Set Your Business Apart With A Unique Selling Proposition
Unless your company has absolutely no competition now or in the forseeable future, you're well advised to find and develop a unique selling proposition (USP) that differentiates your business from all of your competitors. For you to succeed, you have to identify and understand what you or your business does or can start doing for your prospects and customers that provides them with a result that is superior to the competition's. This is called your unique selling proposition (USP). Your unique selling proposition is the distinct advantage or benefit that sets your business apart from the competition. Your unique selling proposition can be quality, service, speed, convenience, experience, low prices, selection, or any other attribute you want your company to be known for. The important thing to remember is that before you can get a greater share of the market, you first have to get a greater share of your prospect's mind. And you can do this by selecting and developing a unique selling proposition. Your unique selling proposition should be one that is a natural benefit offered by your business. Never offer a USP that is false. For example, if you are a high-priced consultant or run a high-line retail store, you shouldn't consider lower prices as your unique selling proposition. Here are a few examples of possible USPs: 1. A broader selection. 2. Bigger discounts. 3. Better advice and assistance. 4. More convenience (location, quick service, immediate delivery, Web site). 5. Top-of-the-line products. 6. Faster service. 7. Service above and beyond the basics. 8. A longer and more comprehensive warranty or guarantee than the norm. 9. Providing superior quality. 10. Any other distinct advantage or benefit you can give that the competition doesn't. The possibilities for building a USP are unlimited. The important point, is to focus on one niche, need, or gap that is most sorely lacking in the marketplace. It's best, however, to adopt a USP that dynamically addresses an obvious void in the marketplace that you can fill. Above all, never adopt a USP that you cannot fulfill the promise for. In choosing a unique selling proposition, keep three factors in mind, your competition, your target audience, and your operation. Make sure you pick a unique selling propostion that fits well with all three. All of your marketing should create a deeper connection between your company and your unique selling proposition. For example, you can choose quality as your USP, while still promoting your service and location. But you've got to communicate the idea of quality in all your marketing, from your sales presentations to your direct mail letters, from your advertising to your Web site. When your prospects think of your company, they should think of quality. And make sure you consistently deliver quality in everything you sell and do. If you don't offer a clear and meaningful unique selling proposition, you're business will stand for nothing. For example, if a business just offers a convenient location, why should they get much patronage if they fail to offer any appealing promise, unique benefit, or special service? Customers expect to be treated with special regard in exchange for their business. Successful companies study their market looking for unoccupied niches. That's why they own a large part of the respective market. These companies realize that many products and service categories are vulnerable in areas that no one has filled. So they fill and claim the niche for themselves. And they do whatever is necessary to live up to their unique selling propostion. The small number of businesses that actually develop and incorporate a unique selling proposition always own a larger share of the market then those without one. By developing a unique selling proposition and incorporating it into every aspect of your business you'll have a major advantage over your competition. All contents Copyright(c) 2004 by Joe Love and JLM & Associates, Inc. All rights reserved worldwide. Joe Love draws on his 25 years of experience helping both individuals and companies build their businesses, increase profits, and achieve total success. A former ad agency executive and marketing consultant, Joe's work in personal development focuses on helping his clients identify hidden marketable assets that create windfall opportunities and profits, as well as sound personal happiness and peace. Reach Joe at: joe@jlmandassociates.com Read more articles and newsletters at: http://www.jlmandassociates.com/
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Why cutting your prices is like cutting your own throat.
It's the oldest sales tactic in the world?
And one of the worst?
Price cutting.
Before you make your next price cut in the face of sales resistance, the question you have to ask yourself is not, "Does it work?," but rather, "Can you live with the bargain?"
Here's a pop quiz: you ? in your role as salesperson ? go for the close. You ask the prospect to make a commitment and they don't. What's your first response?
Well, if you are like most people in a selling situation ? whether you are the hired sales guy or the CEO-your first response to people not buying-for whatever the reason-is to say, "Would you buy if? ?," and the "if" is always some variant of, "...if the price was lower?"
And you ask it almost before you ask them WHY they won't buy.
And it's not only when they tell you they won't buy. Many people in sales mentally calculate the discount into their profit calculations, and start discounting even before they try to close the deal. In almost every sales job that I've worked in, people faced with an end-of-quarter crunch to "make the numbers" start playing the discount game. In many industries, it's become common practice to give away all the profits, and many customers are trained to expect it.
Trouble is, people are not usually 'not buying' because your price is too high.
If you've taken the trouble to establish the real of your product or service, you ? and your prospect ? already know that the value far exceeds the price you are asking. (If not, you better go back and rethink the math.)
So if they are saying "no," or simply not saying "yes," it either means they are experienced buyers waiting for you to spontaneously cut your price, or it means they just do not see a sufficiently compelling value?yet.
Cutting your prices will almost never lead to new sales if they didn't plan on buying in the first place, and the effect on your profits can be devastating. Follow these numbers:
Let's say you sell a product for $100. Your cost is $70. That means it carries a thirty percent margin-your profit is $30. Now, to make a sale, you are "forced" to cut your price by twenty percent. Your new selling price is $80. All things being equal, your profit is now $10-instead of $30. That means a 20% price reduction cost you 66% of your profits.
TWO-THIRDS OF YOUR PROFITS for a 20% price reduction!
Cut your price much more and your profit quickly goes to zero. Or lower.
And that's not even the worst of it.
Once you lower prices, they tend to stay low. That $100 widget you just sold for $80? Well, sorry to say, but it's now an $80 widget.
Even more damaging, your like-minded competitors will almost definitely lower their prices, and you, my friend, are in a price war. To win in this scenario, you need deep pockets to sustain a losing position for the duration.
So for these three reasons-depressed profit margins, permanently lowered prices, and the devastation of a price war-it's a bad idea to lower your prices to buy business-regardless of the economic climate.
What can you do instead?
The two main strategies are clarifying and quantifying the value, and packaging products or services to maintain higher prices.
Here's an interesting example. One of my clients-a software company-had a hot prospect who didn't want to buy the typical contract for software maintenance. They felt that 18% per year was just too expensive, and wanted to pay ad hoc instead.
My client knew this was a bad idea. Customers without maintenance contracts typically become your worst. Why? Because they know it's going to cost them each time they pick up the phone for support, so they try not to. Thus, they don't get the right level of service, they don't know how to use the product and they don't get the results they paid for in the first place.
And even though it's their fault for skimping, they point the finger at you and badmouth your company.
On my advice, my client offered the prospect a four year non-cancelable maintenance contract, and gave them the first year for free. And although it was a 25 percent reduction in total purchase price, it never lowered the per year pricing, and it actually guaranteed more than the prospect's original commitment.
Plus, my client locked in that customer for four full years, during which time they rightly expect to sell them additional products and services.
Price cutting is the "lazy man's" response when it's hard to make sales. Unfortunately, it may not boost total revenues, and results in drastically lowered profits on the sales that do get made. Often the outcome includes permanently reduced prices and margins, and even a price war, which has disastrous consequences for all players, except very deep-pocketed ones.
Sell the value instead. Spend the time to discover what your prospect is trying to accomplish, and make sure your product or service helps them do that. Then establish the quantifiable financial impact, and sell them that. Or package, bundle or go for the long-term, multi-year commitment.
There are other approaches that not only maintain price levels, but even support higher ones. To get an overview of those approaches, visit http://www.lemberg.com/tipsandtools.html and download "5 tactics to avoid price cutting."
--PL
© Paul Lemberg. All rights reserved
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