In Michael Porter’s seminal book Competitive Advantage,
he highlights three core competitive strategies:
- Cost leadership
is for the “Amazons of the world.”
Their economies of scale allow them to reap insane
profits despite charging razor thin prices.
They “make it up in volume.”
is for companies that narrow in on a niche.
While this is a great
way to insulate yourself from competition, you often remain “stuck” in that niche.
That’s not necessarily a bad thing.
Just something to be aware of, and to decide whether being a small business is right for you.
And then there’s differentiation
Providing something unique
to your customer.
This post is for companies that rely on differentiation
as their competitive strategy.
And as you’ll learn, the source of differentiation is changing.
If you don’t adapt, you’ll be left out in the cold.
Product Differentiation Isn’t Enough for Competitive Advantage
When most people think of differentiation, they think in terms of their product.
But as Porter points out, differentiation can be sourced from any part of your “value chain.”
Not just your product.
And here’s why that insight is more important than ever:
If you rely on your product
to differentiate in today’s world, you’ll get creamed
Today, sales conversations
— what your sellers say, do,
— are where the perception of difference is created.
In other words:
The battleground for competitive differentiation has shifted from product, to sales conversations.
How can I say this?
every B2B category is exploding
with a swath of competitive products.
Here’s just one example:
the marketing technology industry.
In 2011, this industry had 150 vendors.
That’s already a lot of noise.
But it’s gotten exponentially worse
Martech has over 5,000 vendors
(That’s not a typo).
Product differences are unlikely to cut through this clutter.
This is just one example.
The same explosion in competition is happening in (almost) every B2B category.
Customers Won’t Evaluate You In a Vacuum
If all of this wasn’t difficult enough, your customers are actively throwing themselves
into this sea of choices.
Today, when customers evaluate products, they actively search
for alternatives to compare it to.
“Comparison searches” on Google have grown by 5-10x (depending on the category) since 2011.
These two trends, when combined, lead to what I call the “Twin Effect.”
The “Twin Effect”
Telling the difference between two competing products is like telling the difference between twin children.
To you (the parent), the differences are obvious.
You eat, sleep, and breathe your product.
You probably visit your competitor’s website regularly, too.
You can immediately
tell the difference between your product and your competitors’.
It’s not so easy for your buyers.
spend all day with your product.
Since it’s their first time comparing the two products, they look the same
to the untrained eye.
This leads back to my opening point.
Sales conversations are the new vehicle for differentiation.
Rather than relying
on your product for differentiation, it’s nothing more than a ticket to play the game
But it’s insufficient without effective
sales calls, meetings, and email communications.
Have You Ever Been Here Before?
Here’s how relying on your product for differentiation plays out in the trenches.
After your buyer watches dazzling product demos from both you and your competitors, they start feeling a keen desire to understand the differences.
So, in an effort to “make an intelligent business decision,” they create the dreadedcomparison spreadsheet.
It usually looks something like this:
The use of this comparison tool leads to a fierce competitive “bakeoff,” and triggers what I call the “spec war.”
You “one-up” your competitor with Feature A.
They retaliate, match Feature A
, and one-up you on Feature B.
This cycle continues until your customer concludes:
“These products are at parity with each other.”
They resort to doing what you were trying to avoid all this time.
They grind you both down on price.
You offer a 10% discount.
Your competitor offers 15%.
And so it goes.
When the screen fades to black, the “winner” of this story is the company who erodes the integrity of their pricing.
The common complaint from the losing seller typically sounds like this:
“The customer said he’s never seen two products look more identical , and the decision came down to price. He just didn’t ‘get it’.”
How You Sell Is as Important as What You Sell
This grim narrative actually represents your biggest competitive opportunity.
What if your customers disqualified
your competitors entirely?
What if customers viewed your competitors as a commodity
and you as a strategic partner?
If you can transform your sales conversations, you can make these things happen.
You can dominate
If your product is “at parity” with your competitors, but your sales conversations
are on a whole new level, you’ll run circles around them.
There are specific things
your team can do during sales meetings to make that happen.
It’s not magic.
All that’s required is the right strategy.
The specific strategies for selling against the competition
are beyond what I can cover here.
That’s why I hosted an live webinar
that’s now available on-demand as a recording.
You’ll learn how to dominate your competition with winning sales conversations, step by step.
You’ll also see real life examples
of sales pitches that “box out” the competition.
If you apply what you learn in that webinar, you’ll earn a seat at the executive table.