USP Analysis

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Labels: Problem Solving

The Unique Selling Proposition:
Crafting Your "Competitive Edge"

For years, business trainers have stressed the importance of "USPs" (Unique Selling Propositions). Your USP is the unique thing that you can offer that your competitors can't. It's your "Competitive Edge". It’s the reason that customers buy from you and you alone.

USPs have helped many companies succeed. And they can help you too when you’re marketing yourself (when seeking a promotion, finding a new job or just making sure you get the recognition you deserve.) If you don't have a USP, you're condemned to a struggle for survival - that way lies hard work and little reward.

However, USPs are often extremely difficult to find. And as soon as one company establishes a successful USP in a market, competitors rush to copy it.

This tool helps you find your USP. And it then helps you think about how you’ll defend it.

How to use the tool:

Download our free worksheet to record your analysis, and then follow these four steps:

1. Understand the Characteristics that Customers Value:

First, brainstorm what customers value about your product or services and those of your competitors. Move beyond the basics common to all suppliers in the industry, and look at the criteria customers use to decide which product or service to buy.

As with all brainstorming, by involving knowledgeable people in the process, you'll improve the range of characteristics you’ll identify. So talk to sales people, customer service teams and, most importantly, talk to customers themselves.

2. Rank Yourself and Your Competitors By These Criteria:

Now identify your top competitors. Being as objective as you can, score yourself and each of your competitors out of 10 for each characteristic. Where possible, base your scores on objective data. Where you can’t, do your best to see things from a customer’s perspective and make your best guess.

3. Identify Where You Rank Well:

Now, plot these points on a graph. This helps you spot different competitors’ strengths and weaknesses.

And from this, develop a simple, easily communicated statement of your USP.

Tip:
When you identify your USP, make sure it’s something that really matters to potential customers. There’s no point in being the best in industry for something they don’t care about.

4. Preserve Your USP (and Use It!):
The final step is to make sure you can defend your USP. You can be sure that as soon as you start promote a USP, your competitors will do what they can to neutralize it: If you’ve got the best website, they'll bring in a better web designer. If you’ve got a great new feature in your product, you’ll see it in theirs next year.

If you’ve established a USP, it makes sense to invest to defend it – that way, competitors will struggle to keep up: By the time they’ve improved, you’ve already moved to the next stage.

And once you’ve established a USP, make sure the market knows about it!

Example:

Dan Jackson, the new CEO of LPC Office Supplies, was worried. He was confused by the situation he'd inherited, and felt that the company was drifting. Part of this, he felt, was that the company had no distinctive market position. He decided to use USP Analysis to find one.

After talking to the company's biggest customers, Dan has identified the following criteria as important:

- Price
- Quality of merchandise
- Range
- Catalog quality
- Website appearance and navigation
- Ease of ordering
- Speed of delivery
- Reliability of delivery.

He then ranks LPC and its competitors using the criteria he had identified. Some criteria he assesses objectively, and on others he relies on instinct, market reputation and salespeople's reports. This gives him the table below:

	LPC Supplies	Barnwick Smith	Roskan Group	HTX Supplies
Price	7	9	6	6
Quality	7	7	7	7
Range	9	6	5	9
Catalog Quality	9	7	6	9
Website	9	7	6	8
Ease of Ordering	7	7	7	6
Speed of Delivery	6	7	9	7
Reliability	7	7	9	7

Using these rankings, Dan plots this graph*:

As he does, different industry USPs start to become plain. Barnwick Smith seems to operate a “pile ‘em high and sell ‘em cheap” policy. The Roskan Group seems to focus on fast, reliable delivery, possibly of urgent, essential materials.

Looking at these, Dan is sure that LPC can compete effectively against these competitors by emphasizing the breadth of its range and the quality of its catalog. However, HTX Supplies is more problematic: Curves are quite close. Even here, though, LPC seems to have better customer service and a better website. A USP of “The easy way to buy everything you need!” seems to work well.

Dan decides to invest in LPC's website and its customer service systems, with a view to opening up a clear gap between itself and HTX. And he then launches a marketing campaign stressing LPC's USP.

* Note:
The technique of plotting criterion rankings as a line graph was introduced by Professors W Chan Kim and Renée Mauborgne in their seminal Harvard Business Review article "Creating New Market Space", published in 1999.

Whilst plotting the rankings as a line graph creates a powerful visual representation, which they referred to as a "value curve", in a pure statistical sense, it's not an appropriate way to represent these data. This is because the criteria are discrete rather than continuous, and so they should really be represented as a bar graph.

Key points:

USP Analysis is a useful way of understanding how people are competing in your industry. And it's essential for identifying your USP, so that you know what to build upon and emphasize to your prospects.

USP Analysis is a four stage process:

First, you list the decision criteria (explicit and hidden) that customers of your industry use in making purchase decisions;
Second, you rank yourself and your competitors by these criteria;
Third, you look at where you rank well, and craft a USP from this; and
Finally, you look at how you will defend and build your USP as competition evolves.