How many have included "value added" inducements in a proposal? What does that mean? Does that mean you failed to give the customer what they wanted in the first place and are now willing to add it to your offer?
If you are truly connected to your customer, McKain says that providing significant and distinct value through your products and services is an integral part of every action. It is not something you add.
How many customers have you talked with in the past year? In the past five years? Listening to the customer pays off.
To provide genuine service delivery and quality, we must ask our customers what they require, what they expect, and what they consider good service. And we must keep asking them. Then, we must identify ways to uniquely support our customer’s needs.
Conclusion: Fight the collapse of distinction in your organization. Center your efforts on strategic differentiation through a customer — rather than competitor — focus. Let’s keep winning!
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