Insights | By Howard Tiersky
Customer Research Reveals SHOCKING Lesson in Differentiation
Whatever product or service you offer in the market, it's likely that there are other companies who are trying to solve the exact same problem you are. Oftentimes, it’s the differences that determine whether a customer goes with you or a competitor, so being clear on what makes your offering different is quite important. I learned a fairly shocking and valuable lesson about this a few years back. I thought I knew what made my company different. But I was totally wrong.
A couple years ago, my company was rebranding after an acquisition and decided to conduct customer research—partially because we wanted to test out a few possible new names, and partially to confirm our understanding of how customers viewed us.
We were pretty sure we understood what our key differentiator was—our intense customer-centric focus in our approach to creating great digital experiences.
But when we started interviewing our customers, asking open ended questions like, “What makes our company different?” We got a totally different set of answers than we expected.
Customers agreed that our “customer centricity” was valuable but told us that nearly all our competitors are now also focusing on it, or at least saying they were.
Did that mean our approach to customer research and use of design thinking to create digital products wasn’t important? Far from it. It was still important, just not a differentiator.
Then, the customers told us that what really did made us different from our competitors. They said it was that we collaborated with their teams effectively. We didn’t try to undermine their employees or try to make them look bad but instead tried to make them successful and grow their skills.
Frankly, we never considered that to be a differentiator because it just seemed to be the right thing to do. It never occurred to us that our competitors weren’t doing that.
Bottom line, what we thought was our key differentiator was actually a “qualifier” and what we assumed everybody did was actually what made us different, at least to many of our customers.
It's critical to know which characteristics of your company are differentiators vs qualifiers.
If you’re an airline, safety is critically important for you to do business, but it isn’t what makes you different because every airline has an almost ninety-nine percent rating. Compare that to someone like Virgin Atlantic who has a masseuse in business class offering neck massages. Is it critically important for someone buying a ticket? Maybe not, but it’s what makes them different.
Since then we’ve started using the model below when researching brands to understand which characteristics of a company fall into which category in the mind of the customer.
THE FOUR TYPES OF BRAND CHARACTERISTICS
Any given brand will have many characteristics—its personality, products offered, ways you can buy, price point, history and heritage, etc. When developing communications about a brand you probably can’t address all of them, nor should you.
By understanding which brand characteristics fall into each of the following four categories you can optimize your messaging.
GENERIC DESCRIPTORS
A generic descriptor articulates “what” you are. Are you an airline? A soda company? A marketing firm? If your customers don’t know what you are first, even if you have the best differentiators, they might be too confused to know when to do business with you.
For example, if you’re a Chinese restaurant in a busy city like New York or London, that’s not a differentiator. There are hundreds of Chinese restaurants in New York.
But of course it’s critically important in your brand communications that customers do know that you are a Chinese restaurant. They first need to be able to categorize you and then you can tell them why you are the Chinese Restaurant they should choose.
QUALIFIERS
A brand’s qualifiers are those characteristics that they have to have in order for customers to consider them. Most likely many of the brand’s competitors also have these qualifiers, but if a brand doesn’t have one, or give the customer the impression that they might not have it, that can create negative differentiation.
For example an accounting firm needs to be knowledgeable about accounting rules. You aren’t going to stand out by being the “accounting firm that knows how to follow the rules,” but if customers somehow get the impression that you aren’t good at that, you will not appear “qualified.”
It’s not always necessary to communicate all qualifiers, but research can help reveal which qualifying characteristics are ones that customers assume you have vs those you need to reassure them about.
DIFFERENTIATORS
Differentiators are characteristics that make you stand out from your competitors in a way that increases the likelihood of someone wanting to do business with you.
If one barber shop gives the same basic haircuts as all the others, but offers free hot towels and soft drinks and their competitors don’t, then that is a differentiator if it is something customers care about, value, and ultimately use in their consideration of where to get their hair cut.
IRRELEVANTS
But not everything that makes you different is something that matters to the customers. “Irrelevants” are characteristics of your company that simply don’t matter in the marketplace.
All companies have many characteristics that are irrelevant to their customers. For example, customers probably don’t care what payroll service you use, or that your headquarters is in Cincinnati, or exactly what type of plastic the garbage bags you sell are made from.
These characteristics may be important for other reasons in a given business, but not valuable when communicating to the customer.
Because customers have a limited attention span, it's just as important to not spend time communicating things that don't matter as it is to communicate the right things.
Customer research is a key tool to help determine which of your company’s many characteristics are generic descriptors, qualifiers, differentiators, or irrelevants.
DIFFERENT CUSTOMER SEGMENTS MAY BE DIFFERENT
The approach described above should most optimally be used to evaluate and categorize characteristics of the company separately for each key customer segment.
For example, you may have B2B customers who care about some of your company’s characteristics that your B2C customers couldn’t care less about and vice versa, so you may need a different communication strategy for different types of customers.
AN EXAMPLE
Here’s what it looks like in practice, returning to our Chinese Restaurant example.
Generic Descriptor: Chinese Restaurant
Example Qualifiers: Doesn’t have a long wait for a table, No major health code violations, takes your order accurately.
Potential Differentiators: Serves food on beautiful decorative dishes from different parts of China, uses authentic Chinese ingredients, has the crunchiest egg rolls in the country or has an amazing view of the city.
Example Irrelevants: The Chef’s name is Bob, the restaurant is owned by a holding company that also owns six other restaurants in the city.
Of course this example might not be exactly right for your Chinese restaurant depending on your customers, that is why customer research is the key to getting these categories right.
In my Wall Street Journal bestselling book, Winning Digital Customers: The Antidote to Irrelevance, I teach you the exact process and methods I use to help my clients succeed in their digital transformation journey to effectively differentiate themselves from the market and win the love of their customers. Get the first chapter for FREE here, or purchase the book here.
