Monetization Playbook #54–The Product Differentiation Matrix
How to identify your star features using the product differentiation matrix
The software business is brutal. Everybody wants to code, low-code or no-code. The age of the few is dead. The era of plenty is here.
So what does that mean for your business, product, or service? Differentiate or die!
But differentiation is hard.
Our surroundings influence us. Sights. Sounds. Socialization. All channel our thinking and level of inspiration, invention, and innovation.
In the last decade, the level of competition within each category and vertical has tripled.
Two or perhaps three competitors existed in each niche vertical in 2010–now prepare to battle with at least ten.
Of course, new types and categories emerge, but with horizontal software knowledge and widespread open-source applications–no secret sauce is safe for very long.
If you build it, they will come. More like, if you build it–they will throng!
Profitwell [via the legendary founder Patrick Campbell] set forth a quick way to think about differentiation.
A simple 2x2 which breaks down your product feature set into:
Core features–table stakes
Wasted features–trash land
Add-ons–some likers, some haters
Differentiable Features–el dorado!
This model synthesizes with the concept of undifferentiated heavy lifting a-la-amazon–eloquently explained by the Flywheel [https://theflywheel.substack.com/] leads to a core focus on areas of differentiation above all else.
Your unique selling point.
The go-to-market product motion goes something like this:
Lead with your USP, your differentiable features that clients value highly and have a high willingness to pay.
Provide a selection of add-ons that not everybody wants, but those who do will bite your arm off to obtain.
Ensure your core features are level set with the market, so there's no room for basic competitive arbitrage. These features are valuable to your clientele but not matched with a willingness to pay i.e. table stakes!
Keep an eye out for low value, low willingness to pay features as this non-differentiable set has no revenue or customer satisfaction upside.
In conclusion–it's better to focus on one or two killer features–than a massive feature set that spans two pages!