Teamleader Blog Article

What is a USP and why is it crucial for your SME?

Cedric Auman Cedric Auman on 23-Apr-2019 13:47:00 in Sales & Marketing

What is a USP and why is it crucial for your SME?

Every business and every brand needs a USP, or  Unique Selling Proposition. Even SMEs, if your aim is to compete with every competitor, regardless of size. What exactly does such a USP entail? How do you define one? And how do you promote it?

USPs are not just a concern to larger multinationals. As an SME, you too need to think carefully about how you position yourself in the market. And about what your USP is, because it communicates exactly why someone would choose you and not your competitor. It is your ultimate selling point, that which allows you, as a smaller company, to distinguish yourself from large market players, and ensures that you are able to compete with them.

what is USPWhat exactly is a USP?

A USP or Unique Selling Proposition is a quality of your product, service, brand or company in which it differs from (and is better than) your competitors. You constantly convey the core message of the USP in your communication, preferably also in the slogan of your company. This way, your selling proposition is always highlighted and clear to your customer.

The notion of a USP was conceived by Rosser Reeves, pioneer in the field of television advertising and active at one of the world's largest advertising agencies, Ted Bates & Company. Even now, a USP has to meet his three fundamental rules:

  1. You must make a clear proposal: ‘If you buy X, you will enjoy this benefit.’
  2. The advantage is ideally unique, not shared by your competitors.
  3. And it is saleable: many people must be eager to enjoy the advantage.

For Reeves, the USP was the key element of an advertising campaign. It had to specify the reason why your product or service was worth buying, while remaining honest. Don't advertise an offer that doesn't do what you promise it will do, and don’t make claims about properties that are not really unique. If you do, this will only make you lose customers in the long run, while jeopardising your reputation in the process.

In his time, Reeves helped build many brands around the world. His ads, though, were mainly based on logic and arguments, not on creativity, and therefore received quite a bit of criticism. From the sixties onward, his down-to-earth advertising was increasingly drowned out by the creative revolution sweeping over the advertising world. But Reeves' principles of the USP remained intact, even today.

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Some of the best USP examples

When it absolutely, positively has to be there overnight (FedEx)

Excellent former USP of courier service FedEx

In 1979, courier service FedEx launched its ‘Overnight’ campaign, claiming it would deliver parcels safely and timely (the very next day). This campaign helped FedEx blow industry giant Emery out of the water, establishing FedEx as the new industry leader. Why? Because FedEx managed to address one of the pain points of its audience (coping with an increasingly fast-paced world), rather than focusing on price alone – which was what Emery was doing. Up until today, FedEx’s ‘Overnight’ campaign still stands as one of the most memorable of all time.

Delivered within '30 minutes, or free' (Domino's Pizza)

The very famous USP of Domino's Pizza

Another world famous USP, this time from pizza maker Domino's Pizza. The reason why this asset is so strong: it is a perfectly clear guarantee. The terms of the deal are not to be misunderstood: too late? No need to pay! Today the company no longer makes this promise globally, certainly not in the US anymore, but it still does in India, for example.

We're number two. We try harder (Avis)

Masterful marketing from Avis

This is one of our personal favourites. Defying all rules ('choose something unique, something better'), car rental company Avis turned a negative quality (they are the runner-up in the sector, after number one Hertz) into an advantage. The result: in just four years' time, Avis' market share increased from 11 to 35%.

How do you consolidate your USP?

Sure, the examples we just quoted are all conjured up by globally active companies (or, more correctly, by their clever marketing boys and girls), but you don't need to be a megalomaniac to be a genius: you too can think of such a USP. Here’s how.

Step 1: answer some basic questions

Start by answering some fundamental questions that require you to think about the essence of your activity. Which services and products do you sell? If you open a restaurant, your offer consists of a meal, or, better yet , a culinary experience. What is your main goal with respect to your customers? In our example, your mission is  to let them enjoy exquisitely prepared food.

Step 2: define and match needs and unique assets

The following questions you need to ask are: whom do you want to sell to? What are their needs, what 'problems' do they experience, that can be solved by your product or service? And how exactly does your offer do that? Sum up the characteristics in which your solution differs from and excels your competitors.

Properly identifying the needs of your target audience and your solution is not easy. Put yourself in the position of your customers, and sum up what they need. Next, look critically at your offer: which characteristics really respond to those needs, distinguish you from the competition and are sufficiently important for your target group? These strengths are what we call your ‘points of difference’ in marketing. The best of these form the basis of your USP.

In your restaurant, for example, you consider it crucial that you work with organic products. But your company is located in a business district, so you have a lot of business people dropping by for lunch. Their problem is a lack of time. Not only do they want to eat delicious and healthy food, they also want to be served swiftly. If you do serve your meals fast, and the competitors in your area are noticeably slower, you have found your USP.

How do you know the needs of your target group and the unique advantages of your offer? If you already have a lot of customers, simply ask them. If you’ve only just started, have a peek at your competitors. Study what they sell and how they sell it. Don’t analyse the characteristics of their offer; instead, look at how they describe it. Figure out which USP they promote, and then choose a different one: your aim should be to innovate, not imitate.

Step 3: formulate your unique selling proposition

Have you found your unique, distinctive asset? Write it out in a fixed sentence, a promise you make to your customers. Concise, clear, and not to be misunderstood. Just like the examples above. Or 'Melts in your mouth, not in your hand', the famous USP of M&M's, conceived by Reeves himself. Start from a paragraph, and simmer it down to the essence, one sentence.

Writing a USP demands a lot of refinement. It’s wise to have it evaluated by others in your company, or even by a customer focus group, to measure the impact. This may require a lot of effort, but once your USP is perfect, it is a fundamental marketing tool that will guarantee more sales for years to come.

USP how to chooseBetter still: formulate your unique buying reason

As we said earlier, the characteristic of your product or service that you focus on in your USP must not only be unique, but also relevant enough for your potential customer. This principle is often forgotten... Many entrepreneurs put unique features of their offer in the spotlight without questioning whether the customer considers it sufficiently important.

Are you also inclined to think about your offer this way? Consider formulating a UBR rather than a USP: a Unique Buying Reason. First, sum up all the unique characteristics of your offer as well as all the reasons why your target group would opt for them. Next, pick out the characteristic that is most relevant to a customer and translate it into an advantage for him or her: this is the unique reason why they would choose you.

When Apple launched the iPod, for example, the company did not communicate about the number of gigabytes you had at your disposal, but about the number of songs you could store on your iPod, namely one thousand.

Apple launched the iPod with a perfect UBR: with the device, you carried a thousand songs in your pocket.

The foundation for successful sales

Once you have determined your USP or UBR, it must form the common thread throughout your marketing strategy and business operations. Regardless of whether you’re developing a website, designing a logo or launching an online marketing campaign: your communication must always clearly state a USP. Know that you can also bring it up as a selling point during a sales conversation, to refute counter-arguments. If your USP entails speedy delivery and you are indeed the fastest, then you don’t necessarily need to be the cheapest in the market, too.

Always turn your words into deeds. Reeves already warned that communicating excessively about a USP that you don’t hold true will lead to customer loss. So communicate your USP to all your employees, train them frequently until they are aware of it, and put the USP into practice every day.

If done correctly, the labour you invested in the formulation of your USP will yield results. Your company will discern itself, and the potential customers will clearly and quickly understand what you have to offer and why they should choose you and not someone else. As a result, you’ll be able to convince them more easily, ultimately boosting sales in a sustainable way.

The importance of customer experience

At this point, perhaps you’re thinking superior customer service could be your key to success. Well, yes and no. The customer experience should be your primary concern no matter your USP. A study by Walker predicts the customer experience will be the leading brand differentiator when it comes to a buying decision by 2020, leaving behind criteria such as price and even product.

CRM technology can be a powerful weapon in that area. To summarise, using CRM software can help you:

  1. Beat your competitors
  2. Sell more and better
  3. Improve customer relationships
  4. Save time and money
  5. Improve business processes

How this works? Download your free CRM guide and find out!

Frequently Asked Questions on USPs

Why is a USP important?

Your USP explains exactly why your product or service is superior to that of your competitors.

A well-defined USP can help your business thrive in several ways:

  1. Differentiate yourself from competitors
  2. Increase customer loyalty
  3. Make it easier to sell your product or service
  4. Increase your revenue

How can I make my business stand out from the crowd?

Smaller businesses sometimes make the mistake of not being distinctive enough in their offering. Yet in a world where customers are spoilt with choice, you’ll need a unique edge to connect with them instantly, if you’re aiming to be successful in the long run. Some examples:

  1. Provide superior customer service
  2. Offer a lower price
  3. Deliver higher quality
  4. Offer faster shipping
  5. Cater to a narrow niche
  6. Be positively surprising
  7. Be green or socially active

Note: the aspect of price is rarely the only reason why people will buy a product.

How do I choose my USP?

Still unsure how to start after going through the step-by-step guide above?

Consider this: your primary concern is to uncover the real reasons customers buy - or should buy - your product instead of a competitor’s. What do you bring to the table that others don’t? Some questions you should ask yourself at this stage:

  1. What do I stand for? What is my purpose, my why?
  2. Who is my ideal customer?
  3. Who are my competitors?
  4. What sets us apart? Why do customers choose us?

In truth, choosing the right USP is never easy. If you’re just getting started, chances are you’re thinking of a couple benefits you offer instead of just one. Here’s how you can uncover your USP and use it to set up your business for success:

  1. Think about your customers first: who are they, what do they care about most?
  2. Understand what motivates their behaviour and buying decisions
  3. Assess what your competitors are already doing

If you don’t have many customers yet, you could assess your competition too: many retailers drop into other stores to see what and how they’re selling. You could go as far as asking their customers what they like or dislike about their products and services.

Last but not least: keep in mind you’re not trying to appeal to everyone. When you decide on your USP, it may seem as if you’ll be leaving out some potential customers by being too specific. But the goal is to connect more strongly with some people, and to do that, you’ll need to disconnect with others.

What is a UVP?

A UVP or Unique Value Proposition is practically synonymous to USP. A UVP describes the benefit of your offer that distinguishes it from the competition. The focus of your UVP should be on the needs of your customers: how will your product or service solve their problems? (Keep in mind that price alone is rarely the reason people buy what you sell!)

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