Differentiation that matters, for newer players

Soon Min Blog, On growth, On strategy Leave a Comment

We’ve just started working with our last batch of startups of the year, and again one of the most common concerns for players entering an occupied space is “How do we differentiate?”. This obviously becomes a problem when there’s a limited marketplace, and too many players vying for the same customer.

If you’re new to the market and entrepreneurship, this gets trickier because of a few barriers:

  1. You might be faced with the challenge of choice. All too often there’s a fear of choosing because that invariably means that you might be ‘missing out’.
  2. You don’t have a marketing background. Many founders are experts in the product, but aren’t used to the concept of setting yourself apart in the marketplace.
  3. You think that differentiation must be something spectacular. It’s tempting to want to seek a silver bullet that’s going to change the game.

While I wrote about it earlier this year, here’s a few more things I’ve learned about differentiation.

It comes in 3 flavours

Differentiation through product 

The first is the most obvious. If you’ve looked at the marketplace and see a gap in a specific offer or feature, there can be an opportunity. In the sea of dessert houses, notably ice-cream/frozen yogurt brands, Sangkaya has chosen to be the first that specialises in coconut ice-cream and other related treats.

Differentiation through brand

Many markets eventually reach a point where the product is parity to others. While they might have something different about their product or service, it might not be meaningful enough (see below). Therefore, the refinement of brand assets like an imagery, character, purpose can tilt the scales in your favour. You’ll see this often in hyper competitive markets like F&B or Personal Care, as evidenced by another local brand ‘Bad Lab’ that sets itself apart with a truly distinctive image.

Differentiation through operations

As customers become more demanding and accustomed to things done how they like it, the method of delivery of the product or service can be a great way to differentiate. This can range from better turnaround times, user experience, clearer communications, or friendlier service. Qwork is an interesting job finding startup that made a simple switch from email communications to include SMS notifications and saw an immediate increase its response rate.

It doesn’t need to be big, but it has to be meaningful

Similar to Qwork’s efforts, it didn’t seem like something earth shattering, but it made a difference to the bottom line of their business. While it makes sense to seek as big of a differentiation as possible, I’ve learned to appreciate that it doesn’t necessarily have to be that big to make a difference. The key thing to focus on instead is that it needs to be meaningful.


Start going through customers feedback

This method applies both to your own (if any) or that of your competitors. Thanks to social media, you can dig through the comments or posts to see what people are saying. What you’re looking for are clear patterns that recur in the complaints, requests or even praises.

Test an idea out 

From the ideas you’ve generated above, whether it’s a new proposition, or enhancement to product/service, or a change of process, it’s usually possible to test it out on a smaller scale to validate if it’s a meaningful enough difference. As there’s always a risk of it not playing out, and you’d want to avoid overspending your time and money. Have an idea of what would a worthwhile success rate, design the test, and let the results guide your actions.

It’s a process, not an end goal

Differentiation lasts only so long as your competitors don’t evolve. In today’s market, that’s the only guarantee that won’t happen. The smaller the differentiation, chances are competitors can catch up  quickly and adapt. Always keep an eye and ear out for what makes your market tick (for better or worse) and continuously make small experiments and eventually changes.

Another process to keep in mind is how you implement and communicate that differentiation. People respond to different cues, have a habit of scanning instead of reading, love images of people instead of streams of bullet points and many more. In this example using the phrase ‘Add to Cart’ versus ‘Purchase Now’ conversion was nearly 10% better, or specifically to this company, worth $840k annually!

When the battlefield is this heated, it can be daunting to seek a way to win more customers. When you’re a newer player, you have the advantage of being more nimble and have the ability to surprise the market. Keep looking out for ways you can set yourself apart, no matter how small, as long as it’s meaningful!

Soon MinDifferentiation that matters, for newer players