3 Questions for Developing an Effective Differentiation Strategy
With commoditization at an all-time high in the insurance industry, the need for differentiation has never been more critical.
Brand Keys recently examined customers’ relationships with 1,847 products and services via its Customer Loyalty Engagement Index. Their research determined that only 21% of all products and services had points of differentiation meaningful to the consumer.
Significantly, insurance and 22 other categories had virtually no brand differentiation. That compares poorly against the automobile industry where there is a high degree of differentiation – Volvo (safety), BMW (driving), Mercedes (prestige), and Ferrari (speed).
It compares even worse against soap brands. The study found that 100% of soap brands differentiated themselves and were considered distinct. That means that the insurance industry is less differentiated than a bar of soap!
The study stated, “The products and services were ‘known,’ but not known for anything in particular.”
In other words, thanks to commoditization, insurance agents are virtually identical in consumers’ eyes. To the consumer, insurance agents have merged into one standardized personality with very few individuals standing out from the crowd.
Those who do stand out are offering their clients something more: a clear and inspiring purpose and a unique personality profile. They are connecting with their clients as Trusted Risk Advisors™ rather than focusing on the transaction. The combination of these words – Trusted Risk Advisor™ — represents who they are and how the consumer perceives them. They are remarkable.
Over the past eight years of teaching the Purple Cow Leadership workshop, we have learned that the best way to stimulate change leading to enhanced perception of differentiation is ask these three questions:
- To what degree do you serve as an advisor in delivering your products and services?
- While people tend to trust you, how do you take trust up three or four notches?
- As compared to the insurance transaction, are you energized and professionally stimulated when evaluating risk?
- Brand Keys’ research showed that if you do not clearly stand for something and differentiate yourself, consumers will think you stand for nothing.
- Failure to create meaningful differences, such as serving as a Trusted Risk Advisor, forces consumers to define you by their own criteria.
- You must distinguish and differentiate yourself, your products, services, and resources, from the competition or risk being reduced to a commodity.