How To Differentiate A Tech Startup In A Crowded Industry

Launching a tech startup is hard. It’s even harder when you’re entering an industry that’s already crowded with similar competitors. But with the right differentiation strategy, you can make your startup stand out, and hopefully defeat the many competitors that stand between you and market dominance.

The question is, how do you do it?

IMAGE: UNSPLASH

Why Differentiation Matters

Why is differentiation so important in a crowded tech industry?

There are a few big reasons:

Memorability. Differentiating your product and your brand allows you to stand out and become more memorable, especially when compared to your competitors. If you go to a typical fast-food joint and get a typical burger, you probably won’t remember the burger in a week or two – or where you got it from. But if you go to a fast-food place with an interesting brand image, exceptional service, and the juiciest, tastiest burger you’ve ever had for the price point, you’ll remember it forever.
Favorable comparisons. Differentiation also invites comparisons, and if you do this well, it will invite favorable comparisons. You want to stand out as different from your top rivals, and this difference may be the tiebreaker for overlapping demographics who might consider both you and your competitor as possible options. As a simple example, if you and your competitor have similar products, but yours is half the price, your shared prospects are naturally going to gravitate to you.
Future loyalty. Making your brand stand out is also a way to invite future loyalty. A more memorable, more interesting, objectively better brand is one to stick with indefinitely.

So how do we achieve that differentiation?

The Unique Value Proposition

The best place to start is with a concise, yet all-encompassing unique value proposition. Your unique value proposition is a simple, often one- or two-sentence-long summary of how you provide value to customers and what makes you different from similar brands.

Think: what is it that your brand offers that no other brand in this industry can offer? What makes your brand valuable? Why would people choose you over a competitor and never want to leave?

To answer these questions, you must know your brand intimately well, and you must also know your rivals. This may require some competitive research and market research on your part, so you can better address the question.

If you come up short, don’t worry; it could be an indication that your brand is not sufficiently differentiated, but there are many strategies that can help you differentiate it.

How To Differentiate A Tech Startup

How do you differentiate a tech startup in an industry that’s already crowded?

These are just some of the options:

Quality. One of the most straightforward ways to differentiate your product is to make it inherently better than the products of your competitors. Obviously, this is a bit easier said than done. However, if you think outside the box, there are little ways that you can make your product better. If it’s a physical product, can you use better materials? Can you make it run faster or smoother? Can you include some small bonus or freebie to make your offers slightly more attractive?
Price. Most businesses are incentivized to make as much money as possible, so it seems counterintuitive to lower your prices. But lowering your prices can be a great way to make your brand stand out in a crowded field. Sometimes, lowering your profit margins, especially temporarily, can be the right move to greater growth and profitability in the long run. This is especially true if your competitors are already overpriced or if you’re targeting a demographic with less disposable income.
Service. Also, consider differentiating your tech startup with service. Providing customers with more information, more support, and stronger relationships with your team members can lead to much higher customer satisfaction and make it easier for your brand to stand out.
Reach. Can you distribute your product in a different way or reach a different geographic area or target audience? Differentiating with your reach can help you set your brand apart, while simultaneously enabling you to evade certain aspects of your competition.
Image. Even if you don’t differentiate your product, you can differentiate the brand offering it. In many cases, differentiating your image with different personality traits, a different tone of voice, or even a unique aesthetic style could be enough to make people forget about your competitors.

Once you’ve fully differentiated your tech startup in this crowded industry, you’ll be on much stronger footing to market and advertise your brand. You’ll also be in a better position to attract new customers, foster loyalty within the customer base you’ve already built, and ultimately outcompete your toughest rivals.