Finding a distinguishing factor for a professional services firm that wants to be seen as a Trusted Adviser can be challenging. Many organizations have difficulty coming up with a differentiator that sets them apart from others.

How To Evaluate A Differentiator

To be successful, a differentiator must meet three important criteria:

  • It must be true. You can’t simply make it up.
  • It must be important to potential clients. If not, what’s the point?
  • It must be provable. It won’t be believed if you can’t demonstrate that it is true.

Differentiation strategies are important for firms to stand out from the competition, but not all methods are effective. Some strategies may be more important to invest in than others. The following paragraphs discuss the different strategies and the key advantages and disadvantages of each.

1. Specialize in an industry

Differentiating your firm by becoming a specialist in your industry is an easy and successful way to attract clients. However, you need to be careful not to try to become a specialist in too many industries as this will make you lose credibility.

2. Specialize in serving a specific role within your client’s organization

This careers specialization based on roles is also quite successful, especially when combined with a focus on an industry. If you are in charge of IT at a law firm, it can be comforting to know there is a service provider who specializes in helping people who have a similar job as you.

3. Specialize in offering a particular service

This can be quite successful if your service is rare and hard to find. However, be aware that unique services can quickly become mainstream. Examples of this include Sarbanes-Oxley compliance and social media marketing.

4. Offer a truly unique technology or process

This approach is entirely different from the traditional assessment-monitoring-adjustment process that offers a unique and beneficial solution to the client.

5. Focus on understanding a particular target audience

Some firms set themselves apart by deeply understanding a particular audience. For example, your company might specialize in marketing to Baby Boomer women. Your clients might be retirement planners, insurance companies, or clothing retailers.

6. Specialize in serving client’s size

Having a specialty in this area can be an advantage over firms that don’t have a specialty.

7. All of your staff shares specific characteristics or credential

Everyone thinks their team is great, so it’s hard to make that a selling point that sets you apart from the competition. But what if you could prove that all of your programmers have PhDs in Computer Science? That would be both meaningful and relevant to a potential client. Alternatively, you could try to prove that all of your project managers are PMPs. That’s not as distinctive, but it’s still provable and would be seen as relevant by potential clients.

8. Specialize in clients who share common characteristics

This differentiator is focused on a characteristic of your clients that is different from their industry or role. For example, you might provide accounting and tax services for expatriates. They might be from any country, industry, or corporate role, yet you will have a competitive advantage.

9. Focus on solving a specific business challenge

In this situation, the focus is more on the business challenge the client is facing rather than the client themselves. The challenge must be something that can be easily identified and would be difficult to solve without the necessary skills and experience. An example would be helping a company get its first government contract.

10. Have one or more specific individuals who are visible experts in their field

This strategy has been tested over time and is very effective. Having the country’s leading expert in your field is a powerful competitive advantage. Many firms have been built on this differentiator alone. If you have multiple experts who are highly visible, you will have a brand that is very compelling and valuable.

11. Offer a unique business model

If you want to be unique in your profession, try billing by a fixed fee instead of hourly. This will help you stand out and be easy to prove. However, be aware that if it works well, you may get imitators.

12. Have a specific geographic focus

Even though technology and standard business practices are making geography less critical, there are still situations where local knowledge or face-to-face interaction is vitally important to clients.

13. Offer access to a unique set of information not available elsewhere

A Firm's Differentiators And Evaluators To Help Stand Out From CompetitionDo you have any information that could be valuable to potential clients? Some firms have created very successful businesses using data that is not easy to replicate.

We are, in fact, implementing that exact strategy in The Preferred Adviser, offering highly valuable, unique and proprietary competitor market and benchmarking data.

14. Offer a unique set of contacts or relationships not easily accessible

What sets your professional firm apart from the competition? Do you have strong relationships with reporters and editors you can use to your advantage?

15. Do business with a distinctive level of service

Most businesses offer good client service as it is the cost of doing business. Everyone does it or at least says they do. To make your business stand out, your level of client service must be exceptional. Can this be accomplished? There are still some businesses that excel in client service.

16. Distinguish yourself by the clients you have

Some firms distinguish themselves by the clients they work with. Having prestigious or well-known clients can make a firm more attractive to potential clients. For example, a firm that works with clients in the higher education market who are also from Harvard, Yale and Stanford would be seen as more successful.

17. Focus on the size of your firm

If you want to be successful, choosing a niche and becoming the largest company in that area is a good idea. This will show potential clients that you’re doing something right, and combining this with a specialization will demonstrate both your relevance and success.

18. Emphasize a relationship with a parent firm or partner

Being closely related to a parent company can have positive and negative effects. Some potential clients may feel you are not objective about other technologies, while others may see it as an asset. Knowing the ins and outs of the technology can be a significant differentiator in situations where your firm is a value-added partner rather than a subsidiary.

19. Focus on a notable signature accomplishment

Some firms build a strong brand by achieving a noteworthy goal. Firms that invent new technologies or solve problems for high-profile clients are examples of this. This sort of notoriety can be used to advantage by the company in its industry and over time.

20. Specialize in producing unique or very valuable result

You can focus on a valuable result from overcoming multiple business challenges rather than just one. For example, you might specialize in turning average growth clients into high-growth firms. This could involve solving a wide range of business challenges rather than specializing in solving just one challenge.

21. Look or act differently than all of your competitors

Many professional services firms resemble one another because they have been in the industry for a long time or because deviating from the norm feels risky. Having a unique appearance can help these firms stand out from the competition. When coupled with other distinguishing factors, a company can develop a significant competitive advantage.

Six Ways To Differentiate Your Business From The Competition

1. Product Differentiation

A Firm's Differentiators And Evaluators To Help Stand Out From CompetitionThere are many ways that products can be differentiated from one another. The most visible is probably through physical differences, though these can also be acquired through advertising. Product differentiation can take the form of features, performance, efficacy, meeting specifications, or several other criteria.

This is where most marketers spend most of their time and dollars.

The issue is that product differentiation does not last long. It is getting easier to copy almost any product innovation. Even though the western world has laws that protect intellectual property, they are not always difficult to bypass.

Many businesses choose not to patent their product innovations because it tells competitors exactly how to duplicate the advantage. A product innovation is only protected for the patent’s life. Anyone with enough capital to buy a machine may be a competitor in days or weeks if a patent does not exist.

2. Service Differentiation

Differentiation of service includes not only delivery and client service but also training, installation, and ease of ordering.

To many people, the essential components of a business are the less important aspects that can be handled without much sophistication. However, McDonald’s is a business that understands how to provide excellent client service. McDonald’s locations across the United States (and indeed the world) generally offer the same products and level of service, so clients know what to expect no matter where they go.

In every location, consumers assume that the fries will be prepared in the same way, have the same amount of salt, and be served immediately after being fried.

3. Distribution Differentiation

Differentiation through distribution channels can effectively provide coverage or availability, immediate access to expertise, greater ease of ordering, and higher levels of client or technical service.

Manufacturers can’t reach the end user if the market is fragmented. For example, building materials must be moved from the factory plant to the contractor. These types of products typically go through two stages of distribution, which include master distributors, specialty dealers, and retailers.

4. Relationship Differentiation

Employees, associates, or team members who interact with clients can help a company stand out by being competent, courteous, credible, reliable and responsive. These employees are responsible for communicating with clients daily and act as a link between the client and the product. If this link is broken, the business will likely fail.

An excellent sales representative, CSR, or technical service representative will create strong emotional bonds with their clients by ensuring that products are delivered on time and working as they should while quickly and accurately resolving any issues.

Differentiating based on the quality of your client service is closely related to focusing on the people you serve. Clients want to do business with people, not an institution. Building these relationships takes time but ultimately establishes a highly differentiated position.

5. Image/Reputation Differentiation

Some businesses distinguish themselves from others by their image, which may be part of another way they differ from others or may be a separate strategic goal. Usually, an image is created by other factors such as high service levels, superior product quality, or performance.

The image of a business is controlled and managed by symbols used in communications, advertising, and all types of media, as well as the atmosphere of the physical place where clients encounter the business. This is not limited to retail businesses only.

Entering markets where DuPont is present can be daunting for new entrants because the company has a strong reputation as a technical powerhouse. DuPont employs many engineers, scientists, and product development experts, making it difficult for new companies to compete.

The sales representatives for Milliken and Company often have a lot of technical education or experience, and the company’s products are seen as being at the forefront of innovation. For a new company wishing to compete against Milliken and Company, the only option is often to use guerilla warfare.

A brand alone does not make a company stand out from its competitors. The brand has to be representative of something, recognizable to the company’s target audience, and communicate something that makes it unique compared to other companies.

It usually requires a lot of money to market something successfully. You must repeat a message at least seven times before people even start paying attention to it. Branding is more than just making a logo. It’s about communicating your company’s values in a way that is both meaningful and effective.

6. Price Differentiation

Differentiating and segmenting your market is the key to success when competing on price. By offering each segment a differentiated product at a different price, you can come as close to maximizing your potential revenue as possible.

Setting different prices for different clients recognizes that the value of goods is subjective and varies depending on the client, the situation, and the environment. In the business-to-business world, prices are often negotiable, and some clients are willing to pay more than the current market price.

In other words, price discrimination allows a business to charge consumers different prices for the same good or service based on the consumer’s willingness to pay. This results in the business capturing the consumer surplus, or the difference between the amount consumers are willing to pay and the amount they pay.

Factors To Consider For Differentiation

A difference is worth establishing when it meets at least one of the following criteria:

  • Valuable: the perceived benefit exceeds the cost
  • Important: delivers a benefit critical to success
  • Distinctive: unique or offered in a distinctive way
  • Superior: better technology, faster
  • Communicates: understood and visible
  • Preemptive: cannot be easily copied
  • Affordable: clients can pay the higher price
  • Profitable: contribution (margin times volume) exceeds the cost of differentiation
About the Author Brian Richards

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