Brand Differentiation: 3 Tangible Reasons it Pays to Differentiate

When making decisions to purchase, customers choose the brand and company that gives them the value that others can't match. A brand that can show it is different from others, in a way that is relevant to customers, gains a significant competitive advantage. Unfortunately, we are frequently reminded of the lack of real differentiation in most mainstream organizations—and of the opportunities, they are thus squandering.

The problems associated with brand indistinguishability are multifaceted and seen across three distinct categories of metrics, described below.

Brand Metrics and Measurement

The first category of measurement affected by a lack of differentiation is basic brand health metrics, including decreasing levels of awareness, relevance, uniqueness, consideration, and purchase intent. These are the measurements many brand managers care most about, and although these are undoubtedly troubling, they pale in importance when compared to other metrics.

Broader Business Metrics

The second category is broader business metrics, such as decreased sales, brand loyalty, and market share. These are even more problematic because they’re not only attitudinal (like many of the brand metrics mentioned above), but they reflect actual customer behavior. Namely, customers are purchasing the brand less frequently.

Financial Performance

Ultimately, brand indistinguishability has a direct and negative impact on a third, critical set of metrics: financial performance. Undifferentiated brands struggle to command a premium price point (including a heavier reliance on discounting, aggressive promotion, etc.) and face slower revenue growth, lower margins, and overall profit and even decreased shareholder value.

With truly differentiated brands, much of the distinction goes beyond their products and services. With Apple, you don’t just purchase a computer or a phone, but a seamless collection of related digital services and a genius bar to help you solve problems. With IKEA, you don’t just buy a chair or a table, but a means of decision-making, assembling, and delivery.

At the heart of differentiation is your brand’s ability to develop and promote distinctive products, services, and branded experiences on a consistent basis. It’s critical to create a brand that stands out from the crowd. When these differentiating qualities are well-represented, customers will take note. So much so that they will pay up to 16% more for a product or service that leverages its differentiation to offer a better customer experience.

Many brand consultants would argue that the only way a brand can truly become successful is through a well thought out differentiation strategy. According to the Harvard Business Review, "The most effective companies don’t rely on distinctive products, services or brand for differentiation; instead, they focus on creating an enterprise so distinctive that it can create many products, services and brands, each more compelling than the next."

Depending on your company’s competencies, offerings, and the competitive landscape, there are many pathways to differentiation. However, a universal quality that successful differentiation strategies share is a deep understanding of what the customer needs—and that's what makes them go the distance. Simply put, not only do consumers suffer the consequences of indistinguishable brands, but so do the companies that own them. It has a direct and negative impact on bottom-line results.

In today’s hyper-competitive environment, it’s not enough to just say that you’re different. The key to standing out from the proverbial “sea of sameness” and creating a strong connection with your ideal customers is a laser focus on the single thing that makes your brand unique and weaving it into its underlying narrative. With your messaging, culture (e.g., employee engagement), actions, and everything in between, you have to show prospects why they should choose you over competitors’ brands.

If you haven't done so already, check out our managing partner, Mitch Duckler's recently released book, The Indispensable Brand—Move from Invisible to Invaluable. Download two free chapters!