Why a USP is essential for your small business (and how to test yours)

Why a USP is essential for your small business (and how to test yours)
Janet Doran
Janet Doran
Business coach & Mentor
The Positive Pen

Posted: Thu 1st Apr 2021

USP stands for unique selling proposition. This refers to the unique benefit delivered in what you do (your product/service) and how you do it, which enables you to stand out from others. The USP should be valuable to customers and seen as better than your competition.
This diagram highlights three areas of competition:

The battle zone: This is where the customer doesn't see any difference between your offer and your competitors'. In this zone you are in direct competition with others; this can lead to competing on price, discounts, special offers and constant promotion. Winning customers is tough here; profits and customer loyalty are low in this zone.

The losing zone: This is where customers see your competitors' offerings as better than yours. You can't win in this zone. If these customers don't appreciate the value of what you offer, you are only wasting time. Attempting to 'match' your competitors simply shifts you into the battle zone.

The winning zone: In this zone, customers recognise that you meet their needs betters than others. They value your offer; therefore price becomes less important, loyalty increases, and customers act as supporters, even cheerleaders, recommending you to others. This is where you have a unique selling proposition.

It's worth noting at this point that the broader the description of your target customer, the more difficult it becomes to create a USP that meets their needs.

USP is also sometimes termed a unique selling point; however, I avoid using this term for small businesses as your USP is highly unlikely to be one single 'silver bullet'.

What are the benefits of having a USP?

The benefits are clear: meeting customers' needs in a way that your competitors don't is a sure-fire way to win new customers and keep them loyal to your business.

Your customers will be less focussed on price as they see the value of your offer in meeting their needs.

They are also more likely to become advocates for your business, sharing their experiences and referring you to others.

How to create your USP?

Creating your unique selling proposition, your competitive advantage, is one of the fundamental parts of creating your business plan, summed up perfectly here in this quote from Alan Lafley, author of Playing to Win:

Spend time honing your offer; what products/services you will provide, how you will deliver it and who really values what you do.

A useful test of whether your offer is distinct is being able to identify the things you will say no to - which products you won't offer and the type of customers who aren't a good fit for your business.

How to test your USP against your competitors?

So, you've cracked it! Now you have a USP that will have customers knocking on your door.

But how do you know if what you think is your USP really offers any advantage over your competitors? Below are four simple tests to see what you really have.

Before you go any further, write down the elements of your USP

OK, ready?

Now consider each of these four questions:

YES to Q1 = competitive parity

If you deliver something that customers value - but your competitors do too - this competitive parity puts you firmly in the battle zone. These are often yesterday's USPs e.g. next day delivery - once an advantage, now often a standard requirement. If the phone has stopped ringing this could be why.

YES to Q1 and Q2 = temporary competitive advantage

OK, so you provide something of value that your competitors don't. This could be a new product or service, skilled members of staff or even your business location - great, you are in the winning zone, but this may not last. If it's valuable to customers, you can be certain that your competitors will be working hard to match you. Don't rest on your laurels, stay close to your customers.

YES to Q1, Q2 and Q3 = unused competitive advantage

Congratulations! You are providing value that your competitors don't offer and, more importantly, would find difficult to offer.

The reality is this is unlikely to be one distinct part of what you do as these can be easily copied; it's a combination of activities, skills, values and people that is really the key to standing apart.

Collaborations with other suppliers, integrating your products or services into the customer's business, or shared values around social and environmental impact.

If you got this far and answered NO to the final question, you are failing to really capitalise on your advantage.

Sustaining your advantage is about recognising what really makes that 'secret sauce' and then ensuring that you organise your business systems to support and enhance this.

So, what was the outcome for your USP?

Benchmarking your business against your competitors will, at best, allow you to achieve competitive parity - clearly defining your target customer, staying close to them to really understand their needs, and continuing to monitor developments in the market is the way to staying the winning zone.

It's not simply a case of finding your USP but creating a business that delivers something different.

It's not easy but that's why it's so valuable when you get it right.

_If you want to work on your USP, the competitive advantage of your business, please book a discovery call to find out how I can help.


Janet Doran
Janet Doran
Business coach & Mentor
The Positive Pen
Do you want clarity & direction to grow your unique business but are unsure where to start or how to plan? Are you struggling to attract customers? forced to compete on price? Would you and your business benefit from: Fresh eyes- A different perspective, fresh ideas and ways to work? Firm Hand - Keeping you focussed on priorities and providing accountability? Challenge - To keep you looking 'up & out' at customer needs & opportunities? Someone to share your business journey - to motivate, support and take away that 'lonely at the top' feeling? As a Business Coach, I help Solopreneurs & small business owners to create a successful business in even the most competitive markets. My mission is to unlock the business leader in each small business owner. Through coaching & workshops to build your knowledge, skills and confidence to think strategically, seek opportunities, overcome challenges and make great decisions. Leading yourself and your team to achieve your goals. If that sounds like something you need, please get in touch to arrange a discovery call. 

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