So often I see companies trying to outdo competitors by being a little bit better, rather than by being significantly different. They try to add a little more memory to their chip, or make the monitor a little bigger, or run their programs a little faster. But this is a game that emerging firms can’t win. Competitors can simply augment their memories, enhance their monitors and speed up their programs. It’s the same with other kinds of products and services. The secret to success in the market is to be really different—to set yourself apart from competitors by clearly and consistently differentiating what you do.

Entrepreneurs make their companies significantly different by:

• Understanding the environment of their customers. By this, I don’t mean the socio-economic or natural environment that surrounds us. I mean the internal, working environment of individuals. Savvy entrepreneurs work to understand the knot in the stomach of their customers. They learn what their customers worry about, what keeps them awake at night, and thus what prevents them from purchasing. Knowing this, entrepreneurs can position their products and services to address and eliminate these concerns, and thus encourage customers to buy. Amazon.com, for example, ensures confidentiality in the purchase process, so I don’t have to worry about using my credit card. Software company Ashton-Tate called its first product dBASE II, even though it was the first version, because George Tate realized that no one wants to buy the first of anything. And a medical-device company that I worked with focused its pitch on the issue of minimizing malpractice suits for doctors, rather than on the technical aspects of their product.

• Focusing on intangibles. Too many entrepreneurs think they can succeed by competing on price or specifications alone. They can’t. Don’t get me wrong—the price and specs are important. But by themselves they don’t differentiate a product effectively enough. As surely as the sun rises in the east and sets in the west, if an entrepreneur competes only on the basis of providing a cheaper product or a faster machine, someone will come along and provide the same thing at a lower price or a faster pace. Intangibles, on the other hand—like convenience, reliability, quality, upgradability, service, and ease of use—provide powerful incentives to buy. Amazon.com makes it easy and convenient for me to buy, so I do. eBay provides a sense of community among its users, even calling groups “neighborhoods.

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• Targeting customers. No product is bought by everyone. Therefore, entrepreneurs must target a specific group of customers and then meet their needs. If one is developing software for doctors or architects, then which kind of doctors or architects? Danny O’Neill has a fast-growth coffee company in Kansas City. His gourmet, “air-roasted” coffee is designed for more elegant restaurants and the coffee aficionado. Sam Walton started Wal-Mart by targeting smaller, rural communities that the then-big retailers believed to be unprofitable. By being significantly different, companies make themselves unique in the mind of the customer. And gaining share of mind is the way to gain share of market.

uccessful companies are trusted by their customers. Trust is the basis of loyalty; it’s the foundation upon which companies not only survive but also thrive. Trust is hard to achieve, must be proven day-in and day-out and is easy to lose. To gain the trust of customers, entrepreneurs:

• Keep promises. Entrepreneurs continually tell customers that they will do things for them. Often they don’t realize that when they say what they will do, they are making promises. When a company tells a customer that an order will be there the next day, that’s a promise! When FedEx launched its now famous advertising campaign to deliver packages “absolutely, positively overnight,” it made a promise. Because it delivered on that promise, customers truly trusted that their packages would be there absolutely, positively the next day. Smart entrepreneurs know that they don’t let their mouths, or their ad campaigns, or their promotions make a promise that they or their companies can’t deliver on.

• Build credibility. A company’s reputation is its most treasured asset. Reputation—good or bad—is a reflection of how everyone in the company interacts with the customer. It’s based on the credentials of the entrepreneur and the management team, the values that employees demonstrate and the evidence of success, like the visibility and growth of the company. By their action or inaction, companies create impressions, engender testimonials and leave reference trails. One sign of credibility is the good word-of-mouth that comes from satisfied customers. Just as people talk about the latest movie that they’ve seen, they talk about the good and bad experiences they have with businesses. For example, I like purchasing books on Amazon.com, so I tell others about my positive experience. The opposite is also true. In fact, research indicates that customers who have a good experience with a company will tell three others, while those with a bad experience will tell 10 others.

• Fix mistakes fast. Most customers realize that companies, like people, aren’t perfect, and that mistakes will happen. Smart entrepreneurs know that fixing mistakes fast is essential to retaining trust. I buy a lot of flowers from 1-800-FLOWERS. The people who answer the phone are cordial and helpful, the flowers that get delivered are beautiful and the service is reliable. But the company did make an error on one of my orders. When I called to let the company know, the agent immediately apologized, refunded my money and gave me a discount on my next order. I can live with that.

A company gains the trust of its customers by being trustworthy. And being worthy of trust means treating the customer as the entrepreneur who heads the company would want to be treated.

When I buy books from Amazon.com or flowers from 1-800-FLOWERS, I’m not buying just books and flowers. I’m buying an experience. I’m buying a Web site that’s easy to navigate, a simple purchasing process, confidentiality and security when I use my credit card, cordial and helpful people on the other end of the phone when I call and an ability to fix mistakes fast and without question.

Too often, entrepreneurs think that customers just want a specific product or service, and they forget all the other expectations that customers have along with it. Entrepreneurs who are attuned to the range of customer expectations surround their products and services with all the support, features, acts and information that add not only real value and utility but also comfort for their customers.

Like Newton’s Laws that govern the physical universe or the periodic table that delineates the elements of nature, these three laws, in my experience, govern the marketing universe and delineate the elements that move products and service into the marketplace. Companies that understand and follow these laws will move forward, making discoveries and solidifying their competitive advantages. They will have satisfied customers who keep coming back again and again, clamoring for more. Those that don’t will wind up like the inventors who tried to build a perpetual motion machine or the alchemists who tried to make gold out of lead—frustrated and defeated—because they keep trying to defy the laws of the universe.