"According to Michael Porter’s theories... Differentiators compete based on a variety of factors, such as quality or service, rather than prioritizing low prices. "
HBR makes a strong case that companies that have not previously competed on price should not be tempted to do so in the current market turbulence for the simple reason that low-cost providers are better at that approach than they will be.
Differentiators compete on other factors and will need to continue to play to their strengths, in order to survive and win. However, it is essential that the basis on which a service is different from it's lower-priced rival is made very clear, or a potential buyer cannot sensibly be expected to purchase the more expensive option.
In Professional Services, differentiators are often highly-nuanced but, given that all companies are looking to cut costs now more than ever, it is essential that firms and each practitioner within the firm be eloquent and clear about what their differentiators are. Relying on retaining clients on the basis that you have a long-standing relationship is a perilous choice, particularly when clients will be looking to dramatically reduce their total number of suppliers of any given service.
Given that the staples of face-to-face meetings and events are not possible, clear communication in a focused, personal way about how your service is relevant and how your expertise can help clients thrive is more important than ever.
It should be good news that a great strategic pivot is not the right answer in these difficult times but do be sure that all your clients know and are reminded why they are choosing you over your cheaper rivals.
So, what should a differentiator do? Our research does point to some concrete lessons for strategists at differentiator firms during recessions. First, do not try to change strategies. A differentiator will never out-cost leader a cost leader. As a result, differentiators are better off focusing, and trying to build, on their strengths. Next, reduce costs quickly, to a point. When faced with uncertain demand, firms need to lower costs as quickly as possible in an effort to marshal resources for a long fight back.