Differentiation is not about being 'different' at all costs. It is about making strategic choices that enable your clients to differentiate you from the competition and choose what you offer.
Differentiators help potential clients to distinguish your offer from other suppliers. They are the main reasons that influence a buying decision – or in other words: the strategic competitive advantages of your firm. Why do clients come to your law firm instead of another firm? A coincidence? Hardly.
Differentiation flows from the needs of the target groups. It is the counterpart contained in the offer that satisfies the identified needs. It is the result of the strategic choices a company makes to create added value and thus gain a competitive edge.
The needs in the market are in a constant state of flux. Therefore, strategies based on differentiation must also be constantly reviewed for their relevance. Marketing therefore also means market research as a basis for the definition of differentiation features.
For this reason, companies that continuously research how the needs of their target group develop are usually not only more successful in differentiation but also more profitable!
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What is certain is that permanently undercutting direct competitors through lower prices does not represent meaningful differentiation. One lives with the constant danger that the competition will undercut one's own prices again. As a result, one not only loses the advantage, but also comes under pressure to lower one's own prices even further. Mostly you end up in a downward spiral. A good example of this are discounters who undercut each other on price. It is therefore important to find a significant and sustainable difference to the competition.
For a differentiator to be effective, it must meet four criteria. It must be rare, true, provable and relevant.
Companies that know their differentiation features can pursue much more profitable strategies. The differentiation of the offer does not take place through a price war, but through the added value created with the differentiation for the target group concerned. The target group is willing to pay for this added value. The company does not have to get involved in a price war.
Effective differentiation strengthens branding. Target groups are more likely to remember an offer and the company associated with it. Consequently, it also increases not only the likelihood of a sale but also of future referrals. Especially for law firms, referrals are definitely an essential marketing tool.
Companies with real differentiators remain unique. They cannot be compared directly with the competition. Interested individuals must rely on the qualitative value of differentiation. The combination of greater value and the lack of comparable offerings creates greater loyalty to the firm. If the promises are kept, there is no good reason to switch and no (cheaper) comparable alternative to switch to.
Differentiating features are therefore the basis for being able to charge higher fees without losing clients at the same time. Profitability ("profit per partner") increases.
Differentiating features can be combined and can thus strengthen the competitive advantage.
Possible strategies for finding differentiators for professional services, especially for law firms and other consultancies in the legal industry, are explained in more detail below:
Consciously or unconsciously, we often assume that our competition knows something that we don't know. We align ourselves accordingly and choose inappropriate differentiators.
There are two basic approaches for making the right choice.
You decide for yourself and without being influenced by what you already have. It takes courage to make and implement such a decision. This approach makes sense especially if your company does not yet have any inherent differentiating features or if you recognise a market opportunity that the company could fulfil after the change.
Here, differentiation is discovered instead of newly created. This approach is especially recommended for companies that don't want a dramatic change in strategy. Often, established consulting firms lack the distance to their own strengths. One loses the overview. Often all it takes is a sharpening of awareness – some space to step out for a moment and refocus. Convincing stories need good and clear differentiators.
The key to sustainable success is a process of permanent awareness of what is happening in the legal market.
Understanding legal marketing as a comprehensive process: Where everything comes together and what legal marketing as a discipline entails.
First, market analysis is essential to objectively assess opportunities for differentiation. Proper differentiation requires that you understand at all times what the target group / potential clients need and how they make purchasing decisions. We need information and data to answer these questions. What else can you do to make better strategic decisions?
The second question you should ask your company is: Do other companies have the same differentiators? Are the differentiators strong enough to drive referrals and customer loyalty? How might the needs of the target group change in the next few years? How can you meet them? Are our differentiators qualitatively sufficient (rare, true, provable and relevant)?
The third prerequisite for maintaining competitive advantage: Culture. The differentiation / strategy must be effectively lived by the employees. They need clear communication and, if necessary, an adjustment of certain processes. Therefore, from time to time, question your marketing materials and key messages contained in the communication: Are they still relevant and do they prove your claimed differentiation?
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Differentiators distinguish the company. A strong differentiator gives your company a competitive advantage.
In order to be successful in competition, professional service companies must first determine or recognise their competitive advantage. It is also possible to combine several features. For this strategy to be effective, the differentiators should be rare, true, provable and relevant. It is important to conduct ongoing market research in order to notice changes in the legal industry and to identify necessary adjustments in the strategy.