It’s accepted wisdom in marketing and sales nowadays that every business needs a strong Unique Selling Point (USP). “Differentiate or Die” has become the clarion call of consultants across the globe, urging their clients to (pay them to) develop clever positioning statements showing how unique and different they are to their competitors.
But does it work? Is a powerful, differentiated USP really critical for the success of every business?
Not in my experience.
The concept of a USP dates back to the 1940′s and originated with consumer goods companies battling for advertising share-of-mind. And indeed today, for many consumer oriented products a strong USP is key to creating brand awareness.
But for many businesses – particularly service businesses and companies who serve a local customer base, the concept of a USP is not so important.
Think about it from the customer’s perspective: when you’re looking to hire an accountant, or you need a taxi, or you want a plumber to fix a leak – are you looking for someone who is unique and clearly differentiated from his competitors? Or are you instead looking for someone who you can trust to do a really good job at a fair price?
Differentiation is great to mark yourself out from the crowd – but in a great many businesses you already stand out from the crowd. In my own consulting practice for example, I very rarely face direct competitors. My biggest competitor – as I pointed out in the post Beating Your #1 Competitor – is the status quo – the client doing nothing. And to beat that, I don’t need a USP. I need to demonstrate compelling value to the client, not uniqueness.
Or take the taxi firm. What will make a potential customer call one taxi firm over another? Usually two factors: availability and perceived reliability. Most successful taxi businesses didn’t become successes because they somehow offered something different or unique – they offered what every firm offers – available, reliable transport. The reason they get chosen is that they (are perceived) to be able to do it better than their competitors.
How about an accountant? Do you really want an accountant that does your books in a unique and different way? Probably not. Probably you want someone who does them well at a good price. The role of marketing for the accountant is not to communicate uniqueness, but to ensure the potential customer trusts that the accountant will do a good job.
I work with a lot of professional service firms – lawyers, accountants and consultants. And when we work together on clarifying their vision and goals I always introduce the concept from David Maister’s classic book Managing the Professional Services Firm that all professional services firms have essentially the same mission: “To deliver outstanding client service, to provide fulfilling careers and professional satisfaction for our people, and to achieve financial success so we can reward ourselves and grow”. The challenge for marketing and sales in professional services is not to create some clever, unique proposition – it is to take this standard proposition of offering outstanding client service and to prove to clients that it’s true.
To be continued…….
Ian
An excellent blog and will really help me with the meetings I attend. There are many points here that makes me think about the sort of questions I should be asking when out there.
I am a business development executive for a digital agency and I shall now follow your blog with great interest.
Thank you very much!
All day long the words, “status quo” seem to eek from my mouth. Ian your points on overcoming this and the perception of what is “best” is spot on. Great post and great advice.
Great post Ian,
I happen to agree with what you are saying but in some situations like a start up company in an industry already established by other companies, the initial idea of proving standard and expertise will always be against the new company because time and market dominance play a strong role in establishing credability. It is usually from this standpoint that some start ups try and differentiate themselves by creating a niche market that they can operate in. I do however think that you are talking more about established companies knee jerk reaction of differentiation in response to percieved threat or trend.
I think you’re right Nesh – that’s exactly a circumstance where differentiation is needed – otherwise you won’t get any share of mind at all.
My rant is more a reponse to my fellow consultants who seem to be pushing the idea that absolutely everyone needs a strong USP – and that the USP is the most important thing. For most of my clients, establishing value for the customer comes first – and differentiation a distant second. This is especially true for professional services.
In a follow-up post I’m going to look at when differentiation actually is valuable.
Ian
PS I’ve been looking at your blog recently – nice work! For those who haven’t read it get on over to http://www.symvolli.com
Ian, your competitors are pushing a need for a strong UP (Unique Point) which as you say isn’t important . If you have a solution or value that your competitor doesn’t have then it becomes a USP – which you can exploit. If you define selling as a convergance of a buyers need with a sellers solution then everything else is just over-hyped branding.
ps. thanks for the mention.
Ian,
Another great post as always. I think for the start-up company in a established market a USP is important to help you gain traction, but you are absolutely right in a commodity market there is no real reason to focus on the USP.
Just something to think about though… doesn’t the quest to beat the status quo become your new USP from a certain point of view?
Take Starbucks for instance. You can get cheaper better tasting coffee other places, but their USP was to “beat the status quo” by providing the best service and a inviting environment.
Having dealt with attorneys and accountants I would say there is easily room for them to compete on this same level… but then wouldn’t that be their USP?
Hi Brad,
I think Starbucks is an interesting example. I’d say that originally, their success was because of their USP of good service with a great environment (although you could argue that a number of small local coffee shops also provided that – Starbucks difference was to take that model global and make it highly profitable). It worked because there was a big enough untapped market who valued that USP.
But nowadays there are many other chains offering similar experiences – the proposition is no longer unique. Starbucks choice is either to find a new USP (but running the very high risk that the USP is just not valuable to a large enough market) or accept that they are no longer unique and focus on operating the model better than anyone else. So in this model people would go to Starbucks not because they were the only ones claiming good service with a great environment – but that they were the best at providing it.
Now you could say delivering better than anyone else on the (more common) service promise would then be their USP – but I think that devalues the meaning of a USP – you could label almost anything a USP when really it is supposed to be a point of market positioning that is unique to your firm.
That’s the essence of my argument: In many markets, being unique is not important – being really really good is. There are many markets where differentiation ceases to add enough extra value to enough customers to make it a profitable strategy.
I think this is very true of service and other businesses who operate in essentially local markets. Of course, there is some scope for specialism and niche strategies; but most businesses succeed by doing the same essential things (having the same essential value proposition) as their competitors – but just doing it better. In fact in many cases they don’t have to do it better than everyone, just better than most. If they can, there will be a big enough and profitable enough market for them.
For me, providing the best service is not a USP – unless you have deliberately chosen to focus on good service and your competitors haven’t. But for most service businesses this is rarely the case. I can’t think of a single consulting, accounting or legal firm that doesn’t have something in their mission about providing great customer service. The difference is that some are better at it than others. This isn’t a USP, it’s operational excellence.
Ian
Ian,
I love your contrary approach to the mainstream! I can sense that I’ll want to post lost of responses to your blogs because I love the debates you’re stimulating.
I personally think that USP is incredibly important for marketing. For selling, it’s less critical because once you’re in front of somebody, it’s all about the relationship and how well you understand their needs and can demonstrate that your product or service will perfectly satisfy them.
From a marketing perspective, the power of USP is obvious and if any business is spending money on marketing and is not going to the effort of using their marketing spend, however large or small, to differentiate themself in some way from their competitors then they are flushing cash down the drain.
Let me elaborate a little to explain. Let’s say I’m struggling with self-confidence and, talking to a friend, I am recommended to talk to a life coach.
Armed with this potential solution, I open up the Yellow Pages and go to the “life coaching” section to find a bunch of adverts that all look the same. I may as well be playing pin the tail on the donkey when choosing, which is fine for me as a customer but, the best coach to suit my needs isn’t going to get me if I don’t see “Speciality – Self-Confidence Coaching” or similar in great big letters.
I’m not trying to write a headline, by the way, just get the sentiment of what’s needed to hook me into the ad. The whole point of creating a powerful USP is to identify the specific issues that clients in a certain niche market are facing and to answer them through your USP. I believe 100% in USP because I have seen the difference in will consistently make for those businesses that take the time to create one.
When the USP is very powerful, it can also help in the sales conversion too. That’s why the guarantee as a form of differentiation is used so effectively by so many companies.
The biggest problem with the consultants who spout about the need for USP continually is that they don’t really understand the topic in depth. Without that depth of understanding it doesn’t make such a compelling tale.
In service businesses, our personalities, our systems or our niche expertise can all become our USP. And you don’t have to work with just a single USP either – you can choose a USP per niche market, something that is valuable to them specifically.
Cheers,
Lee
“People don’t go into business to survive, but that’s what so many end up doing”
Thanks for your very thoughtful comment Lee. I’d agree with your marketing/yellow pages example – if all people have to go on is an ad, then differentiated positioning is essential. And I’d back up your point about needing to know the topic in depth too.
My “USPs aren’t so important” point relates more to local businesses and professional services – where sales are driven primarily by word-of-mouth and referrals rather than advertising. For example – thinking about the life coach I suspect that most business for a life coach comes from referrals and word of mouth from existing customers rather than a yellow pages ad. In this case, the USP is not nearly as important as the the reputation that the coach has built up for really being able to deliver results.
Now what the life coach might choose to do is in their yellow pages ad, position in a niche (even though they have the capabilities to operate outside that niche). But in their other marketing and business development (focused on generating word-of-mouth and referrals) position more generally – and use the trust and credibility to deluiver they build up with their customers and network as their core message rather than a specific niche.
Ian
Ian. No way man. I can’t believe you bash the USP. Let’s look at your examples a different way. You mention hiring plumbers who are local — well, my friend, THAT is their unique value proposition: They are closer to my home and will get here faster… making my problem go away sooner.
OK, I don’t want to hire a CPA that has a new accounting method… but I do want to hire one that has explicit and real experience in MY industry. I want one that has a passion around fixing small business problems, and a unique position within the industry regarding sharing knowledge with clients, providing global transaction advice, and managing cash flow. There is ONLY ONE of those in my hometown, and I hired them based on that USP.
In fact, I came across your website because you have a USP — a sales guy who is so good at what he does that he can share his knowledge through video, blogs, and informative web pages. Your USP is your own celebrity — your credibility based on the fact that you sell yourself so well!
Please don’t disparage the usp!
Come on David – being local is a USP? Being local is hardly unique. A sales guy who shares his knoweldge on the web. hardly unique either.
And your selection of your CPA? Here’s my take: your primary reason for selecting him was that those skills which he had were the ones you needed – they had value to you. You didn’t just hire him because he was unique. If you’d not needed those skills his uniqueness wouldn’t have mattered a jot.
Now sure, the fact he was the only one in the local area with those skills means you didn’t have a choice to make. But how many of his clients needed that exact bundle of skills? I’d say not many. I’d be prepared to bet that most of his clients need some, but not all of those skills – so for them, he’s not unique at all.
That’s my whole point. Being unique is nice – it can make you the only choice – provided that you have the skills and capabilities your clients need. If you don’t, then all your uniqueness counts for nothing.
And that’s the trap of the USP. Instead of focusing first on what would be of value to their clients and excelling at that – USP thinking leads people to focus first on what’s different. It promotes cleverness and uniqueness over providing value to clients.
Now I don’t mind looking at how to differentiate yourself after you’ve figured out the best way of providing value to clients and understanding what they really need. But it comes second – not first.