While mentoring startups through the early business concept development stage, I have found that many entrepreneurs have a hard time articulating their business target market concept in terms of a unique selling proposition (USP). A USP is a statement of what makes your business standout from the competition. It might speak to a key UNIQUE quality, feature, price, service, etc. The USP requires a critical understanding of your brand positioning and differentiates what your company offers through what you stand for and how this benefits your customers.
To develop this, I suggest you use SWOT analysis to view your business core values from the industry rivalry and buyer’s prospective. In other words, figure out where your product/service stands relative to the market and focus your sales efforts on communicating your core value proposition in terms used by your buyers/customers. For instance, are you a low-price, high-volume commodity or a premium luxury brand? You better define how you are unique (USP) or more valuable than the competition because if you don’t do this well, your target market will not see you as a solution to their pain-point.
Here are a few guiding thoughts that might provide a simple business value proposition (VP) model framework method to start the critical thinking process about your USP. Understanding the simple value proposition (VP) of your business model will also help you make more complicated decisions regarding your business strategy.
OK, what is the difference between a USP and a VP? Your Value Proposition (VP) is a fundamental business model decision that serves as the core strategy a company chooses to separate themselves from the competition. It’s what your business does better than anyone else. The VP is always intimately connected to all business activities. It focuses internally on operations. The ideal value proposition is a mix of a company’s strengths, customer needs and competitive differentiation. It combines the uniqueness of the brand with the top priorities of its customers. Your value proposition should meet three elements:
- It’s specific. What are the specific benefits your customer will receive?
- It’s pain-focused. How will your product or service fix the customer’s problem or improve their life?
- It’s exclusive. How is it both desirable and exclusive? How well does it highlight your competitive advantage and set you apart from competitors?
How does a brand or company know when it’s time for a new value proposition? Ask if the existing value proposition:
- Attract new customers to the brand?
- Match the current brand promise?
- Allow the majority of customers to access its benefits?
- Align with the changing competitive landscape?
- Produce desired results?
If the answer is “no” to two or more of the above questions, it’s probably time to consider creating a new or updated value proposition. After all, a strong value proposition can be the difference between stagnation and growth for your business.
The Unique Selling Proposition (USP) is the element of strategy that looks outward at customers and is what sets you, your business and your product or service apart from your competition. Your USP can be an actual fact, or a perceived difference or specialty. The most useful definition of unique selling propositions (USP) is a believable collection of the most persuasive reasons people should notice you and take the action you’re seeking. So basically, USP is a part of Value proposition. When you want to provide value to your customers, you need to have a unique selling point. The point of a USP is to focus on the niche or the need in the marketplace and deliver a promise you can make.
The biggest difference between these two principles is that the Value Proposition (VP) is deeply ingrained within the company core operations, while the Unique Selling Proposition (USP) is more fluid and flexible to meet and focus on a current target market. Another key difference between the USP and VP is that a company can only have one Value Proposition, and to be successful, they need to go all-in on this one. Alternatively, a company can have literally dozens of Unique Selling Propositions, especially if they are selling to different customer personas and are offering multiple products and services. Since decisions and activities should align with your core value proposition, you should first define it. So, before trying to explain what your business is or how it works, you might start by considering what core value your business is based upon.
In general, many businesses employ one of the several types of core value propositions that serve as a basis for their USP: make it better, faster, or easier; make it cheaper; make your customers money; etc. For example, Southwest Airlines made flying cheaper. Quicken, made writing checks and balancing your check book faster and easier. Amazon and Ebay help customers make money by providing a platform that enables them to sell their goods for a profit. Walmart makes business decisions through out its entire organization by choosing strategies and activities that help consumers save money. That is their guiding principle as a business and the reason why they are the dominant leader in low-cost retailing.
Goldman Sachs, a longtime leader in investment banking and wealth management, has excelled at making their corporate and individual clients huge amounts of money. Likewise, Vanguard has been exclusively focused on being the low-cost provider in the mutual fund industry…quite the opposite of what Goldman Sachs is focused on, but their strategy of providing the lowest-cost investment vehicles to their clients has allowed Vanguard to emerge as the dominant leader in the index and low-cost mutual fund industry.
Lastly, Jiffy Lube is exclusively focused on making oil changes faster. They do not provide alternative services that most full-service mechanics do because if they did, it would slow down their turn around time on oil changes. Like Goldman Sachs and Vanguard, Jiffy Lube has obtained a dominant position in its industry by focusing on activities exclusive to their core value proposition.
In all the above examples, the value proposition (VP) is, relative to competing brands, how the company chooses to separate themselves from the competition. Think: McDonalds vs Five Guys…both serve hamburgers, both are competing for hungry customers who eat in a quick serve restaurant format. McDonalds delivers on a “Make It Faster” value proposition to their customers. Every store is the same, food is acceptable and customers expect and can trust everything is done in the exact same format. Five Guys, on the other hand, provides a “Make It Better” position. Food is as good as an expensive sit down restaurant and prices are far more expensive. Both strive to just meet the core expectations for the remaining value propositions mentioned above. But now, let’s go a layer deeper and develop the unique selling proposition. The market segments are different and require different Unique Selling Propositions.
Unlike your one company value proposition, your business can have many unique selling propositions. This is because the point of a USP is to focus on the niche or the need in the marketplace and deliver a promise you can make. For instance, your business might be selling to many market places such as a moving company that moves you across county or across town or across the street. These are three different market segments and the advertisements will be shown in multiple locations, such as LinkedIn, real estate networks, local HR departments, older community centers and even HOA’s. Therefore, each market segment will require different USP and content. The unique selling proposition (USP) is what sets you and your product or service apart from your competition and clearly tells your customer the benefits. Every business must have at least one USP. Some businesses have many. The companies that have the most success know their market place and the competition very well.
Here are some simple characteristics and action steps that you can take to develop your own USP. These suggestions are guidelines and may help you critically think about your USP:
- The USP should be a shore one sentence – usually less than 15 words;
- It needs to be easily remembered by your customers;
- Your USP should be emotional. Action on behalf of your marketplace is ultimately inspired by the removal of pain or the gain of pleasure;
- Use your USP in your marketing and advertising campaigns;
- Your USP should fulfill a void in the marketplace – with a promise that you can and will deliver;
- Does your USP define your position in the niche market of your choice and is the marketplace willing to pay you for it?
- As your product line expands, as your customer’s needs change, and as your marketplace changes, your USP will change.
Among all the decisions you need to make as an entrepreneur, perhaps the most powerful decision is to clearly identify what is your core value proposition and use it to define your USP and other business decisions. This framework will help clarify the strategies that you employ and hopefully prevent you from pursuing activities that will distract from delivering your core value and unique selling proposition.
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