What is a point of differentiation (POD)?

A Point of Differentiation (POD) is the unique value your business offers that your competitors don’t. It’s what makes your product, service, or brand memorable and desirable to your target audience.

Why POD matters

Most small businesses don’t fail because their products are bad. They fail because no one notices them. In today’s crowded marketplace, having a great product isn’t enough. You need to stand out. And that’s where your Point of Differentiation (POD) comes in.

Many small business owners focus on building a better product. But better isn’t what gets you noticed. Different does. That’s why one of my first tasks when working with small business owners is helping them develop a POD—the unique quality that sets their business apart.

I came around to this way of thinking more than a decade ago after listening to business consultant Michael Michalowicz. He used the example of Olympic swimmers compared to 23-time gold medalist Michael Phelps. The field was no match for Phelps, so how could other swimmers stand out?

“What if one of the Olympic swimmers did a cannonball into the pool instead of diving?” Michalowicz asked. “He’d probably lose, but he would get noticed. And we’d remember him forever.”

That’s the power of being different. When you stand out, people remember you.

Why ‘better’ isn’t enough

At least once a week, I get a call from someone asking for feedback on their business idea. Sometimes it’s a new concept; other times, it’s an existing product. They’re excited about the features, the design, the value it offers. But they’re missing one crucial element.

I always ask the same question:

  • “I like what I’ve seen, but how is it different from dozens of similar products or services?”

No matter what they say, most businesses’ products or services aren’t different in any meaningful way. And that’s a problem. A big problem. Without differentiation, your business is just another face in the crowd. Defining your POD is a first-order priority because it helps you do the following:

  • Stand out in a crowded market.
  • Attract the right customers who resonate with what makes you unique.
  • Compete effectively without relying on price wars.

Now that you know how important differentiation is, let’s focus on how to establish your POD.

How to identify your point of differentiation

Think of POD as the answer to this question:

“Why should someone choose your business over the competition?”

Here are some areas where you can find your differentiation:

  • Features: Unique design elements, functionality, or product characteristics.
  • Content: The style, tone, or type of content you produce (blogs, videos, guides, etc.).
  • Audience: Serving a niche or underrepresented market segment.
  • Format: Offering your product or service in a new way (subscription, mobile app, etc.).
  • Revenue Model: Innovative pricing or membership structures.

A personal example

When I launched a members-only newsletter, Tackle Talk, in 2011, I didn’t want to blend in with the crowd. I spent weeks researching and identified my key PODs:

  • Exclusive content unavailable elsewhere.
  • Service tailored to industry professionals.
  • A distinctive newsletter format.
  • Premium pricing to attract serious subscribers.

Your POD doesn’t have to be revolutionary; it simply needs to be relevant and meaningful.

The role of competition in defining your POD

You’ve probably heard: “To succeed, do what your competitors do, but better.”

I disagree. Better is subjective. Different is undeniable. Traditional methods like the 1-2-3 model (identify competitors, list similarities, highlight differences) can help, but they often fall short. Why? Because:

  • You’re too close to your business to be objective.
  • You might overlook indirect competitors who are fighting for the same audience in different ways.

Instead, I recommend a more powerful approach: talk to your customers.

The customer discovery playbook

Want to know what sets you apart? Ask the people who matter most: your customers.Here’s how to uncover your true POD:

  1. Reach out: Connect with 20-30 potential customers, especially those who currently buy from your competitors.
  2. Ask smart questions: Focus on their experiences, frustrations, and desires. Some examples:
    • What do you like or dislike about [competitor’s product]?
    • What would you change if you could?
    • What features matter most to you?
    • What would convince you to switch to another brand?
  3. Analyze Patterns: Look for recurring themes. What frustrates them? What delights them? That’s where your opportunity lies.

Remember: Customers often don’t know what they want until they see it. So, focus on their problems, not just their wish lists.

Being ‘better’ is subjective. Being ‘different’ is unforgettable.

Tying It all together 

In his book Get Different: Marketing That Cannot Be Ignored, Michalowicz poses three critical questions every business owner should ask:

  1. Does it differentiate?
  2. Does it attract?
  3. Does it direct (customers to take action)?

If your answer is “no” to any of these, you’re leaving money on the table. By focusing on differentiation, you’re not just competing—you’re creating your own category. Most businesses get stuck trying to be “the best.” But the best is temporary. The different? That’s forever. So, here’s your challenge: Stop trying to be the best. Start trying to be the only. Identify your point of difference today—and watch your business stand out, get noticed, and win.