Agency Differentiation: 6 Steps to Separate You from Your Competitors
Being different is easier said than done; it takes strong strategic thinking to develop a differentiated value proposition. Let’s look at 6 steps to differentiating your agency from you competitors and what it means to your success.
Six Essential Steps to Differentiation
There are six essential steps to differentiate your agency from your competitors.
- Listen to the customer. This tactic has been neglected by generations of well-intentioned professionals. A pleasurable and memorable experience occurs when the customer has the opportunity to speak about his or her dreams, goals, passions and aspirations.
- Exploit the differences of your services and resources from your competitors. You must be able to highlight these differences. If not, you are in the crowd.
- Demonstrate the value of your offerings so the consumer can feel the impact on their key indicators.
- Include creativity and passion in building customer solutions.
- Demonstrate your personal commitment to ensure that the consumer achieves the outcomes proposed.
- Shoot for your customers’ hearts. Engagement and loyalty requires an emotional connection.
Lifetime Value of the Customer Relationship
In marketing terms, the lifetime value of a customer represents the net present value of the cash flows attributed to the relationship.
It is short-sighted to view the value of the relationship in terms of the revenue derived from the initial engagement. Rather, the following must be considered:
- Repeat purchases over the lifetime of the relationship
- Cross-purchasing of additional products and services
- Price premium due to the appreciation for the experience
- Positive word-of-mouth in terms of referrals
- Appreciation and enjoyment when interacting with staff
Many organizations use acquisitions, marketing campaigns, and sales blitzes to improve performance. While these strategies may give the firm a short-term boost, they are not long-term solutions. Customer engagement and loyalty is the most solid plan. Real growth occurs because there is a “love affair” between an organization and its customers. And the customer can’t wait to sing the firm’s praises to friends and colleagues.
Distinguished Value Proposition
As mentioned earlier, a differentiated value proposition is essential. Your firm’s value proposition is the reason for your professional existence. It describes how you create value for others. It makes you stand out in a crowded marketplace. Without a compelling value proposition, you are ordinary and disposable — a commodity. With a distinguished value proposition, you are unique and indispensable.
Your agency’s unique value proposition statement must summarize the reason why a potential customer should buy your particular product or service, how it exceeds your competition, and why it is worthy of the price they must pay. The ideal value proposition is concise and appeals to the customers’ strongest decision-making drivers. It is an irresistible offer, and invitation that is so compelling and attractive that the customer would be out of his or her mind to refuse your offer.
It is also essential that you develop, define, measure, and manage customer loyalty. It is not enough to understand your retention and organic growth rates. You must dig deeper to understand why customers return, why they defect, why they buy, and what they say about you and your team.
Loyalty is commonly defined as faithfulness or devotion. Richard L. Oliver, the renowned consumer scientist and Vanderbilt University professor referred to customer loyalty as “a deeply held commitment to re-buy or re-patronize a preferred product or service consistently in the future despite situational influences and marketing efforts having the potential to cause switching behavior.” The loyalty effect is created when the consumer becomes an advocate and evangelist of a product or service. The impact of customer loyalty includes, but is not limited to, repeat purchases, brand loyalty, and positive word-of-mouth.
Loyalty is the key to profitable growth. Fred Reichheld, Director Emeritus at Bain & Company and bestselling author of The Loyalty Effect (1996), Loyalty Rules (2001) and The Ultimate Question(2006), has documented research that evidences a 25 to 100 percent increase in profits from just a 5 percent increase in customer retention. Companies with the highest customer loyalty typically grow at more than double the rate of their competitors.
Customer loyalty is not a choice any longer. It is the only way to build a sustainable competitive advantage. Easy? No way. It requires a dedication to, and focus on, the delivery of a customer experience that transcends price and product. At the core is an experience with the customer that is so tight that it wards off competition and entices word-of-mouth referrals.
Logic or Emotion?
Is the consumer’s purchasing decision based on logic or emotion? What do you think?
So what is logic? It is reason supported by facts. What is emotion? It is the feeling that leads us to act and react. Emotion describes the intensity of how our body and mind will respond to an event. Emotions drive us toward pleasure or away from perceived danger. Perhaps, emotions are best described as signals from the subconscious that steers the decision-making process. This is especially true when logic sees all choices as equal.
The single motivator in purchasing decisions is not data or facts. It is emotional response. People buy when they feel comfortable, when they feel they can trust you and your firm, and when your process feels natural and reassuring. In simplistic terms, people rationalize purchasing decisions based on facts, but they make decisions based on feelings.
It is always the heart that is touched first. So, what does this mean to your agency? Although you may take great pride in the “features and benefits” of your offerings, it is imperative that you assess the degree to which you are able to stimulate the emotions for those whom you serve. In order to accomplish this, you must deeply engage your customer’s emotions in addition to, and even above, their intellect. The simplest strategy is to find out what keeps your customer up at night as well as what drives them. It is your discovery of their goals, passions, and struggles that opens the door for an intense and lasting relationship – an emotional connection which transcends price and product.
Dare to be different? You bet. The payoff will be huge!