The Real (Obvious) Reason Businesses Fail
We have all heard the often bandied and dire statistics about the percentage of businesses that fail. While there are a number of reasons for this, perhaps the most common is also the most self evident- lack of sales.
The deeper question is why do so many businesses fail to achieve sales or scale sustainably. In working through my own failures and later triumphs as well as my work in helping small businesses to Fortune 500 clients, I have witnessed a frequent mistake which invariably leads to poor sales performance- lack of a clear and compelling unique selling proposition (USP).
Developing an effective USP is requisite to growing your business. In short, your USP is the reason a customer should choose your business over a competitor’s.
Crafting such a USP requires a deep empathy for your customers. To find this, you must ask yourself, what are your customer’s deepest needs, desires, their most challenging pain points? Such a survey will reveal critical insights and provide a framework for developing a more resonant USP.
Many business owners may find themselves too focused on their own beliefs about their products or services. It is important not to impose such presumptions on your customers. It is vital to be customer-centric, wholly immersed in the hearts and minds of your customers.
The free market system works optimally through altruism, the idea that you must create value to succeed. You must work hard to create that value and you also must be just as diligent in communicating that value. Crafting an effective USP can take time and you may be required to test different messages to ascertain what works best.
But when you find it, it can make all of the difference. As an impassioned student/ consumer of all things Dan Kennedy, I often share the story of one of Dan Kennedy’s most successful students, Craig Proctor. Craig used the power of an effective USP to vault his real estate career. Craig tells his story in the book, “No B.S. Direct Marketing,” by Dan Kennedy:
Dan introduced me to the concept of unique selling proposition (USP), challenging me to answer for my real estate business the most important question on every prospect’s mind, i.e., “Why should I do business with you versus all other options, including doing nothing at all?” This made total sense to me and I jumped all over it. I started to test different USP messages and quickly came up with a winner, which I aggressively used: “Your Home Sold in 120 Days or I’ll Buy It.” This very effectively positioned me as “the guy who’ll buy your home if it doesn’t sell” and this irresistible consumer benefit drove truckloads of business to my door like never before. I never looked back. In a slowing Toronto real estate market in the early 1990s, my Guaranteed Home Sale Program helped me succeed because it solved a very important consumer problem. While every agent will promise to sell your home, I guaranteed it- a very meaningful and compelling consumer benefit. In fact, several times a day the phone would ring with prospects asking: “How does this ‘you’ll buy my home’ thing work?” to which I would reply: “I need to see your home before I can tell you how much I will buy it for.” This of course made perfect sense to sellers, and now I was face-to-face with someone who wanted to sell their home…By simply replacing my image ads with USP ads, I got an immediate and dramatic increase in sales. With USP advertising, I not only created massive awareness in my marketplace, I also successfully attached a very powerful and tangible consumer benefit to my identity, so not only did prospects know who I was, they also understood exactly what made me different and better than my competition, and they had a specific reason to call me.
While designing a USP may require effort, it can quite literally be the “make or break” tool for your business. It also requires you to reflect deeply about your customers, gain more clarity about your business and its offerings and ultimately allow you to deliver real value. Fundamentally, business should be about ameliorating people’s lives, solving problems and enriching society, not only the business itself.
I have found that USPs come more easily at first in B2C markets. We have developed a methodology for this process. If you are looking for a strategy to design a USP in a B2B market, I recommend the framework below as presented in a Harvard Business Review article, “Customer Value Propositions in Business Markets” by James Anderson, James Narus and Wouter van Rossum. The article is worth a read.
Value Proposition: All benefits
Consists of: All benefits customers receive from a market offering
Answers the question: “Why should our firm purchase your offering?”
Requires: Knowledge of own market offering
Pitfall: Benefit assertion
Value Proposition: Favorable Points of Difference
Consists of: All favorable points of difference a market offering has relative to the next best alternative
Answers the question: “Why should our firm purchase your offering instead of your competitor’s?”
Requires: Knowledge of own market offering and next best alternative
Pitfall: Value presumption
Value Proposition: Resonating Focus
Consists of: The one or two points of difference whose improvement will deliver the greatest value to the customer for the foreseeable future
Answers the question: “What is most worthwhile for our firm to keep in mind about your offering?”
Requires: Knowledge of how own market offering delivers superior value to customers, compared with next best alternative
Pitfall: Requires customer value research