This is the factor that makes you stand out from the crowd.   However, because most of us operate in mature markets, that can be really, really difficult.

To stand out in a market, you have to promise a core benefit.   That usually means 'we're cheaper', or 'ours are better', or perhaps 'our service is good'.   Wow!   All good reasons why you'd want to do business with them, and so unique!   (Sarcasm's over now).

There are three ways to differentiate, and in most businesses only one will work.   It is possible to differentiate only on price, on quality, or on service.   Let's look at each one.

Differentiating on Price can be a losing battle

If your prices are lower than your competitors, the customers are likely to flock to you!   What usually happens though is you end up in a price war, so the winner will be the one with the deepest pockets.   Look at the supermarkets, liquor outlets, airlines, hotels, hire cars, etc.   So … Wrong!   Price is not a great differentiator.   (Looked it up; yep, it's a proper word!)

Differentiating on Quality can work (but mostly doesn't)

A superior product does not guarantee that customers will come only to you for it.   However, goods can be replicated easily and the copier can likely deliver at a much lower cost (lower development cost) and retail price.   Works for some (Ferrari, Rolex, Versace) but it's best not to compete on this strategy.

Service is a great way to differentiate

Think Richard Branson.   A few flops in his record of business, over 100 in which he's involved but service is always outstanding, even amazing.

He selects high demand, high margin industries where the service is terrible and provides amazing service at reasonable prices.   So can it be that simple; just provide awesome/great/or even just better, service?

Why do businesses fail at service?

It means being more than just nice, too many businesses can't even do that.   Two things (only two?) go wrong:

1. You can't go from woeful to wonderful on one leap.   It takes time to develop your standards, train, and build consistency.

2. Sometimes you can change the layout or décor, but 'fancy before fundamentals' usually won't work.

Here's one way to do it right:

1. Know what the two or three critical service factors are – from the viewpoint of your customers (ask them what they like about you, over a few days).   It could be the speed of service, cleanliness of premises, staff attitude, the way their questions are answered, or even something else.

2. Once you're pretty sure what these factors are, deliver on them 100% of the time.   No exceptions, no failures.   If there are, over-compensate as fast as you can.

3. After you're sure consistency is right, find ways to surprise and delight your customers.   People want to feel special and they'll be delighted why this treatment is happening to them, resulting in referrals for you.