What is a Competitive Differentiator?

A competitive differentiator is how you set yourself apart from the countless other companies in your industry targeting the same customers as you. No matter how innovative or unique your sales pitch might seem, the chances are there will always be another company out there offering an alternative.

A competitive differentiator is how business leaders can improve their chances of not only making an initial sale but keeping customers coming back for more in the long term.

Competitive Differentiators and Positive Business Outcomes

In today’s digital world, where almost anyone can become an entrepreneur overnight, most markets are becoming inherently saturated.

What’s more, customers have more options than ever before because they’re not limited to a specific geographical region when shopping for solutions to their problems. Cloud-based technology, worldwide delivery and the wider advent of the internet has changed selling forever.

Competitive differentiators are how you improve your chances of succeeding in this marketplace.

A competitive differentiator is essentially what makes you different from other competitors in your space. You can compete on a range of different factors, from price points to customer service. However, every business needs at least one or two differentiators to achieve positive business outcomes.

Choosing a Competitive Differentiator

To achieve positive business outcomes with competitive differentiators, companies need to first determine how they’re going to set themselves apart from the crowd, then make these unique selling propositions evident to their customers.

A strong understanding of your competitor differentiators provides you with the tools you need for better marketing, and stronger sales pitches. However, it’s important to choose your competitive differentiator carefully. While some solutions will help you to stand out in the market for an extended period of time (like customer service), others may not be as competitive as they seem.

For instance, using pricing as a competitive differentiator might help you to attract additional customers initially, but it also means you could end up in a “race to the bottom” on pricing with other, more established vendors who have more room to balance supply costs.

How you choose your competitive differentiator will depend on a number of factors, including your company’s overall mission or strategy for how you plan on serving your audience, and what you want your position in the market to be. For instance, you can’t be both a cost leader and a premium solution.

The Different types of Competitive Differentiators

Often, the best way to choose competitive differentiators is to research your target market and the number of competing companies in your industry. If you already know there are a number of brands in your space trying to compete by offering a low-price service, then you also know choosing the same competitive differentiator might not be a good idea.

Some of the most common competitive differentiators you can choose from include:

  • Product features: The unique capabilities and functions of your product or service can help to set you apart from the crowd. If you can offer something that no other brand can provide, this can be an excellent differentiator, provided other brands can’t simply copy you.
  • Brand identity: Differentiating yourself with brand elements means building a relationship with your customers through a powerful image, personality, and set of strong values. Differentiation through brand identity requires a strong understanding of your target audience, and a commitment to solid marketing initiatives.
  • Service elements: Service elements of differentiation include everything you can do as a business to set yourself apart when supporting your customers. Your approach to customer service, solving issues, and guiding your customers is crucial here.
  • Price: As mentioned above, pricing can seem like an easy way to differentiate your solution at first, but it quickly loses its impact if another company can offer a lower cost. Be careful not to get too caught up in pricing.
  • Delivery options: Delivery options refer to how you get your product or service to your customers. This could include differentiators around how your product is distributed, and where it’s likely to be sold.

Finding Your Competitive Differentiator

There’s no one-size-fits-all approach to competitive differentiation. For most companies, the path to success will always start with the right level of market research. Analyzing the size of the market, the trends in the industry, and the demographics of your target audience should give you an insight into which differentiators are most likely to work for you.

You’ll also need to consider your competitors and what they’re already offering. Think about what kind of companies already have the highest share of the market. Which companies do you want to replicate, and which do you want to separate yourself from entirely?

After assessing your market and your competition, think about your offering and what makes it special. What have you currently got in your offering which can make your sales pitch stand out to your target audience? Where do you think you could add more value to your offer, or show additional benefits compared to the competition?

Once you’ve established your competitive differentiators, look for ways to embed them into your marketing and sales techniques as often as possible.