Sequencing Table Stakes vs. Differentiators
As product managers, we're constantly bombarded with feature requests from customers, stakeholders, and team members. With limited engineering bandwidth, it's our responsibility to thoughtfully prioritize which features to build next. But how do we decide whether to focus on differentiators that solve unmet needs or table stakes that address already-met needs in novel ways?
In this essay, we'll explore the critical difference between differentiator and table stakes features, and why PMs must strategically choose between them based on product maturity and market dynamics. We'll dive into the challenges of prioritization, the risks of neglecting either type of feature, and the importance of carefully considering the sequence in which we tackle differentiators and table stakes.
The Myth of Differentiation
In most discussions, “differentiation” is seen as an unquestionably good thing to pursue. But, I’d like to take a moment for us to bust this myth.
Consider a hypothetical example: let's say you're building a project management tool, and you're determined to make it stand out from the crowd. You might invest heavily in a complex, proprietary system for organizing tasks and deadlines, complete with its own unique terminology and workflow.
While this might seem like a differentiator, it could actually create more problems than it solves. Customers who are used to standard project management conventions might find your system confusing and difficult to learn. They might struggle to onboard team members or collaborate with external partners who are unfamiliar with your unique approach.
In this case, the pursuit of differentiation has actually created customer overhead and friction. Instead of making their lives easier, you've given them a new set of challenges to navigate.
The same principle applies to feature overload. When we're too focused on adding new, unique capabilities to our product, we risk overwhelming customers with options and complexity. Just because a feature is different doesn't necessarily mean it's valuable - and in some cases, it might actually detract from the core functionality that customers rely on.
This is where the value of table stakes comes in. While it might not be as exciting as building something brand new, there's a lot to be said for executing well on the features and capabilities that customers expect.
Think about a basic feature like search. It's not a differentiator - every product in your market likely has some form of search functionality. But that doesn't mean it's not important. In fact, a well-designed, intuitive search experience can be a major selling point for customers.
The same goes for things like performance, reliability, and ease of use. These might not be the flashy, attention-grabbing features that make your product stand out, but they're the foundation that everything else is built on. If you don't get the basics right, all the differentiation in the world won't matter.
Of course, this doesn't mean you should ignore differentiation altogether. There's still a lot of value in finding unique ways to solve customer problems and deliver value. But it's important to strike a balance - to focus on differentiation where it matters most, while also investing in the table stakes that customers expect.
Ultimately, the myth of differentiation is the idea that being different is always better. In reality, the most successful products are often those that execute well on the fundamentals, while also finding strategic ways to set themselves apart. It's about understanding what customers truly need and delivering on those needs in a way that's both effective and efficient.
As we'll see throughout this essay, the key is to take a balanced approach - to invest in differentiators where they can have the biggest impact, while also building out the table stakes that create a strong foundation for long-term success. By dispelling the myth of differentiation and taking a more holistic view of product strategy, we can create products that truly resonate with customers and stand the test of time.
Now that we’ve busted this myth, let’s dig a bit deeper into “differentiator features” vs. “table stakes features.”
Defining Differentiator Features
Let's start by clarifying what we mean by differentiator features. These are the features that solve unmet customer needs and provide disruptive, net-new value.
They're the reason customers choose to adopt your product on top of their existing solutions, as they address pain points that no one else has solved yet.
Imagine you're building a new CRM for small businesses. A differentiator feature might be a built-in AI assistant that automatically generates personalized marketing copy and materials based on customer data. This solves a new pain point for small business owners who don't have the time or resources to create effective marketing content themselves.
Small businesses aren't choosing your CRM to replace their existing processes or tools. Instead, they're adding your product on top of what they already have because it provides so much incremental value.
Your differentiator feature is a revenue generator, not a cost center, making it a no-brainer for businesses to adopt.
Some real-world examples of truly disruptive differentiator features:
Uber's ability to hail a ride directly from your smartphone, without needing to wave down a taxi or call a dispatcher
Slack's organization of conversations into dedicated channels, vastly improving upon traditional instant messaging platforms
Dropbox's seamless file syncing across devices, eliminating the need for manual file transfers and updates
These features fundamentally changed the way people performed existing tasks, providing value that simply wasn't possible before. They solved problems that customers didn't even know they had, creating entirely new markets and categories.
It's important to distinguish these true differentiators from features that simply improve upon existing solutions. For example, Salesforce's customizable dashboards and reports are certainly valuable, but they're not solving a fundamentally new problem. They're reimagining how to address an already-met need, which falls into the category of table stakes.
Similarly, Slack's integrations with third-party tools, while incredibly useful, are not a differentiator on their own. Integrations have become an expected feature for any modern collaboration platform.
Differentiator features are all about creating new possibilities and solving problems in ways that were previously unimaginable. They're the features that make customers sit up and take notice, wondering how they ever lived without them.
When prioritizing features for a new product, it's critical to focus on these true differentiators. They're the key to standing out in a crowded market and convincing customers to adopt your solution on top of what they're already using.
But as we'll see later, differentiators alone are not enough to sustain long-term success. As your product matures, you'll need to balance differentiation with a strong foundation of table stakes features to defend against competitors and meet evolving customer expectations.
Differentiation is all about increasing novel benefits; but, many times your novel benefits introduce novel costs in terms of processes for customers. Remember people choose products with the highest ROI, benefit / costs; you can’t focus on costs first because you need to have some benefits to work with, but soon you’ll find that you’re incurring too many process costs
Defining Table Stakes Features
On the other hand, table stakes features are those that address core customer needs and ensure product viability. They're the features that customers expect your product to have based on their experience with other solutions in the market.
Table stakes features are necessary for product competitiveness and customer retention. Without them, customers may churn to competitors who better address their baseline needs.
Continuing with our small business CRM example, table stakes features might include:
Contact management
Deal tracking
Email integration
Mobile app access
Customers expect a CRM to have these core capabilities, as they're essential for managing customer relationships effectively.
It's important to note that table stakes features still require innovation. It's not about copying competitors feature-for-feature, but rather finding new and better ways to solve the same underlying customer needs.
Some examples of table stakes features in B2B products that have been reimagined over time:
Google Docs' real-time collaboration and version history
Dropbox's file sharing and syncing across devices
Atlassian's project management and issue tracking tools
While these features address already-met needs, each product has found ways to innovate and provide a superior user experience compared to traditional solutions.
Table stakes is all about eliminating process costs and cognitive overhead or management costs.
The Sequence of Differentiators and Table Stakes
Now that we've defined differentiators and table stakes, let's talk about how to prioritize them.
The key challenge is that PMs have limited engineering bandwidth, so we must choose a specific sequence of features to build. We cannot simply "have it all" and tackle differentiators and table stakes simultaneously.
When launching a new product, it's crucial to start with differentiators. You need those unique, compelling features to gain initial traction and convince customers to adopt your product. If you start with table stakes, you risk blending in with competitors and failing to differentiate yourself in the market.
However, once you've established your differentiators and started to gain customers, you cannot simply rest on your laurels. Customers will inevitably start to "leak" your differentiators to other players in their tech stack, in the hopes that someone else will copy your features and provide a more integrated solution.
This is where defensively building table stakes comes into play. By proactively addressing the core needs that customers expect, you make it harder for competitors to displace you. You signal to customers that your product is a viable long-term solution, not just a flashy point solution.
As your product matures, you'll need to find the right balance between differentiators and table stakes. You can't neglect either one, but the ratio may shift over time based on your product's lifecycle stage and market conditions.
Launching Products with Differentiator Features
Let's dive deeper into the importance of launching products with differentiator features. When you're entering a new market or tackling a new problem space, you need to give customers a compelling reason to choose your product over the status quo.
Imagine you're building a new expense tracking app for small businesses. If you launch with only table stakes features like receipt scanning and category tagging, you'll struggle to stand out from established players like Expensify or QuickBooks.
Instead, you might launch with a differentiator feature like real-time expense policy enforcement. This solves a new pain point for finance teams who struggle to ensure compliance with company policies. By proactively flagging out-of-policy expenses as they happen, you save finance teams time and reduce the risk of fraud or accidental overspending.
Launching with a strong differentiator feature helps you get your foot in the door with early adopters who are more willing to try new solutions. It also generates buzz and word-of-mouth marketing, as customers share their excitement about your unique value proposition.
However, it's essential to clarify that customers are not necessarily choosing your product as a replacement for their existing processes. Instead, they're choosing to use your product in addition to their current tools, because you provide incremental value that they can't get elsewhere.
This is a subtle but critical distinction. If customers view your product as a complete replacement for their existing systems from day one, they may be hesitant to adopt it fully. Change is hard, and ripping out entrenched processes is a daunting prospect.
But if customers can use your product alongside their current tools and gradually see the value it provides, they'll be more likely to stick with it over time. They can slowly integrate your product into their workflows, rather than forcing a wholesale switch.
Some successful B2B product launches that led with differentiator features:
Gong's AI-powered revenue intelligence platform, which provided unique insights into customer conversations and deals
Airtable's flexible, no-code database and app building tools, which empowered business users to create custom workflows
Figma's collaborative, browser-based interface design tool, which streamlined the design process for teams
Each of these products solved unmet needs in their respective markets and provided compelling reasons for customers to adopt them alongside existing tools.
The Risk of Differentiator Leakage
While differentiator features are critical for initial traction, they also come with a significant risk: differentiator leakage. This is the phenomenon where customers share your unique features with competitors, in the hopes of driving feature parity and reducing their reliance on your product.
Differentiator leakage can happen in a few ways:
Customers explicitly ask competitors to copy your features, often as part of sales negotiations or product feedback sessions.
Competitors proactively reach out to your customers to gather intel on your features and roadmap.
Customers inadvertently share your features with competitors through casual conversations or public forums.
The more successful your differentiator features are, the more likely it is that competitors will try to copy them. They see the value you're providing to customers and want to level the playing field.
Additionally, other decision-makers within your customer's organization may push to eliminate your product for cost-cutting reasons. If they view your product as a nice-to-have rather than a must-have, they may pressure their teams to consolidate vendors and stick with more established players.
This is why it's so critical to defensively build table stakes features as your product matures. You need to signal to customers that your product is a long-term solution, not just a temporary band-aid.
By proactively addressing the core needs that customers expect, you make it harder for competitors to displace you. Customers will see your product as a viable alternative to incumbent solutions, not just a point solution for a specific pain point.
This doesn't mean you should stop building differentiator features altogether. But it does mean that you need to balance your focus on differentiation with a strong foundation of table stakes. Neglecting either one puts your product at risk in the long run!
Defensively Building Table Stakes
As your product gains traction and your differentiator features become more widely known, it's only a matter of time before competitors start trying to copy them. This is where defensively building table stakes features comes into play.
By proactively addressing the core needs that customers expect, you make it harder for competitors to displace you. You signal to customers that your product is a viable long-term solution, not just a flashy point solution.
For example, let's say you're building a project management tool with a unique visual timeline view that helps teams spot dependencies and bottlenecks. This differentiator feature is driving strong adoption among customers.
However, you know that competitors are likely working on copying your timeline view. To defensively build table stakes, you might invest in features like:
Robust task management and assignment
Seamless integration with popular tools like Slack and Google Drive
Customizable project templates and workflows
These features may not be as flashy as your differentiator, but they're essential for keeping customers engaged and preventing them from jumping ship to a competitor.
Approach table stakes with a critical lens, looking for ways to innovate and improve upon the standard features in your market. Don't just copy what competitors are doing - think about how you can solve those same customer needs in a better, more streamlined way.
For instance, instead of just building a basic task management feature, you might invest in AI-powered task recommendations or automatic task scheduling based on team availability. By putting your own spin on table stakes, you can create a more compelling overall product experience.
Another critical aspect of defensively building table stakes is integrating with customers' existing workflows and systems. The more deeply your product is embedded into their daily routines, the harder it is for them to switch to a competitor.
This might involve building native integrations with popular tools in your market, or providing robust APIs and webhooks for custom integrations. The goal is to make your product feel like a natural extension of the tools and processes your customers are already using.
Choosing Table Stakes to Displace
As we've discussed, defensively building table stakes is a critical part of maintaining your product's competitive position and preventing displacement by rivals. However, it's important to approach this process strategically, rather than just randomly grabbing existing table stakes to build.
Identify specific parts of your customers' workflow or technology stack where you can create the most value by displacing incumbent solutions. This requires a deep understanding of how your customers work, what tools they rely on, and where the biggest pain points and inefficiencies lie.
One way to approach this is to look for areas where your product's unique differentiators can be leveraged to provide a better, more integrated experience than the current table stakes. By focusing on these areas, you can create a wedge to gradually expand your footprint and become the go-to solution for that part of the stack.
For example, let's say your product's key differentiator is a powerful, AI-driven analytics engine that provides insights other solutions can't match. You might look for opportunities to displace incumbent BI and reporting tools by providing a more seamless, integrated analytics experience within your product.
By focusing on this specific part of the stack, you can create a compelling value proposition that goes beyond just checking the box on table stakes. Customers will see the benefit of having all their data and insights in one place, rather than having to switch between multiple tools.
Once you've identified the key areas where you want to displace table stakes, it's important to prioritize your efforts based on the potential return on investment (ROI). This means looking at factors like:
How many customers are currently using the incumbent solution?
How much time and effort does it take to switch to your product?
How much additional value can you provide by integrating this functionality into your product?
How much development effort will it take to build out this capability?
By weighing these factors, you can create a roadmap for displacing table stakes that maximizes the impact on your business while minimizing the cost and complexity of development.
Also, keep in mind that displacing table stakes is an ongoing process, not a one-time event. As your product and market evolve, new opportunities will emerge to expand your footprint and provide more value to customers.
Stay focused on the areas where you can create the most value, and to continuously assess and prioritize your efforts based on the changing needs of your customers and the competitive landscape.
One way to stay ahead of the curve is to actively engage with customers and gather feedback on their evolving needs and pain points. This can help you identify new areas where you can displace table stakes and provide a more compelling, integrated solution.
Another approach is to keep a close eye on industry trends and emerging technologies that could disrupt the current table stakes. By staying on top of these developments, you can proactively build out new capabilities that keep you ahead of the competition.
Ultimately, the goal of displacing table stakes is not just to check a box or match what competitors are doing. It's about creating a more seamless, integrated experience that makes your product an indispensable part of your customers' workflow.
By approaching this process strategically, prioritizing based on ROI, and continuously iterating based on customer needs and industry trends, you can build a product that not only meets the table stakes, but sets a new standard for what's possible in your market.
The Cognitive Load of Managing Multiple Point Solutions
As your product matures and you build out more table stakes features, you'll likely find that customers are using your product alongside a growing number of other tools. While this is a good sign that your product is providing value, it can also create friction and cognitive load for customers.
Managing multiple point solutions, each with its own interface and workflow, can be a major pain point for users. They have to constantly switch between tools, remember different login credentials, and keep track of where data lives.
This is where the value of an integrated, end-to-end solution comes into play. By leveraging your differentiator features and building out a comprehensive set of table stakes, you can position your product as the go-to platform for your target market.
The goal is to provide a single, unified experience that meets all of your customers' needs in one place. This not only reduces cognitive load, but also creates a stronger sense of loyalty and stickiness.
For example, imagine you're building a comprehensive HR platform that includes features for recruiting, onboarding, performance management, and payroll. By providing an end-to-end solution, you can eliminate the need for customers to juggle multiple point solutions and create a more seamless experience for employees and HR teams alike.
Leverage your differentiator features as the foundation for a broader platform play. By solving a unique, high-value problem for customers, you earn the right to expand into adjacent areas and become the preferred solution in your market.
Displacing Competitors by Enhancing Table Stakes
As you build out your table stakes features and position your product as an end-to-end solution, you'll naturally start to displace competitors in your market. Customers will see your product as a more comprehensive and compelling alternative to the point solutions they're currently using.
However, simply matching competitors' table stakes features is not enough to truly displace them. You need to continuously innovate and find ways to improve upon the standard features in your market.
This might involve reimagining the user experience, leveraging new technologies like AI or machine learning, or finding creative ways to integrate with other tools and systems.
The goal is to make your table stakes features so compelling that customers can't imagine going back to their old ways of working. By constantly raising the bar and setting new standards for your market, you can expand your footprint within customer organizations and become the default choice.
For example, let's say you're building a customer support platform with a differentiator feature around AI-powered chatbots. As you build out table stakes like ticketing, knowledge base, and reporting, you might invest in features like:
Sentiment analysis to automatically detect and escalate high-priority issues
Intelligent routing to match customers with the best-suited support agent
Proactive support recommendations based on customer behavior and history
By enhancing your table stakes features with unique value-adds like these, you can create a more compelling overall solution that displaces competitors and expands your reach within customer organizations.
The Evolution of Differentiators into Table Stakes
It's important to remember that differentiator features don't stay differentiators forever. As your product and market mature, what was once a unique and compelling feature can quickly become an expected part of the solution.
This is a natural part of the product lifecycle, and it's something that all successful products go through. As your differentiators become more widely adopted and copied by competitors, they slowly transition into table stakes.
For example, when Dropbox first launched, seamless file syncing across devices was a true differentiator. No other solution made it so easy to access your files from anywhere. However, as competitors like Google Drive and OneDrive entered the market, seamless syncing became a table stakes feature that customers expected from any cloud storage solution.
Continuously assess and redefine your differentiators as your market evolves. What new problems can you solve for customers? How can you stay one step ahead of competitors and maintain your position as an innovator?
This might involve doubling down on your existing differentiators and finding ways to extend their value, or it might mean pivoting to new areas entirely. The important thing is to never stop exploring and experimenting with new ways to create unique value for customers.
Some examples of features that have transitioned from differentiators to table stakes over time:
Mobile-responsive design for web applications
In-app chat and messaging for collaboration tools
Automated data backups and disaster recovery for IT solutions
As these features became more commonplace and expected by customers, they shifted from being unique selling points to basic requirements for competing in the market.
Late-Stage Product Strategies
As your product reaches maturity and your market becomes more saturated, it can become increasingly difficult to develop new differentiators in-house. The low-hanging fruit has been picked, and the cost and risk of investing in new, unproven features can be hard to justify.
This is where acquisitions can play a key role in maintaining market leadership and acquiring new differentiators. By buying up smaller, more nimble competitors with unique features and capabilities, you can quickly expand your product's value proposition and stay ahead of the curve.
For example, when Facebook acquired Instagram in 2012, it was a way to quickly gain a foothold in the growing mobile photo-sharing market. Instagram's unique filters and social features were a differentiator that Facebook couldn't easily replicate on its own.
Similarly, when Salesforce acquired Slack in 2021, it was a way to quickly gain a differentiator in the team collaboration space and fend off competitors like Microsoft Teams.
Of course, acquiring new differentiators is only half the battle. The real challenge is integrating those features into your existing product strategy in a way that creates a cohesive and compelling overall solution.
This requires a careful balancing act between preserving the unique value of the acquired features and making them feel like a natural part of your product. It also requires a clear strategic vision for how the acquired capabilities fit into your broader roadmap and growth plans.
Conclusion
The balance between differentiator and table stakes features is a critical one for product managers to navigate. While differentiators are key for driving initial adoption and standing out in a crowded market, table stakes are essential for long-term success and defending against competitors.
Take a strategic and intentional approach to feature prioritization based on your product's maturity and market dynamics. In the early stages, it's critical to focus on solving unique, high-value problems with differentiator features. As you gain traction and competitors start to catch up, it's important to defensively build out table stakes to prevent displacement and create stickiness with customers.
As your product reaches maturity, the focus shifts to enhancing table stakes, displacing competitors, and expanding your footprint within customer organizations. This may require a combination of in-house innovation, strategic acquisitions, and a clear vision for how to integrate new capabilities into your product.
Throughout the product lifecycle, the challenge is to stay ahead of the curve and continuously redefine what it means to be a differentiator in your market. This requires a deep understanding of customer needs, a keen eye for market trends and opportunities, and a willingness to take calculated risks and experiment with new ideas.
Ultimately, the most successful products are those that can strike the right balance between differentiation and table stakes, and adapt their strategy as the market evolves. By taking a customer-centric approach and always looking for new ways to create unique value, product managers can build products that stand the test of time and become true leaders in their space.
Thank you to Pauli Bielewicz, Mary Paschentis, Goutham Budati, Markus Seebauer, Juliet Chuang, and Kendra Ritterhern for making this guide possible.
