Finding Your Sales Niche: Different Is Better Than Better
If you plan to launch a new venture, product, or service in 2016, make it different from those currently available. Different is better than better.
For example, the Apple MacBook is different from Windows laptops: more graphical, more tools and applications for publishing, photos, music, and video. Unlike HP, Lenovo, and Dell, Apple developed both the hardware and the operating system and tightly integrated them. Not coincidentally, Apple's slogan for many years was "Think Different." Over the years, Apple steadily took market share away from Windows. In 2010, for the first time, the market cap of Apple exceeded that of Microsoft. In 2011, Apple became the most valuable company in the world. Different is better than better.
By the second "better," I mean quantitatively better than what is currently available. HP, Lenovo, and Dell laptops are each better than the other in some way: a 20 percent longer battery life, a 15 percent larger screen, 25 percent more storage, etc. Especially for a start-up, such a quantitative advantage is at best tenuous.
Your start-up's competitors likely include companies that are larger, better established, and better known than you. In most industries, quantitative improvements in performance and cost happen continually. A purely quantitative advantage is hard for a start-up to sustain.
"Different" means a qualitative advantage using a different approach, design, or technologies that make your product or service the best choice for some important customer set. Being different means you have one or more dimensions that are different from your competitors', whether the dimensions are customer needs (or customer experience, an increasingly crucial differentiator) or product features. Here are some examples of different that have customer needs in mind:
• Other dentists require limited-mobility patients to come into their dental offices. But you make house calls.
• Other electricians and carpenters recommend each other to customers. But you, an electrician, know that so many jobs involve both skills that you and a carpenter friend use online tools to integrate your scheduling, service delivery, and billing.
• Other call centers allow customers to complete satisfaction surveys after the call. But yours asks permission to record calls, then it uses audio processing to measure tension or anger in the customer's voice, track whether it trended up or down in the course of the call with your agent, and flag outliers for improving future interactions.
Your product or service will not be for every customer, whether consumer or business. That's okay. If you can earn the loyalty of a small but sufficiently strong set of customers, they will become repeat customers for your product or service; will buy more of your product or service over time; and recommend you to their friends or colleagues, so you will further benefit from word of mouth.
It is possible, with a sufficiently large advantage, to be different along the same dimensions as established competitors, but that is much harder than being different along dimensions without such competitors. A tablet with 20 times the memory of other tablets at a comparable price would enable wholly new usage patterns and applications that exploit the voluminous memory. That's truly different. Maybe you use a novel memory technology to achieve it. But since memory size is a primary dimension along which established tablet makers compete, watch out: They will work hard to catch and surpass you. (Make sure one or more patents, licenses, or trade secrets adequately protect your novel technology.)
“Better" means your start-up or new endeavor has to fight larger competitors head-on. "Different" means finding a dimension without competitors that is valued by some set of customers, and excelling along that dimension. If you can identify and excel along two such dimensions, even better. You won't be competing directly with the established competitors, and you'll have more time and room to become established yourself.
Being different not only gives you a unique customer set, it also makes it harder for established competitors to respond to you. Harvard Business School professor Clayton Christensen meticulously documented this effect in his classic The Innovator's Dilemma (HarperBusiness Essentials, 2003) for the disk drive industry. In the 1980s and '90s, established hard disk drive vendors found it hard to shift to new, smaller form factors, even though the smaller form factor drives were better suited for each new generation of smaller, more portable computers. The established vendors' existing customers—mainframe and minicomputer manufacturers—wanted high storage capacity and low price per megabyte. But the new form factors (initially) had both lower capacity and higher price per megabyte, and thus were ill-suited to satisfy the needs of established vendors' customers.
In each case, one or more upstart disk manufacturers who did not compete in larger form factors won the market for the smaller form factors, appealing to a different set of customers. Different was better than better.
So find the reasons that differentiate you, in a way that is deeply valued by a segment of customers. This differentiation may be core to or supporting the need you address; either could be key to your success. As your customers buy from you again and again, and tell others about you, you will grow with them.
John Chisholm, CEO of San Francisco-based John Chisholm Ventures, has three decades of experience as a Silicon Valley entrepreneur, CEO, and investor. He founded online software companies Decisive Technology (now part of Google) and CustomerSat (now part of Confirmit). He has invested in dozens of privately held companies and mentored hundreds of entrepreneurs on five continents.He is president and chairman of the worldwide MIT Alumni Association, a trustee of MIT and of the Santa Fe Institute, and a contributor to Forbes. He holds bachelors and masters degrees in Electrical Engineering and Computer Science from MIT and an MBA from Harvard Business School.