You may have read my recent blog Differentiate Your Customer – Market Segmentation” [link] where I talked about using the concept of differentiation on your customers and markets for market segmentation. While writing that blog I realized I could write a different blog with the same title focused on how we can help our customers differentiate themselves in their customers’ eyes. If you can achieve this, you have a good chance of turning your relationship from a transactional vendor to a partnership. Not a bad place to be.
So how can you help differentiate your customer in their customers’ eyes? I see two key ways you can do this – supplying a component of their product that makes their product better or enhances their value proposition (I call this Direct Differentiation, as your product is part of the product they are buying), or providing a service, solution or product that helps enhances the customers experience (which I call Indirect Differentiation). That being said, the more you expand your definition of a product to include experience, the lines between these can blur.
Let’s start by talking about Direct Differentiation, which always makes me think of the old BASF advertisement – “We don’t make the products you buy, we make the products you buy better”
They make the cooler-cooler, they make the blues-bluer, etc.
Is your product used by your customers to make their product? If yes, how can you improve your product to help your customer differentiate the end product? You need to make sure you are talking to their customers, understand what they value and then use that knowledge to improve your product or create a new product. This is something a lot of companies who supply through OEMs (Original Equipment Manufacturers) neglect, they listen to their customer (the OEM) and not the end customer. The OEM may be focused on their view of the overall market need, but often do not have full insight into the specific need or value that your product provides. Therefore, be an expert on the needs and value your product addresses to both your direct customer and their customer and enhance your product and differentiation to benefit both groups needs.
When looking at Indirect Differentiation, there are many ways this can be realized. Does your product make it easier and quicker to diagnose and repair your customers product? If so, you are enhancing their differentiation. Does your product make it easier for your customers to manage customers or sales online? Again, you are enhancing their differentiation. Does your product increase their speed to market, decrease installation time, reduce cost? Differentiation, Differentiation, Differentiation. As I mentioned earlier, if you are providing Indirect Differentiation to your customers, maybe you should help them understand the value in expanding the definition of their products to focus on the overall experience. The product is not just the piece of equipment, it is the reduced time to get it installed and operating, it is the reduced downtime due to advanced troubleshooting tools, it is the reduced cost of production due to less wasted materials. One area where this works great is with “so called commodities”. How do you differentiate a commodity? Through experience. Do any of your customers play in crowded markets with commodity products or services? If so, start trying to understand the end customer and what motivates them and what they value. Perhaps by doing this, you can help your customers differentiate themselves and separate from the competition with value that is truly desired by the end customer.
Oh, and one last thing, when you operate in this way, do you know what you are doing in your customers’ eyes? Differentiating yourself. Nice how that works.
If you are interested in learning more about how you can Differentiate Your Customers in their customers’ eyes and how you drive growth through your own differentiation feel free to e-mail me at firstname.lastname@example.org. I always enjoy a good conversation about the power of market segmentation.
Insights into building great products and choosing the right markets to grow.