Brands across the globe and in virtually every industry are suffering from a crisis of differentiation. It seems every time one company discovers something that works well, others race to copy the idea. Professional services, airlines, wireless communication, and insurance are just a few examples of industries in which major brands have become nearly indistinguishable from one another. The primary reason for this: Companies have forgotten how (and why) they need to differentiate their brands.
In this blog, I’ll cover why brand differentiation matters and how to achieve it with your brand.
According to the WPP and Millward Brown 2015 “BrandZ Top 100 Global Brands” Report, which studied brands from 2006 to 2015, differentiation is the single most important contributor to a brand’s success. The top 50 brands in the world achieved an average Difference Score of 139, while the next 50 scored an average of 96. That’s a significant difference.
To be fair, the importance of differentiation is not a new idea. It is arguably the basis upon which modern brand management was founded. However, as more recent theories and measurement techniques (such as Net Promotor Score, brand purpose, and brand relevance) have gained traction in the world of marketing—and for good reason—it seems to be at the expense of differentiation. While these concepts all have merit, they do not alleviate the need for differentiation. In fact, they all depend on—if not actually assume—a minimal level of distinction in branding.
Importantly, brand differentiation is not only critical from a marketing perspective, but it also has far-reaching broader business implications. Simply put, differentiation directly affects a brand’s short-term profitability and long-term viability.
Specifically, when customers see brands as interchangeable, they make purchase decisions based primarily on price, which inhibits a company’s ability to command premium pricing. This translates to lower product margins and reduced profitability. Additionally, customers are (not surprisingly) less loyal to brands they feel are undifferentiated. This leads to lower revenue, reduced market share, and ultimately compromises a brand’s ability to survive, especially in challenging market conditions.
Yet despite the undeniable advantages of achieving differentiation, brands can’t seem to get out of their own way. As far back as 2006, a Copernicus and Greenfield study discovered that consumers were beginning to see more categories as interchangeable commodities. Several years later, Deloitte confirmed that customers saw several categories of products as homogenous, ignoring labels for the cheapest item on the shelf.
The good news is brands can break the monotony, but to do so, they must remember what it means to be different.
Becoming Truly Different
To establish meaningful differentiation, follow these five brand strategy tips.
1. Start With Your Positioning
All brands need to establish a compelling and unique positioning to attract customers and resonate with stakeholders. Every single aspect of brand activation—from the core product or service offering to the experience it delivers to customers—must be rooted in (and consistent with) its positioning.
Back in the day, conventional wisdom suggested that brands needed to be positioned around a consumer-facing benefit: in other words, “what” the brand does for you. But the “what” question is just one way to position a brand. Today, there are numerous examples of brands that have achieved meaningful differentiation in other ways.
For example, the Red Bull brand is arguably positioned around a “who”—namely the persona of an active, successful person. Other brands, like Dove, lean on their purpose as the basis for their positioning, or in other words, the “why.” Still other brands achieve differentiation through the way they go about their business—the “how.” Nordstrom, with its exceptional customer service and Southwest Airlines with its people-first attitude, are two such examples.
Point being: There are a number of energy drinks, personal care lines, department stores, and airlines available, but each of the above brands discovered ways to become more relevant in customers’ lives—and they did so in different ways.
2. Look for Your Customer Experience
Customer experience is another aspect of branding that has become homogenized over the years. As soon as one brand decides to offer a drive-thru option, free delivery, or same-day service, you can bet other brands will quickly follow suit. However, consistent with the point above about positioning, by definition, different brands should provide different experiences.
Too many companies think in terms of “the” optimal customer experience as if only one optimal experience exists. The reality is that different customers are attracted to different brands because they don’t all want the same thing! So why would customers expect (or even want) the same experience from different brands?
Rather than focusing on the ideal customer experience, companies should think in terms of brand experience. Brands should seek to create touchpoints along a customer journey that are consistent with and inspired by the brand positioning. Doing so paves the way for individual brands to consider what they want their interactions with their customers to look like. It also provides customers the benefits of distinctiveness and variety, enabling them to choose the experience that is most meaningful to them.
Take inspiration from Disney, the king of branded experiences. Every part of the Disney experience, from trips through the park to movies at home, traces its purpose back to the famous Disney magic that has made Disney so successful for so long.
3. Keep It Personal
Customers want to feel like people, not mass-marketed demographic numbers. Advances in technology, along with more creative and sophisticated marketing practices, make it easy to customize experiences, so there’s no reason not to provide customers with personalized offers and experiences that make them feel appreciated.
Target accomplishes this by assigning guests a personal identification number after their first visit to the store. Over time, guest behaviors create personality profiles, which Target uses to provide more relevant offers, experiences, and communication. Sometimes this works too well, like when Target accidentally outed a pregnant teen to her family by sending pregnancy product advertisements to the house based on shopping history. Brands should try not to appear too knowledgeable, but they should leverage customer information to create better brand experiences.
Coca-Cola’s “Share a Coke” campaign from 2014 executed mass personalization perfectly. Every Coke can carried a popular first name on it, with names from cultures around the world, which encouraged people to find their own cans and share with their friends and family online.
4. Cultivate Stronger Relationships
Brands must bridge the gap between transaction and relationship in order to connect with customers in more meaningful, lasting ways. Technology and social media make it easy to interact with customers outside the store, but those multiple touchpoints should all be consistent with the brand positioning.
Customers can easily spot disingenuous brand tactics, and they understandably resent them. Resist the temptation to jump on the latest meme or joke just to join the conversation. Instead, touch customers in areas where the brand’s presence makes sense. Uber, for example, partnered with Hilton’s loyalty program to help guests book transportation in new cities and find things to do near their hotels. It makes sense, it feels genuine, and it stays true to Uber’s brand positioning.
5. Push the Limits of Growth
Following the crowd never produces exceptional results. Brands should reject incremental fads and flavor-of-the-month line extensions. Instead, they should pursue long-term, transformational brand-inspired growth.
Don’t fear extending your brand into new markets and industries. It’s the only way to achieve meaningful and sustained growth. Instead, identify bold steps—without contradicting or otherwise jeopardizing the brand’s positioning—and take the plunge.
Evaluate potential new opportunities through three lenses. First, determine where the brand’s boundaries of extension lie. An environmental company, for example, probably shouldn’t jump into the oil and gas industry. Next, lean on the brand to see where new opportunities might lie. That same environmental company might do well in other areas pertaining to relevant social issues. Finally, test new opportunities with small steps to validate their usefulness. At all times, ask not only whether these steps are consistent with the brand positioning, but also whether they further differentiate the brand from its competitive set.
Differentiation is a long-term objective, not a take-one-and-call-me-in-the-morning solution. That said, it’s a noble goal and by no means an unattainable one. By keeping these principles in mind, brands can escape the proverbial “sea of sameness” and provide customers with what they really want: relevant, unique, on-brand differentiation.
How do you differentiate your brand? I’d love to hear about it in the comments.