Start-up business plan essentials: Creating a USP
How to make your start-up stand out from the crowd
Chances are the executive summary, a one- or two-page section of your business plan, is all that will be read before an investor, lender, prospective partner or key employee makes up their mind if your ideas make good business sense. That may sound harsh, but unless the executive summary sounds compelling, your plan will be pushed to get past the mail-room. The same rule applies for the handful of identifying factors that make up the tip of your identity iceberg – the bits the customer sees first. Markets are busy places and you have to have a distinctive proposition to stand out from the crowd.
What is a USP?
The term USP has several related meanings including ‘uniquely serious problem' and ‘unique selling proposition'. There are also a couple of variants such as ‘unique competitive position' (UCP) and ‘unique positioning proposition' (UPP). They are all ways to describe what makes your business stand out from the crowd. Though the term is synonymous with the idea of a slogan or strapline that captures the value of the product in the mind of the user, it doesn't necessarily have to be so. Its purpose is to position your product against competitors in a manner that is hard to emulate or dislodge.
How to create an effective USP
When Tim Waterstone started his bookshop chain in the UK the competition sold books in rows stacked on shelves, spine out in alphabetical order, sectioned off by subject. Bookshops operated a leisurely 9-5 existence, Monday to Friday and mornings only on Saturdays, staffed by assistants with no real understanding of books. Waterstone's business USP addressed several major problems for his customers:
- Firstly, book buyers are usually in a job; were they not they would use a library; so not being open on evenings or weekends effectively constrained customers to a quick visit, sacrificing part, if not their entire, lunch break.
- Secondly, he considered the way that people browse for books. Research shows that nearly two-thirds of book purchases are unplanned in the sense that the customer either had no firm idea of what they were looking for, or they simply stumbled across an appealing title while in the shop. With this in mind, books had to be distributed around the shop to maximise the opportunities for customers to stumble across an interesting title. While the spine out bookshelf layout was highly economic in terms of floor space and stockholding, it was both unappealing and a further factor limiting sales prospects.
- And lastly, Waterstone staffed his bookshops with people who could offer advice and information on authors and their books. The Waterstone USP was its operating model.
Some companies have developed a catchy phrase or strapline that stakes out their unique position in the corporate landscape. ‘Vorsprung Durch Technik' (progress through technology) for Audi is an example of this approach. Another strategy is to set out to own the word that sums up the essence of your USP and turn it into an adjective. Hoover for vacuum cleaners and FedEx for overnight delivery are examples of this approach. You need to find a USP that works for you and your business.
Key components of a USP
There are three ingredients of a successful USP:
- Unique: although you may doubt it at first, customers care less about your product or service being either the best or the cheapest. Neither of those attributes is as easy as it seems to measure or recognise. It's the two or three biggest benefits of owning your product or doing business with you that is where your uniqueness must lie. You must show why those benefits are important to your customer, and how you will deliver. FedEx used ‘When it Absolutely, Positively has to be there overnight', as their unique benefit for two decades, only comparatively recently changing that to ‘The World On Time'.
- Selling: this involves getting people to part with their cash. John Lewis, for example, has ‘never knowingly undersold' as its powerful message to consumers that they can safely set price considerations to one side when they come to making their choice, and just get right on and buy.
- Proposition: to be compelling you need to show you are solving a problem or pain point for your customer. Domino's Pizza decided for their customers the pain point was waiting so they adopted ‘Pizza delivered in 30 minutes or it's free' as their proposition. In 2009, they backed this up with an online ‘Domino's tracker', keeping customers informed of their order status to the point of despatch.
Whatever your business proposition, it's likely that you'll be facing some competitors so it's integral that you establish your business' place in the market and you can't do that without a good USP.