Startup Messaging: Should You Differentiate Against Your Competitors?

Alex Goldfayn had a great post this week called Death by Differentiation that got me thinking about competitive positioning and startup marketing.  Alex, a marketing consultant, laments that many of his clients are too focused on differentiating themselves from their competitors:

These companies have focused their marketing on smaller, peripheral features which differentiate them from the competition. So that instead of focusing their message on the 80 percent of the product or service that speaks to mainstream consumer interest, they instead focus on the 10 percent that makes them different from competition, which mostly matters internally.

Thinking about how I would apply this thinking to startups, I found myself agreeing and disagreeing with the post.  On the one hand, I agree that vendors often care far more about tiny differentiating features than prospects do.  On the other hand, if all the solutions in a market deliver the same particular point of value, doesn’t that value become expected or assumed?  And (as is the case with many startups) if I’m entering a market with an established competitor, don’t I have to focus on what makes my offering different because my prospects will always be comparing us?

In my opinion, how you articulate your value to customers should describe what makes you better, it’s just not always in the way you might think. Your messaging needs to:

  1. Take into consideration what the customer already knows about the market
  2. Highlight how your solution is better than what prospects perceive to be alternatives
  3. Be focused on value (not features)

Diving into each of these – here are some things to consider:

1/ Test Your Assumptions (Don’t Assume Your Key Value Points are Already Known)

Alex makes this point in his post and he’s right – prospects don’t know your product (or your competitor’s product) the way you do.  Vendors often assume that customers are much more savvy about offerings on the market than they really are. You will have to get out and talk to a bunch of prospects to determine what points of value they assume everyone has, and which are things that they need to be educated on or haven’t really considered yet. Your focus should be on the latter.

2/ Know Who you Really Compete Against (the Competition Isn’t Always Your Competitors)

When the market is not very mature, often the products that offer solutions similar to what you do, aren’t really the main alternative in the eyes of the customers. For most startups “do nothing” is the toughest competition you will face and in those situations you need to articulate why prospects should consider buying your category of solution at all.  The difference between what you and your competitors deliver is pointless if the prospect decides that that she doesn’t need either of you! Often the biggest step toward winning is simply getting in the game. Positioning against your competitors in this case would be at best pointless, and at worst could be giving credibility to competitors that the prospect might otherwise not even be aware of.

3/ Focus on Value (Prospects Don’t Care About Features)

It’s natural for vendors to focus on the features we have that our competitors do not.  We focus a lot of time inside the company on designing, developing and delivering features.  For prospects however, features don’t matter in the slightest.  It’s the value that those features enable that’s important.  Focusing on that will automatically change the way you describe your product delivers in a way that answers the question “Why should prospects care?” Notice that we are asking why prospects care, not why your development team cares. Value is the reason you decided to deliver those features in the first place.

Competitors don’t always matter but competitive alternatives do and your marketing needs to address the value that you can deliver within that frame of reference.  That is not at all the same thing as focusing your messaging on the handful of features that you have that other vendors in your space do not.

47 thoughts on “Startup Messaging: Should You Differentiate Against Your Competitors?”

  1. Nicely done, April. I agree with each of your three main points.

    Regarding your opening — this part: “On the other hand, if all the solutions in a market deliver the same particular point of value, doesn’t that value become expected or assumed?” — I am not suggesting all product BE the same. They’re clearly not. I am saying, like you are, that consumer tech companies, particularly startups, should focus on educating their customers on the CORE of their service, even if it’s the same as the competition’s. Teach people about your product, not your competition.

    1. Thanks Alex – and great post, it got me thinking.
      The thing is that sometimes I think you do have to move beyond that – when you are going straight at a larger competitor for example, but you need to be certain that your prospects understand what the base value is all about. For example, when SalesForce.com launched they rarely talked about the value of CRM. CRM was a mature market and it was assumed that everyone understood why you might want to track your customers. Instead they focused on the fact that that they required “no software” (i.e. the product was delivered as a hosted service) and that approach worked just fine for them.
      The key I think it to not make an assumption about what prospects know or don’t know without testing it.
      April

  2. I think you’ve hit the nail on the head here, April. Note that all three of your points focused on the prospect, and the first two points focused on prospect perceptions.

    Ries & Trout (in The 22 Immutable Laws of Marketing, Marketing Warfare, and other books) contend that the competitive landscape in consumers’ minds should drive marketing strategy. Market leadership is determined by how consumers perceive brands in a category, not by revenue or market share. And the ranking of a brand in the consumers’ minds determines how the underlying company or product should be positioned relative to competitors.

    1. I have a copy of “Positioning – the Battle for Your Mind” that has got to be 20 years old. The amazing thing about Ries and Trout is how little the art of positioning has changed – and yet, we still don’t get it right a lot of the time. It’s proof that talking about this stuff is one thing but actually making it happen in practice is where the magic happens.
      April

  3. Finally! I’m glad you and Alex are saying this. I’ve been a proponent of the same concept – differentiate when you should but remember the key values that got you where you are. For startups, they are typically creating products where the market has not matured yet. In many cases the key competitor is the status quo or a prospects home-grown solution. You need to differentiate your product based on what they do now not what you think another vendor is offering. Of course, this changes as the market matures but by then, hopefully, your company has matured its product, positioning and messaging. Your point on value is true no matter what – startup or mature company – knowing what the real value of your product is golden.

    Bill

  4. Your niche is appropriately differentiated when going up against the market leader. The customers outside your niche are over served and under fit by the market leader’s generic offering.

    Beyond the feature/value competition, you also compete on time and lifecycle positions. Time here isn’t speed, but reach out into the future, the Hype Cycle.

    If you are not yet in a convergent category, go ahead compete on differentiation, but once you go convergent adding another feature adds costs for the vendor and eliminates features for the user, because the user’s attention is limited and allocated. So don’t do that. If you think you need to compete on differentiation in the late/convergent market, try a Blue Ocean–change the whole game.

    1. Hi David,
      Thanks for the comment. I think that the key is to stay focused on what your customer believes the value to be and what they think the alternatives are (rather than who folks inside the company think the competition might be). If you can keep your finger on that even while the market is changing, you will be fine.
      April

  5. Hi April!

    I have a couple of questions for you..I’m curious – in talking internally on the product value vs. competition, there are often many voices in an organization about what the core business value is for a product. First, what questions do you ask to get heart of business value, and second, what techniques have you used to test the market on the value statement. (Traditionally there’s been prospect feedback, but have you used online community research or more emerging techniques to test positioning and value statements for a product?)

    1. Hi Julie,
      Getting at the heart of the value isn’t always easy. In my experience there is not substitute for face to face customer interviews to tease out what the key point of value are. The same goes for testing the market value with prospects and customers – facet to face interviews are the best. I have attempted to do more scalable things in the past (focus groups, surveys, etc) and frankly, they stink at telling you how customers really feel.
      In terms of what questions, it depends on what you are trying to tease out. I like to start with an open-ended set of questions around what they perceive the value to be and then I like to ask them to rank them in order of importance. I find often customers will say a lot of things are really important so the trick is getting at what things are more important than others.
      Hope that helps!
      April

    2. Julie,

      Along with what April says, another tactic is to ask them before and after questions. How did they do things before your magic and how do they do them now? What changed and how has that impacted their a)job, b) comp plan, c) company operations, d) personal life, etc.? How do they measure, feel or perceive that impact? What are they doing now they couldn’t do before?

      And don’t rely on internal voices for the answers. Get out of the office and talk to people who have real dirt under their fingernails.

  6. Coming back to expand another point in the discussion.

    I *hate* it when I see web sites or hear people say, “Unlike …” In addition to the dangers of educating a prospect to an alternative, it also inexorably anchors you to that competitor. By trying to differentiate yourself that way, you position yourself exactly in the same place.

    Let a customer or prospect bring up the competitor. If they do ask, say, “Here’s how we’re different/better/more valuable…” and talk about value points that are important to that customer. Otherwise, leave your competitors out of the conversation.

    For an education on how to brilliantly differentiate without really mentioning your competitor (and WITHOUT saying unlike), fire up the Way Back machine and look at how Avis took on Hertz with their “We’re #2 but we try harder” campaign.

    1. That’s a really good point. At a previous company (where I was operating in a very mature market) we spent a lot of time talking about differentiated value but we had a rule that we never mentioned a competitor by name because we were the clear leader in the market and one of our largest competitive advantages was that we had much better mindshare with prospects in the space. The Avis example is a good one – they shouldn’t be the one to tell prospects who the leader in the market is.
      Your other point about being tied to that company is a good one. Markets are fluid and just because you are in the same space today doesn’t mean that you will always be there.
      April

  7. Hi April,

    I just came across Rocket Watcher (great name). Too few start-up CEO’s, and their marketing person if they have one, appreciate the importance of this question.

    When it comes to messaging I’ve observed that most every company starts their conversation by telling people how great they are. Many companies then spend too much time comparing themselves to their competition, sometimes directly but mostly indirectly. And then they go on and on about all the great things they can do for you (sounds like a lot of conversations you overhear in a nightclub).

    Great marketers understand that the hard intellectual work of marketing means investing in understanding what’s really motivating their customers actions. They then use those insights to find the words that connect their products or services with the motivating emotions of their prospects and customers.

    I believe that crafting messages that reflect a real understanding from the customers’ perspective is at the heart of exceptional, world class marketing.

    1. Hi Jeb,
      Thanks so much for the comment (and sorry it took me a while to post it – it got caught in the spam filter for some reason).
      Being externally-focused in messaging takes a lot of discipline in my opinion. It’s doesn’t normally come naturally especially when folks are heads down running at a hundred miles an hour trying to make their startup work. But like you say, it really is the key to good marketing.
      April

      1. My pleasure April.

        So true…a lot of discipline. Yet when it becomes part of that sprint to get air speed and altitude you wonder how you ever lived without customer-led insights. It takes so much of the guess work out of marketing.

        Jeb

  8. Very glad I have found Rocket Watcher—very insightful content!

    I believe the key component here to be “value”. In today’s marketplace you not only have to think about how to be cost efficient with your customers budget. You will need to max out the productivity as well, straighten out the waste and provide more than your direct competition. You have to appeal from
    multilevels and find new ways to create more for the customer. All inclusive has taken on a whole new meaning in today’s market. You must broaden your skill set and rev up your marketing strategies.

  9. Hi April,
    Good i found this website, wished i found it earlier. Anyway, good discussion, i think the comments are very spot on. Quick quick question, Is it a good idea to differentiate yourself from a competition on pricing and also the market the competitor is operating in?

  10. Pingback: How Do You React to Competition? | VentureStab

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