The Systems Thinker Blog

Business Improvement: Differentiate or Die!

Posted byRon Carroll

There are so many high-quality goods and services available in the marketplace today that the world does not really need your business—unless of course, you have something "remarkable" to offer. "Very good" is no longer good enough. It is an everyday occurrence, hardly worth mentioning—certainly not the basis of breakthrough success. Your business must stand out like a “purple cow in a field of brown cows!” (Seth Godin, The Purple Cow).

In today's world, the safe course is the risky course. Boring leads to failure. You must become an innovator. You must differentiate or die!

Consider the bell curve as it relates to products and services. At the small front-end (green-blue) are the innovators and early adopters (e.g., mobile devices, robotics, green energy, social media). This stage is often characterized by fast growth and high profit.

Innovation Bell Curve

The mass in the middle (reds) includes the established commodities (e.g., automobiles, personal care items, and carpet cleaning). These products are characterized by strong sales but lower profit margins due to intense competition.

At the end of the bell curve (orange-yellow) are disappearing products (e.g., station wagons, land line telephones, chimney sweeps, and drive-in movies). This stage has diminishing sales coupled with low profit margins. You don't want to enter the marketplace with one of these products unless your innovation gives it new life. Most successful entrepreneurs work at the front end of the bell curve, in the realm of "new" and "different."

What Is Innovation?

Innovation is at the heart of every exceptional business. What is innovation? It can be a new invention, technology, process, or business concept. However, it is most often a significant variation or improvement to something that already exists. It is the skill of developing the new "best solution"—from the customer's point of view.

Innovation adds new product features or benefits not previously available. It borrows ideas from other industries. It makes products cheaper, faster, smaller, better, stronger, more efficient, and so on. It pushes limits, new frontiers—"going where no man has gone before." When innovations are useful, interesting, outrageous and remarkable—when they remove more pain or add more benefits than anything else available—your target market will seek them out.

However, the innovation may not be a product or service at all. It may be distinctive sales, marketing or advertising methods. It may be an improved distribution or delivery method, sharper pricing, more convenience, lower risk, better guarantee, or “killer customer care.” You must differentiate in some remarkable way. With innovation, market timing is important. Innovation that is slow to market may be overtaken by competitors.

Remember, your business is your product. It is made up of systems and processes that provide consistent and measurable results. When you innovate to produce remarkable internal systems, you will have a remarkable business.

FedEx was the first to develop a remarkable system for delivering packages overnight. Costco created a customer-care system that allows people to return merchandise for any reason. McDonald's developed a system for producing the same fast food anywhere in the world by low-skilled workers. All three took something ordinary and made it into something extraordinary by innovating remarkable business systems. They differentiated themselves, and you can too.

Could your customer say this about you?

"One of our favorite clients is an auto repair shop that regularly puts three to four competitors out of business every year. His business operations are run so flawlessly, his marketing is so compelling, and his customer satisfaction is so high . . . customers are irresistibly drawn in and drawn back time after time. They are helpless. In their minds (and in reality), they would be STUPID to go anywhere else to get their cars fixed" (Rick Harshaw, Y2Marketing).

How Do You Innovate?

Innovation is not as hard as it sounds. You just need to figure out a way to deliver more value to customers than any of your competitors. There are many ways to do this. Begin by asking yourself this simple question: If I were a customer of my business, what would compel me to buy from me instead of my competitors? If you don't have a good answer to this question, you're in trouble. If you aren't willing to get into the Zone and figure out the answer, you're doomed. Sorry, but the marketplace doesn’t need another "good" business. What it needs from you is something better than it's ever had before.

Please don't say you're special because you have higher quality, better service, or the lowest price. That's what everyone says. And, if your strategy is to use catchy advertising, fluff, or fast-talking sales pitches to sell the same old products and services that everyone else is offering, forget it. If all you have to offer is the status quo of your industry, it would just be luck that a customer decides to buy from you. You can't build your business based on luck! Rise above the status quo.

Pricing is often the key differentiation of products in the commodity stage of the bell curve. At the innovative stage, where many entrepreneurs are, it should be your unfailing commitment to meet your target market’s needs better and more effectively than anyone else would dream possible.

Legitimate price advantages do happen. But all too often the cry, "We have the lowest price in town" is a sign of weakness. Translated, it probably means the business has not invested in marketing, quality people, “killer customer care,” and other expenses incurred by well-run companies. Selling on price alone often stifles profit and growth. Truthfully, the customer pays a premium for the privilege of doing business with remarkable companies, but they must think it's OK because they keep coming back.

Here’s what your customer is thinking, consciously or not:

“When I shop I am not always looking for the lowest price; I am always looking for the best deal—real, quantifiable, interesting, exciting, and compelling reasons to buy from you. You'll get my business if you are the obvious solution to my problem, if I were crazy to buy from anyone else. And if you can turn me into an evangelist, just watch your company grow.”

What is Branding?

Some people refer to this process of becoming remarkable as "branding." Business owners tend to think of branding as advertising, when advertising is just one element of branding.

"A brand is not what you say it is. It's not a logo, corporate identity or product; it is a gut feeling about a product, service or company. It takes a village to build a brand—customers, vendors, employees, partners, stockholders. When enough people have the same gut feeling, you have a brand" (Marty Neumeier, The Brand Gap).

Branding touches every part of your business. It is the integration of all business systems to create consistency for customers, vendors, employees, and you as the owner. When the "outside perception" of your business is remarkable, and the "inside reality" of your business is remarkable, you become the buzz of the marketplace, and you will have a brand.

Peter Drucker said, “a business has two purposes: marketing and innovation.” Get into the Zone. Innovate. Seize a differentiating idea, dramatize it, and make it your own. Position your business in the marketplace as a beacon on a hill to your target market. Make your business truly remarkable!

Once you have differentiated your business in the marketplace and developed effective sales and marketing systems, you must do everything in your power to keep customers coming back. You need business systems that will give them a great buying experience and convert them to loyal patrons.

Step 7: Convert with “Killer Customer Care”
Back to Table of Contents: 10 Easy Steps to Grow the Perfect Business





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Tags: Business Systems, Innovation