Mastering Differentiation – 5 tiers to win

Differentiation is often pigeonholed into product innovation. A strategy that is short-lived and not sustainable in the long run. Thus, I would argue that the scope of differentiation extends far beyond.

Here’s a what I’ve learned about the multifaceted nature of differentiation in the industry:

1️⃣ Technological innovation.

This is the most obvious form of differentiation. The strategy? Develop a product that’s objectively superior. It’s a path well-trodden by high-tech startups flush with funding, but it’s not without its pitfalls. The key is relentless innovation and being the first mover.

↳ Example: A company like DeepMind, leading AI research and application.

2️⃣ Business Model:

Here’s where you deliver the same product but through a novel approach. It’s a strategy ripe for disruption and highly distinctive, yet rife with uncertainties. Ideal for scaleups willing to tread uncharted territories and validate assumptions.

↳ Example: Airbnb’s approach to the hospitality industry, offering a unique marketplace model.

3️⃣ Segment Focussed:

Specializing in a niche market that others overlook is a strategic gem. The advantage is the difficulty others will face in claiming the same segment. However, the challenge lies in making a definitive choice, which can be daunting for startups.

↳ Example: Gusto, focusing on providing HR solutions specifically for small businesses.

4️⃣ Identity:

Sometimes, it’s about the same product offered by a company with a distinct identity. This approach relies on the uniqueness of identity and personality, difficult for competitors to replicate.

↳ Mailchimp, known for its user-friendly approach and quirky branding in email marketing.

5️⃣ P.O.V.:

This involves explaining the same product in a different context. It’s a strategy that can galvanize a movement, though it’s a long-term play requiring time to educate the market. Suited for brands with a significant marketing budget or those in no rush.

↳ Example: Slack, which reframed from communication into workplace communication, positioning itself not just as a tool but as a revolution in corporate culture.

In conclusion, ascending the ladder of differentiation levels is key. Even without a unique product, you can stand out and outperform competitors. Aim high, and remember that in SaaS, differentiation is not just about what you do, but how, why, and for whom you do it.

🔍 So consider a two part activation strategy. One part brand, one part GTM.

Start with the first, to inform the second, to revise the first, and so on.