Most startups have the feeling that they are unique. They are very excited about this new big thing they bring to the world. However, so often, when investors first look at them, they think "seen that before", "plenty there already", "crowded market", "nothing new"... They jump to the next one and they might not even go beyond that first impression.
Part of it is about communication. How to convey how unique you are. Clarity of the message. Simple and relevant user cases. Efficient pitch. That will greatly help. But if you have no real differentiation, communication will just be cosmetics.
Still too often, startups haven't done their homework completely with regards to differentiation. Differentiation should be a project in itself. There are so many ways you can differentiate your business. Think systematically about the following ones:
1. Product innovation. Features are an obvious way to be different but think also about the way you constantly release new things on the market, so that your comptetitors will always have to adjust to yourself and not the opposite. Think about Apple. Build a development roadmap for differentiation. Within product innovation you must think about features, but also UX/UI, performance, reliability, compliance and if we talk about physical product, style, design, size and physical attributes, durability and maintainability.
2. Targeted market / niche. You might want to become the specialist of a given segment. You may have an idea that seems similar to others but your user cases and your efforts are focused on solving the problems of a specific population of businesses or individuals. Think about Slack. It has become the tool for team communication in the startup world. Very few people know it out of this ecosystem, even though it starts now to be more widespread. The first niche maybe an initial step before reaching wider markets.
3. Customer service. You do a business that is well known but you will do it much better. Customers will love you for that. Or you will do it faster. Delivery will be quicker. Trouble shooting will be more efficient. Find your angle. Your fight will be about service quality, speed, satisfaction.
4. Values. At a time when climate change, sustainability, recycling, social impact, corporate responsability, bio, ethics and respect are so important, a whole range of customer, whether they are businesses or individuals, are ready to reconsider their habits to favour suppliers that are more in line with their aspirations and principles. If you really put your declared values in practice, you might then become their next supplier.
5. Branding and story telling. This is often difficult for entrepreneurs coming from a tech background to think of branding as their first differentiation. You might have a lot to learn in that field. Talk to people, hire the skills. You'd better learn fast if you are on a B2C market. Think about the crucial impact it can make. Think about Michel et Augustin.
6. Cost. It might no be the most popular at the moment with cases such as Ryan Air and Uber. But still consumers and business are looking for cost efficiency as one of their main purchasing criteria. Cost approaches have been disrupting entire industries. So, even if your intention is not to be the cheapest on the market, you have to make your research to find out if anyone is willing to start a price war or be the low cost contender on the market. Then be ready to strenghten your sales pitch since customers will always have a hard time turning down the lower offer. At the opposite, you might want to target the upper portion of the market with a high scale offer - but then quality, exclusivity, high performance, skills, experience, uniqueness and branding will be key to justify this approach. You can't be Hermes just like that.
7. Bundling. This does not necessarily come as a primary way of differentiating your business, however it can be very powerful. Having strong partnerships will give you this edge. Cross-selling and joint marketing can be powerful tools. Customers may find really value in one-stop-shops. Going the other way around, you can also team up with a larger player that will offer your service in its bundle. Think of Vodafone offering Spotify.
8. Community. Many start-ups want to add a community dimension to their business. Few succeed. The difficulty is in the execution. How to attract people and build the initial community. And furthermore, how to make this a real community where people truly interact and find an interest to be there and to come back. Think about LinkedIn. At first, the idea was to put you in touch with the network of the people you knew. It has turned into a massive CV, recruitment, training and professional information and promotion platform. Very few people still ask you to be put in touch with your n+1 or n+2 contacts but the community has found its rationale another way.
9. Distribution channels and customer acquisition techniques. Distribution has always be a way to differentiate a business. Think about the first companies selling services through "telemarketing" in the 80's when most startup founders were not even born. Dell made its success on new customer acquisition techniques in the 90's at a time when physical stores were still the place to be. Think about what can make you different in the way you organise your customer aquistion process, from digital and off-line marketing campaigns to the sales process - direct sales, partners, inside sales, full digital - as well as the density of your point of sales network if you have physical products.
You should take the time to review these 7 areas of differentiation and assess where you stand with regards to each: is it your major differentiation today? could you do better? should you consider it? what prevents you from doing something in that field? what difference would that do on the market ?
But do not forget that this is just the start. Everything is moving around you. Action generates reaction. Your competition won't stay inactive. You might just have taken the edge for a little while... or for the longer term if you are able to build a consistent process where everyting contributes to reinforcing your position. Each angle of your business must be consistent with the plan, from technical development to the people you hire and the way they talk to your clients, from your values to your princing scheme, from the pace of release of new products to the partners that you chose.
Then you might start not only looking different but beeing really different.