The Myth of Differentiation

Many would agree that businesses must differentiate themselves from their competitors. Businesses’ ability to differentiate themselves from the competition is crucial for growth, profit, and even survival.

Professors Terrell Middlebrooks of Northwestern University’s Kellogg School of Management and the University of Chicago Graduate School of Business, respectively, have said it well.

Dare to be unique is what service companies must do. To gain a position of leadership in the market…and to then lead. It is important to differentiate yourself from your competitors… They move away from internal “be better” initiatives and adopt “be different” externally-oriented strategies. It is based on providing unique value to customers that no other competitor can provide.

McKinsey is their first example.

It’s so common knowledge that even arguing for differentiation seems simplistic. Why argue for something that everyone knows already?

The conversation about differentiation is, therefore, largely focused on how and how strongly you can differentiate yourself. (Terrell & Middlebrooks even go so far as to suggest that you should be in opposition to your competitors, coining the term “opposition.”)

I’m afraid I have to disagree. Please give it some more thought. Everything I’ve heard and read about differentiation is incorrect. You may be experiencing the same thing.

On Unique Selling Propositions

One of the most popular platitudes among the high priests in business is that each company, or even every individual, must have a unique sales proposition (USP). USP is defined as something you do or say about yourself or your company that’s different from what others offer or do. In other words, one-of-a-kind… unique.

I give about 40 speeches or presentations a year. During presentations, I ask members of the audience for their elevator pitches – the minute-long description of themselves that they would give to the CEO of a company in which they are interested in becoming a client.

After they finish, I ask people to raise their hands if their partner gives a great elevator pitch. Many hands go up. I often hear the following when I ask them what made them so special: They are clear about their work, how they can make a difference for their clients, and what industries they serve. I often hear stories that bring their businesses to life.

I asked them who had heard about the concept of a USP and who had been told at least one time in their professional lives that they needed to have one. Most hands go up. Then I asked who said something different in their elevator pitch. Most of the time, no one raises their hand. But occasionally, there are a few brave souls who jump in.

Despite the fact that their elevator pitch partner may have delivered a great speech, many people will eventually back down from their claim that their partner is unique.

The “Unique and Different” Label

In elevator pitches and marketing messages, professional service firms make the mistake of claiming to be unique and different. Google’s search for “unique consultancy firm” (without quotes so that it only returns results with these words as a string) returned close to 4,000 websites. This is one of the sites on the first page.

[Firm name] is a unique consulting firm …. We target firms who are more concerned with quality than price and quantity. We specialize in small and medium businesses. However, we prefer clients who are more concerned about the results and services they receive than with price. Our firm is not suited to price-conscious clients. Although our services are high-quality and slightly more expensive, the results and customer service are almost always better than what the client expected.

[Author’s note: I tried to find a more professional-sounding copy that included the term “unique consulting firm,” but they were all pretty much like this. You can’t make up this stuff, people.

When a company declares itself unique, the reader is left with the following question: Is the firm really unique? (Or, in the case of this firm, “rather” unique) And, yet, does it “virtually exceed the client’s expectations?” Ugh.

If the answer is no, which it usually is, then the company loses credibility. It sounds like they’ve been reading a marketing textbook about the importance of having a USP or delivering a differentiated message.

Some admit that their unique-speak sounds amateurish or even acknowledge they thought so before they made it public. Firm leaders have a good sense of commonsense but seem to ignore it when they declare their uniqueness.

Some firms take differentiation to the extreme, putting out a flurry of “we are different” messages. Consider the message of a leading Boston law firm:

We practice law differently at [FIRM name]. Our attorneys all agree that the results are what drive our business. However, we also believe that building relationships with clients and providing added value is key to our success.

The reputation of this firm is excellent, and I believe it to be true. The firm’s goals are to drive business by delivering results, building relationships, and providing value-add.

What Customers Really Want

Even though firms may hear differently, being unique is not a big factor in retaining or winning clients. The “we’re unique” message can often be detrimental to them. Imagine the following situation: your tooth is hurting, and your dentist has left town. It would be best if you urgently had an oral surgeon, so you turn to your trusted friends Trip and Beverly.

Referral 1: A close friend, Trip, suggests Dr. Phlox.

He claims that his aunt Deanna, who lives in the next town over, needed oral surgery. She went to Dr. Phlox. The word on the street says that he is a solid man. Aunt Deanna was greeted by the doctor, who took time to explain what would happen and answer any questions Deanna may have had.

Deanna’s surgery went well (as far as they knew), and she has not had any issues since. Deanna said he was a bit more expensive than the average doctor, but he is very busy and well-established, so it makes sense.

McCoy, it is said, is a well-known oral surgeon in the United States. He has been known to go where no oral surgeon before him had gone. His office is unique, as are the people, procedures for oral surgery, and tooth technology he pioneered. According to his Website and brochure, his results are 22% superior to those of all other oral surgeons, which explains his high prices.

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