How To Differentiate Your Company

Differentiation is vitally important to your business success because it helps you keep your customers coming back time after time.

Do you realise that most companies replace the majority of their customers every five years? Businesses in general lose at least 10% of their customers every year. Thus, every five years the average business must replace at least half its customer base. Why? What happens to these customers? Let’s take a look:

3% move away or die.

5% are led by their friends to buy elsewhere.

9% of customers stop buying because a competitor provides a better offer.

14% of customers defect because they’re dissatisfied with the product or service.

68% of customers stop buying because of indifference. In other words, they don’t think anyone cares about them. This apathetic attitude to customers when they have become a ‘customer’ is the key reason they leave you.

Now here’s the interesting fact: Most businesses fight over one of the smallest percentages of defecting customers. They chase the 9% who are looking for a better price. It makes no sense because even if you’re successful at capturing a “price sensitive” customer, you can be sure they’ll defect as soon as a competitor offers a lower price. Let your competitors fight over the price shoppers. Spend your time where the value-conscious customers meet!

Consider the 14% of customers who are dissatisfied. Do you think you could reduce that percentage just by staying in touch with your customers and asking them about their level of satisfaction? The answer is yes.

But wait! Two-thirds of customers are defecting because of indifference. You can make a huge impact by differentiating your business and making sure that every customer knows that you are sincerely interested in serving them. Not just today, but forever.

Here are some ideas that will help you differentiate your business and keep more of your customers.

Promote your new products and services to your existing customers.

List your products and services on your direct mails, your linked-in accounts, your business cards, your packaging, your Facebook and Twitter business accounts and other marketing links. Don’t leave it up to your customers to know your product line!

Get to know your top customers, the 5, 10 or more who spend the most money with you.

Whether they are retail customers or on-line shoppers, get to know them! By the way, these are the people who will give you referrals that will help build your business faster than any other method.

Get physical with your marketing strategy.

Use more than literature to promote your business.  A computer software trainer we know sends a bottle of aspirins to prospects to get them to sign up for his seminars, which are designed to “ease the pain” of learning a new software program. A travel agent we have used in the past uses sand to sell holidays. What can you use to be different? Think about the benefits of your products and services.

Now think of an object to associate with the benefits. Send that object to your customers and prospects!

Call your customers AFTER the sale.

Thank them, encourage them, and answer their questions. By doing so, you are there when they need you and you prove yourself different from other companies who just take their money and run!

No doubt there are other ways of making yourself different in the market place. Whatever they are, use them to effectively show why you should be top of their list when they are thinking of your products and services.

Thanks again


Sean McPheat

Managing Director

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Gaining A Competitive Advantage

Michael Porter’s Competitive Advantage model sets out a strategy that creates a positioning in your market place based on sustainable advantages that you can build up in your industry.

Porter states there are basically two types of competitive advantage that results in a third viable competitive strategy and gives you your USP.

The two types are differentiation and cost leadership, i.e. the low cost producer.

The differentiation model determines those companies who look at their uniqueness in the marketplace, based on the viewpoints of their customers. These could be the product itself, service, brand image, marketing, service back up, etc.

But this doesn’t mean the company can ignore its pricing position. In areas that don’t affect its differentiation, costs should be kept to a minimum, says Porter. Only in the unique differentiation areas should the price premium paid by customers be seen as valuable to them.

The other competitive advantage is being the cost leader in the industry. This is often achieved by economies of scale, and the differentiators should still be considered important, even if you are attempting to offer lowest price. If price is your only differential, someone, somewhere will beat you short or long-term. And then what happens to your advantage?

Porter then states that the result of your first two competitive advantages is your focus. That is, you set out to be the best in a segment or niche market. This explains why some companies set out to differentiate themselves in the market, then lose their focus and fall behind the competition. You must look for other niches that will attract customers rather than become outdated by focusing in areas that don’t attract current customers.

Porter’s Competitive Advantage model offers an effective and important addition to your management portfolio by focusing on what your company should do best. That focus is better than trying to appeal to all sectors with some differentiation and average pricing. Customers will be unable to determine what you actually stand for unless you offer some kind of advantage to them.

It’s an interesting model that creates a firm strategic model for progress in your industry.

Thanks again


Sean McPheat

Managing Director

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