Blog post

A Different Perspective on Differentiation

By Hank Barnes | November 12, 2019 | 2 Comments

go-to-market

I write and talk about differentiation a lot.  And our vendor clients are constantly looking for help in uncovering and communicating differentiation.  Its very much focused on what makes them special and different than specific alternatives.   Differentiation is critical for success.

But recently, I saw some data that provided another perspective.  My colleague, Derry Finkeldey,  led a study of 764 line-of-business buyers (yes, that buyer that most vendors are really concerned about reaching and appealing to).  The findings are available to clients in our Gartner for General Managers program in this survey analysis document (additional research for GMs and other roles is coming).

One of the charts really caught my eye.   We asked these buyers what mattered most (and least) when considering vendors.   Statistically speaking, we used a MaxDiff technique to identify the most, and least, important factors.  The chart below highlight the top 4 factors.

Source: Gartner, Inc.

All four  of these factors (there were 9 others, by the way) make it abundantly clear–LOB buyers want vendors that will work with their business and care about their business priorities (the lower rankings were more oriented toward vendor reputation, brand, price, etc).

The one that jumped out for me though is the 4th highest.

Vendors spend all their time focusing on their own differentiation, when, maybe, they should be focused on their ability to help their customers differentiate.   Now this is interesting, because I really don’t have a business if I sell to just 1 company.  And if I sell to many, differentiating based on my product is not realistic.

But, if I think beyond the product at everything that surrounds it and the real business issue, we could do more.  It would illustrate understanding of the customer situation.  We could look at choices that can be made during implementation and deployment that could help the customer differentiate.   This does not have to be about customization.  It is about choice  (and maybe we evaluate customization against the ‘does this help you differentiate’ perspective).

Clearly, if you want to reach the LOB buyer, the mantra we have been pushing for years (understand the customer’s situation, lead to product not with, etc. ) is critical.

The next time you think about differentiation, consider it from the customer’s perspective—it’s not about your differentiation (solely); its about whether you can help them differentiate (and gain competitive advantage).

 

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2 Comments

  • Rohit says:

    In the world of SaaS, how do you think software companies can deliver mass differentiation for the customer? Is it primarily through customisation after understanding the underlying business problems, or is there more to it?

    • Hank Barnes says:

      Rohit, great question and it is a tricky one. Mass differentiation inherently isn’t. So I think it comes, to a degree, from implementation choices and the things you wrap around the SW. Two companies could use the exact same Freshworks product and one would achieve market differentiation and the other would just be more efficient. The other, if you think you have a product that enables differentiation, is to use a leapfrog vertical strategy. Start in one, get a critical mass of differentiation, then use that to entice more dynamic companies in adjacent industries.

      There is a level of market and product maturity involved, as well as customer ambitions. Not all customers value differentiation as highly. So the final factor might be to understand goals and scenarios….