MOST entrepreneurs start out their business for a variety of reasons. Whichever camp that the entrepreneur may fall into, there are methods to avoid just competing on the price front.
Creating a differentiation between you and your competitors can be achieved with TWO simple exercises.
Author: Coach Nicholas Goh
Designation: Certified Business Coach with ActionCOACH, Sales Coach
MOST entrepreneurs start out their business for a variety of reasons. It could be that they have worked in the same employment for a number of years and feel like they want to do something on their own. It could also be that the employment that they were in laid them off. It could also be simply that they were handed the business.
In light of all these reasons, entrepreneurs have chosen this path and there can be a very surprising story once they travel along that road. They start to notice many more people who have also chosen the same journey of entrepreneurship and fortunately or unfortunately some of these new entrepreneurs may end up providing the same product/service as your own business. Some people relish the challenge of having new businesses in competition with their own and there are some who dread it.
Whichever camp that the entrepreneur may fall into, there are methods to avoid just competing on the price front. Competing just on price alone can be costly, tiring and more critically can wear out the business very quickly. This is where the idea of creating a differentiation arose. Creating a differentiation between you and your competitors can be achieved with TWO simple exercises.
Firstly, create a Unique Selling Proposition, otherwise known as a USP. The term USP was coined by Rosser Reeves in his 1961 book called Reality Advertising. In that book, he declared that the USP must be “the proposition must be the one that the competition either cannot, or does not offer”.
There are various benefits to having a well-defined and well developed USP for your company. In many ways, the marketing and advertising of a company is tied very closely to the USP of a company. Also, a USP secures the status of a business as the head in their industry and that leads to greater loyalty from clients, greater profits due to margin improvement and greater client numbers – all massive benefits for any business.
How to make your own USP:
- Learn as much as you can about
- Other marketing materials
- Then ask yourself 2 questions
- Is there anything you offer that your competitors don’t?
- Is there a process that you do better than your competitors?
When doing this activity, you may discover that you might be sharing similar processes, but they have not mentioned it anywhere in their marketing, advertising or sales process. If you are the first, you own it.
Be reminded that it can be easy to make a bold claim but the more important issue would be to back the USP with compelling facts, studies, tests, figures, charts and results. Doing so will give you a much stronger standing in your marketing and sales process.
The second strategy would be to create a Guarantee for the business. One of the reasons people don’t buy is the perceived risk they believe they are taking in purchasing a product or service. These risks include:
- Making the wrong decision
- Losing money
- Not receiving what they paid for
- Not being satisfied and then not being able to recoup their investment
The risks that are detailed above will go through the minds of a consumer if they were trying a new product or service offering from your company and if they are not addressed early on, can affect the conversion rate of a business. One strategy to overcome these risks is to offer a rock solid guarantee that will make the purchase risk free, or at least decrease the risk as much as possible.
A strong guarantee makes it less threatening for people to consider the offer. You lower the barriers that prevent people from doing business. It gives them a compelling reason to buy today without the fear of looking bad tomorrow. By removing the risk to buyers through guarantees, a business will stand out. It makes it easy and fun for people to buy and profits will dramatically increase.
There are many methodologies that are involved in creating a USP and a Guarantee for your company. However, I think one of the most important qualities would be to think outside the box because it will force you and your team to think of ways to innovate beyond what you currently are.