The goal of every tech company should be achieving lasting differentiation. Unfortunately, many companies neglect even the fundamental aspects of differentiation. Instead they end up creating me-too products that are just like their competitors.
In 2000, Jack Trout wrote the seminal book on lasting differentiation called “Differentiate or Die.” The central theme of the book remains relevant even today. Trout argues that companies must emphasize the unique value of their products to survive. Especially in today’s competitive market.
“Differentiate or die” means giving customers a good reason to choose your product over the competition. Companies can use a variety of strategies to achieve this. Including being first in the market or specializing in one area. Trout doesn’t talk about this but you can also differentiate based on how you sell.
Why is lasting differentiation so important?
If a company fails to emphasize its unique qualities, it risks getting lost in a sea of choices. Especially in the competitive tech industry. Based on G2 Crowd data on various software segments, we see an intense level of competition. For example, Marketing Automation has 375 vendors, CRM has 865 vendors, and ERP has 593.
Many tech companies overlook the importance of differentiation. They fail to make adequate efforts to stand out from their competitors. Or some tech companies attempt to differentiate after the product is already built. This is fake differentiation that amounts to marketing word-smithing. This leads to unclear distinctions between vendors that confuses customers. Afterall does the “easiest CRM to use” sound that much different than “the most user-friendly CRM”?
In her book “Obviously Awesome,” April Dunford discusses five essential components of effective positioning. Markedly, the first component she mentions is competitive alternatives. In order to understand your position better Dunford proposes asking a question -“What actions would customers take if our solution did not exist?”. This question helps identify the unique value your product offers compared to alternatives.
Once we have a list of differentiated features, we can go deeper by asking the next question – “What benefits do these capabilities provide to our customers?” In other words, we seek to understand the value these features enable for our buyers. This is marketing 101. But yet so many tech companies struggle with this.
Bring it all together
Tech companies need to stop with the fake differentiation. Rather they need to spend more resources on building lasting differentiation.
