All businesses face competition. And many of the business owners that I work with have to deal with multiple competitors on the market. How do you determine your USP (Unique Selling Proposition) when you have many competitors?
Some businesses – especially those in retail – can find themselves in a market where there are so many competitors that it seems like the only way to make your business stand out is by offering the lowest prices.
I say “It seems like the only way” because even for these businesses, there are ways to set yourself apart from your competitors.
Let’s start by taking a look at what happens if you compete on lowest price.
Lowest price competition is not a sustainable business strategy
At least, not for most small or medium-sized businesses.
If you are Amazon or Alibaba, or you have huge financial reserves, then, yes, by all means, try this strategy. Once you have won the market, you can start increasing prices again.
But this is not usually the situation that the businesses I work with find themselves in. Rather, they are likely to find themselves dealing with the following situation.
A customer is looking for a product to buy. There are dozens of businesses on the market offering the same or similar products. You are one of these businesses. You use the same or similar marketing strategies as other businesses – “We offer the lowest price!”
Maybe you add a few things, like telling customers that you offer good service or that your products are high quality. But when you look closely, you will see no real difference between what your business is doing and saying and between what your competitors are doing and saying.
What then happens is that you start attracting more and more customers who are only interested in getting the lowest price. Moreover, these customers often end up causing problems and giving you headaches.
Since they are looking for the lowest price, they are focused on getting as much as possible from you at minimum cost. They are trying to maximise their benefit at your expense.
This means that you end up with people who – even though you are offering low prices – start to haggle and negotiate with you, trying to get you to reduce the price even further.
And what do you do?
You know very well that if you do not agree, your customer may go to your competitor. And who knows? Maybe your competitor will be able to reduce their price.
They win your customer. You lose.
Word spreads. More customers start going to your competitor.
He is doing well. You lose more business.
Since you do not want this to happen, what do you do? You either reduce your prices, trying to attract more people. Or, you increase your marketing, making sure that more people know that you are the cheapest business on the market.
But your competitor is not sitting around being idle. He – or she – will also take action to make sure that customers keep coming.
Before long, you and your competitor end up fighting each other in a negative spiral of reducing prices and giving discounts.
The end of the story?
Both of you lose. The customer wins.
What can we learn from this?
The customer wins because they end up paying less. (Or, the customer may yet decide to abandon both of you and go to another seller.)
This is because if there is nothing that makes your business stand out from other businesses, price will be the only thing that people look at.
If you are attracting customers who are only making decisions based on price, you are slowly working to kill your business.
You will even find that instead of finding ways to attract higher-paying customers, your business will end up attracting more and more people at the lower end of the market.
So, what can you do instead?
You look for ways to stand out and get noticed.
How to determine your USP when you have many competitors
A USP is a combination of factors that sets you apart from other people who are doing the same thing that you are doing.
If you want your business to prosper and grow, you need something that shows that you are different.
This will not be one big thing.
Usually, it is a combination of small things. It is this combination that makes you stand out and become interesting to the type of customers that you want to attract.
Step 1: Find possible areas where you can distinguish yourself
Start by putting together a list of categories where you might be able to distinguish yourself. This could be:
- the kind of customers you serve
- your skills and educational background
- the products and/or services that you offer
- your approach to doing business
- how you present your business
Step 2: How do you compare to your competitors?
After that, check out your competitors. How do they present themselves in each of these categories?
Next, take a moment to think about what makes you and your product or service different from others and/or better than what competitors are offering.
Don’t spend too much time thinking about this.
If you cannot think of something for one category, move on to the next one. For now, what is important is getting an idea of your USP. (You can always add something later on.)
Step 3: Collect information that will build your brand and credibility
This is about finding those experiences and stories from your life and business history that you can use in your business.
If you are a photographer, this could include projects that you have worked on, photography courses that you took, or how you have been interested in photography since you were a child because you wanted to create lasting memories that people could look at.
This is just an example. You will have your own stories and experiences.
Note: the important thing is to choose stories and experiences that can be linked to your business.
Step 4: Ask your customers what your USP is
This is always a great exercise.
Ask your customers why they keep buying from you. What makes them keep coming back to your business? What are the things that they appreciate about your business? What do they like about doing business with you or your employees?
Hint: make sure to ask your most profitable customers!
Pay close attention to what they tell you. Certain things will keep coming back in their answers.
Those are key building blocks that you can use in your USP. And also in your marketing!
Putting this into practice
Let me use myself as an example. When I go through all of the above steps, I end up with a list that looks like this:
- I am passionate about the power of entrepreneurship to make this world a better place by increasing wealth, creating jobs, and reducing inequality. If you look at my work experience and at my NGO, you will see that helping businesses grow has always been at the centre of what I do.
- I have Dutch and Liberian parents and grew up in Liberia. To this day, I am firmly rooted in both cultures, both countries, and both continents.
- I have Master’s degrees in Business Administration and Business Economics and a large European network of funders and investors. I have used this knowledge and this network to grow my business and my NGO.
- I am the founder of an award-winning NGO in Liberia – Mineke Foundation – that also runs social enterprises. I have been doing this since 2009 so I know what it takes to build both a successful NGO and successful small businesses in a developing country.
- Since 2014, I have built up a consulting practice that provides services to clients in Europe and the US. I have tested various ways to get more customers, increase my profit, and grow my business. I know what works well and what doesn’t work well.
- I have worked with small and medium-sized companies in both Europe and Africa to help them grow their business and/or get funding. This means that I have first-hand experience of the challenges that many SMEs face when trying to get funding from a bank or investor.
- My customers tell me that they appreciate that I deliver high-quality results, I always go the extra mile to help them, I surprise them by finding creative solutions to problems, and I am a great person to work with.
There are very few people in this world who will have this exact same combination of defining factors – possibly only one person: me!
This combination of factors is what makes me different. It is what makes my business unique. And it is what helps me to attract a certain kind of customer through my marketing.
The same applies to you.
If you take the time to find out what makes you different and better and you use that message in all aspects of your business, you will attract customers that are happy to pay you a good price for what it is that you are offering.
Minus all the drama and headaches.
What business owner would say no to that?