The One Word Many Business Owners Don’t Understand

Notice anything about the photo to the left here?  Does anything stick out just a little more than the others?

Differentiate

Take a moment to look at businesses in your niche and I bet you will see the majority of them doing the same thing, selling the same product, and offering the same services, in essentially the exact same way. Yet when asked, these same businesses will have a hard time telling you why their results are nearly the same as everyone else’s.

This doesn’t mean that you and your competitors can’t offer similar goods and services. Quite the opposite actually. You most likely will have the same offering for your target market, but something needs to get into the head of your consumer to make them choose you.

Consider This

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My point here is that you don’t need to have a completely unique product, idea, or service…but the way you bring that product, idea, or service to market better be unique enough to stand out, yet similar enough to sell.

The Law of Familiarity and Diminishing Returns

The law of familiarity states that

“as consumers become more familiar with a product or service the rate of return to the producer of that product or service will diminish over time”

What this means is that the more mainstream your offering is, the more you are going to have to work to differentiate yourself in order to make above average profits.

Example: You Don’t Need to Invent the Shoe

When the first shoe was created and sold I am sure consumers went giddy over it, and it was sold/traded for obscene prices. But over time we have become pretty familiar with shoes, and as such the opportunity for above average returns has diminished.

Enter Nike.

Nike differentiated themselves in the shoe business, took a product that has been around almost as long as humans have walked upright, and brought the “WOW” factor back to it. What do they get for their efforts to differentiate?  They get the privilege of selling tennis shoes for $150 to lines of individuals eager to pay such a price.

Granted some of you will be lucky enough to be inventing today’s version of the shoe and you will experience astronomical returns by comparison to the rest of us, but you’re certainly in the minority. 

Keep it Simple, But Know Your Edge

Differentiation doesn’t need to be on a grand scale. You don’t need to be so weird or out of the ordinary that people remember you. But you do need to know what your edge is, and how you are differentiated from the competition.

In fact you will be best served by being familiar enough to consumers that they know what you are about, yet different enough to stay in their minds. Much like the picture at the beginning of this post, all very alike but one just a little bit different.

Lastly: If you aren’t sure what sets you apart from the competition, figure it out quickly. If nothing sets you apart…figure out what will even quicker.