Differentiate your Product Pick your Paths

3 Best Ways to Differentiate Your Product for Startups

We’ve all been there, you’ve got a great startup idea only to find out that there is already a similar product in the market.


This may seem discouraging, but it shouldn’t be. Actually, this is proof that customers are willing to pay for products that are similar to yours!

Now you just need to identify that your product fits in the market.

Differentiating your Product

Focus on Being Different, Not Better

Several companies can exist in one market for a number of reasons. One reason is that people want options.

People will choose one product/service over another due to price, customer service or even a friend’s recommendation. So in order to be amongst the options to choose from, you will want to make sure that your product offers something that others do not.

The process of identifying features/services that allow you to stand apart from the crowd is called differentiation.

Differentiation can be:
– Taking a current process  and making it easier
– Offering a product/service at a price your competitors can’t match
– Bringing  a product/service and custom fitting it to a particular market segment
Differentiation is not:
– Changing something that adds no value just so that you can say your different

Here are the 3 best ways that you can differentiate your product:

1. Focus on your Customers

When you are focused on your customers and not your competitors then your product will be differentiated by default.

Think about it like this.

If a customer truly has a problem then they are probably using a similar product to alleviate their pain. But what if the competing product isn’t doing a good job solving the problem?

Sure you could change up a few things, but are they things your customers want?

When you are focused on the competitor, it is easy to create solutions to problems that don’t exist. You should focus on your customers’ needs and create features/services that differ from your competitors.

2. Find out what your customers are using

Even though we don’t want you to focus on your competitors, it’s important to understand what the market likes and doesn’t like about competing products.

If there’s a particular service or feature that your customers really like about a competing product, it doesn’t make sense to reinvent the wheel.

RelateIQ is an example of a company that understood this concept.

There are tons of CRM tools that exist in the market, but RelateIQ identified something that the other tools had overlooked.

One thing people hate about CRM’s is manual data entry. It just took too long to enter in all the customer data each time a new connection/customer was identified.

RelateIQ differentiated itself by allowing the user to link their Gmail accounts. Now all of the contact/conversions/etc was automatically synced and there was no need to enter customer details.

The company grew quickly because they were able to solve a pain point that their competitors were overlooking. RelateIQ was purchased by Salesforce for $400M in 2014.

This is a great example of understanding your customer’s pain points, but at the same time understanding the common elements your customers enjoy.

3. Find a Smaller Segment 

Sometimes the market is just oversaturated and there are too many companies that exist in one space. Social networks are a good example of this. Even though you may only use 4-5 social networks there are hundreds in the market today.

If you are in a crowded market, one way to differentiate yourself is to find the underserved segment of the market.

Facebook came at a time when Myspace and other social networks were really popular. When Mark Zuckerburg created Facebook, he wasn’t directly competing with Myspace because his network was only for Harvard students.

Slice the Pie

Think about a pie sliced into multiple pieces. The whole pie makes up one market but there are multiple ways you can slice this thing up.

If you have personally experienced the problem that your startup is going to solve, then view yourself as a customer of your product. Cut your market into a slice that best represents your demographic and see if others in that group have the same issue.

For Example….

My alma mater has issues raising money from its alumni. Instead of assuming all college and universities have this issue, I would segment that down to historically black colleges and universities. 

Each time you take a slice, see if there are similar products that serve this group.

You shouldn’t expect to find zero competing products, but the less the better. This will allow you to take an authoritative position in a smaller market and it will be much easier to shift to other markets in the future.

If you need some help identifying your market check out our post that walks you through a simple step-by-step process. Click here for the post


To sum this all up it’s important to understand who your competitors are but not to allow competitors to drive decisions about your product.

1. By focusing on your customer’s you will understand the problems that they have and then you can iterate on the best solution to solve it.

2. Study your competition and understand what your customers like and don’t like about their product.

3. Identify the underserved slice of your market so that you will only have a few products to compete with.


How are you differentiating your product from your competitor’s? Let us know in the comments! 

Brandon Mitchell

5-time startup founder helping others bring their ideas to life.

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