Why Would Anyone Buy From You?
To be successful, your business needs to stand out from the competition. What makes a business stand out from its competitors is a reason for customers to choose that business instead of the competitors. In business, this reason is called a business’s unique selling point, or USP for short. Your USP is your final answer to the question: ‘Why would anyone buy from you?’
When your business has a unique selling point (USP) that appeals to customers, your customers have a reason to choose you over the competition. Businesses which do not have a clear and strong USP often have to resort to competing on price – in other words, they make price their USP. It is best to avoid competing on price because it usually means a lower profit margin. This makes a business less feasible because it gives you less room for error.
There are many things which could contribute to a business’s USP. However, make sure yours is based on something the customer values. For example, your USP could be based on:
- Being first to the market
- Being more reliable than competitors
- Having products sold exclusively
- Having the highest quality
- Being the most economical
- Being the healthiest
- Having skilled or knowledgeable staff
- Ease of use
- Being locally made
- Selling organic products
- Being made from sustainable materials
- Being the most convenient
- Being environmentally friendly
- Level of service
- Being able to respond the quickest
Factor to Consider
Note that as your business succeeds, your USP may change. Having an established product or service in the market can be a unique selling point, because people tend to trust things that have been around for a while. For example, when Coca-Cola was first introduced, it had to compete on factors such as its unique taste. While its taste still matters, Coca-Cola is now the most recognisable soft drink on the market – its familiarity and reliability are now part of its USP.
Your Strengths vs. those of a Direct Competitor
To work out your USP, you need to look at the competition. You cannot assume you have a point of difference (a USP) without actually seeing what other businesses in your industry are doing. Even if you think your product or service is so new and different that you essentially have no competitors, this is extremely unlikely to be true.
For example, if you have created a new type of food which no one else sells, this does not mean you have no competition. Food is required to satisfy a basic need: hunger. People do not have to buy your food to satisfy this need – there are plenty of other options available for people to satisfy their hunger!
By looking at the competition, you will get a broader view of how customers choose businesses in your industry. For example, if you are opening a restaurant, you will want to look at all the restaurants in your town. You will see that there are differences between them, some of which are more noticeable than others. For example, some restaurants will be aimed at family groups, while others will be mainly aimed at adults. Some of the restaurants will have a casual style of dining and others will offer more formal dining. This is deliberate: each restaurant is trying to attract customers by appealing to a specific subset of customers.
Your business may have many competitors, but some of them will be more important than others. A direct competitor is a business that is in the same industry as you and which offers a comparable product or service to yours to the same target market – in other words, they are the businesses that are most like your own. In the restaurant example, two restaurants that offered casual, adult dining would likely be direct competitors.
Your direct competitors will be your closest competitors when you launch your business. They are the ones you really need to watch. Bear in mind that your ‘closest’ competitor is not necessarily located in your area – it could be an online business, perhaps one based overseas! Regardless of where they are, you’ll need to know:
- what they offer and how much they charge,
- what they do well and what not so well,
- if they have a unique selling point and, if so, what this is, and
- what you expect will be your strengths in relation to them. These are things that will give your business an advantage over them.
Some examples of strengths you might have relative to a direct competitor are:
- Intellectual property
- You and your experience
- Technical knowledge
- New products and / or services
- Supplier relationships
- Unique brand
- Māori uniqueness
After examining your closest competitors, see if there are any ‘gaps’ you can take advantage of. In other words, is there anything they do not do that you believe you can do well? If so, this could be your USP.
Factor to Consider
Your business may have indirect competitors as well. These are either:
- businesses in your industry which offer different products or services from you, but satisfy the same need, or
- businesses which offer the same types of products or services as you, but target a different part of the market.
Steps to Identify a USP
- Write down what you know about your target customers. Good starting points are what they do, what motivates them, and why they buy.
- Write down what you could offer that your target customers need — these are potential USPs.
- Remove USPs your competitors are already doing well — you need to be unique.
- Match potential USPs to things you believe your business will be able to do well.
- Interview 10 to 12 members of your target market about which of the potential USPs best meets their needs.
- Ask yourself if the USP is unique, clear, fills a gap in the market, and is something you can deliver.
Having a USP is an important part of judging feasibility. It is best not to go ahead with a business idea until you are sure your product, service, or business model adds value that customers cannot find elsewhere.