Your features list should consist of all the aspects of your offering that are differentiating. That is, features that truly set your product apart from that competitive alternative AND that customers care about. This should be a small sub-set of the master feature list.
It is best to think broadly about features and not overlook possible sources of value from associated aspects of your offering, such as training, customer support, packaging, delivery, financing, etc. In general, keep features separate, rather than combining them. Then you can narrow down this list to those that differentiate your offering from your competitor.
Functional benefits are the actions or results experienced by the customer from using your offering. Simply put, functional benefits describe what a feature of your offering does for this customer.
Identifying true functional benefits requires a deep understanding of how your customer uses your offering. Read out each feature and ask your team, “so what?” and “how does this benefit the customer?” and “does this really make a difference?” and always “why?” Especially if your team has never had a deep discussion about this before, it is definitely worth the time.
Done well, these discussions can be energizing, illuminating, and at times a bit loud. But stirring this pot is always a worthwhile exercise. Previous “voice of the customer” surveys, market research, and first-hand experiences working with customers are all are very useful inputs for this exercise.
Note that while adding benefits from a features list, you may find that some features may not provide any tangible benefits to a particular customer, while others may provide multiple benefits.