From the course: Creating a Business Plan

Define points of differentiation

From the course: Creating a Business Plan

Define points of differentiation

- Your business plan needs to clearly spell out the points of differentiation for your product or service compared to your competitors. And those points of differentiation need to be things that your customer cares about. Now, the differences need to be substantial relative to competition. By saying you're one to 2% faster than your competitors, that won't get a customer's attention. 20% faster, now you have their attention. Second, they don't just have to be substantive differences; they have to be meaningful. If your customer cares about cost but not at all about speed, it doesn't matter if you're 20% faster. So make sure, as you're articulating these points of differentiation, you look at substantive differences, as well as meaningful ones. Now, knowing how you're differentiated is going to help you know where to invest your time and money, because this is a planning exercise, and you're going to focus on those differentiating factors and where to compete or not compete in the marketplace. This is the part of your business plan that's going to keep your strategy focused. And staying on strategy is going to make you more effective and more competitive. It'll prevent you from chasing work you shouldn't pursue. It'll prevent you from investing in things that are going to be dilutive, that your customers won't care about. For my business, one of the points of differentiation is all of our instructors who deliver our training are practitioners. We're executives. We're not academicians, we're not career trainers. So our point of differentiation is we put business people on the podium in front of our clients. Now, point of differentiation is not cost. We're not cheap. We cost more than our competitors. But when we put this in front of our clients and say, yes, we cost more, however, the thing you really care about is the quality of instruction, and this is where we're differentiated, it allows us to compete differently than our competitors, who are competing on price. And we walk away from work that is cost-based, because we won't do those competitive bids. Instead, we're going to focus on markets that are going to value the experience of our instructors who are on the podium. And it keeps the business focused and on strategy. So as you articulate your business plan, make sure you think through those points of differentiation that your customers care about, and that you have a meaningful performance advantage on versus your competitors. And by spelling those out clearly, you're going to make sure that you focus on strategy and you have a more competitive offering.

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