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How to Create a Unique Selling Proposition and Stop Selling on Price

By: | Published: July 21, 2010 | Filed under: About small businesses, Small Business Advice

Creating a unique selling proposition, or USP for your business is the most effective way to tap a crowded market without trying to compete on price. Let’s examine what a USP is, how to create one, and an example of how companies can use a USP to compete with a large conglomerate like Walmart.

A USP is what sets your company apart from your competition. It is the driving reason why people should buy from you, regardless of if your price is higher. It should provide a very clear benefit to the consumers that no other competing company is able (or willing) to offer. Always make sure that your USP is simple for the consumer to understand why they should be buying from you. When you do this, you are attempting to negate the consumers belief that they should be purchasing from your competition because they are cheaper.

Competing in your market on the basis of price to consumer isn’t the only way to get their attention to your brand. Just because you are offering a comparable product or service for a lower price, doesn’t necessarily mean you will win their business. Offering things like personalized service, additional value adds etc, can help you win clients over who would be willing to spend a little more to enjoy that level of service.

An excellent example of a company that sells on the basis of price is Walmart. They have the capability to offer the products that they stock cheaper than any other retailer. Other retailers often get frustrated that they can’t compete with Walmart’s prices and try to lower their own prices to draw some attention. Of course, this is a failing strategy. What these retailers could do instead, is develop a USP that demonstrates additional value to the consumer. In this case, where their prices may not be as low, they are making up for it by over delivering services to the consumer. For example, while the pharmacy at Walmart may have the lowest prices on pharmaceuticals, your local mom and pop pharmacy can offer to pick up your prescriptions, drop off your filled order, and give you a much more personalized experience overall that Walmart could ever offer. There is certainly an audience in the market that would be very interested in paying a higher price for more dedicated and personalized service.

There will always be a part of markets that will want to only purchase on the basis of price. The sooner you realize that this is not the entire market, the sooner you can start developing a USP and demonstrating to consumers how you are offering added value that no large competitor would ever be able to offer. Once you have your USP established and in place, it’s time to tell the masses! Do whatever it takes to tell your current and potential clients that you are doing something completely different from everyone else!

3 Comments »
  • Joe

    Its almost impossible to compete on price alone. Its almost always better to figure out what you can provide in addition to an outstanding value, and target the niche that needs that additional service.

  • Baron

    I work automotive, and I am constantly deluged with “best price” scenarios. And it wasn't until after I instituted a value-based presentations in to the mix that we really hit our stride (250% growth over a 15 month span).

    You must, however, be willing to let those people go who are just price specific and are intent on buying a number. I know for certain that 10 percent of people will refuse to come in and see me, just because I will not anchor myself with absolute numbers.

    But I would rather lose that 10% of the opportunity list than the 40-50% of that same list I will lose if I get in to a silly bidding war, letting them run with my numbers up and down the street.

    In sales, it takes a little more talent to close this way but when you can do it the grosses are better, the customer satisfaction indexes are generally better (a salesperson must build rapport to be successful, and can't rely on selling the number), the “show of appointments” ratio is generally higher (they have to come and see you to get what they need) and the closing percentages are generally the same.

    At lease in my business there is a little more to it than that, but the basics are identical.

    This is a nice article for me to show my people, to re-enforce this concept that I have been teaching them.

  • Abeysomone

    Nice blog!!!!!!!!!!!!! i really like it.
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