You’ve been told that you need to create a Unique Value Proposition. What that means is you need to find the unique thing about your business that makes it truly worth building.
The issue is that most entrepreneurs, and most people with ideas, think that the uniqueness of the value proposition is the only place that you should innovate. And it’s just not true. You could innovate in pricing. You could innovate in your cost structures. You could innovate in your marketing channels. You can innovate in your customer segments. There are lots of places that you can innovate.
In fact, the more innovation you put into your business model, the more disruptive it’s going to be. So the UVP (the unique value proposition) is at the end of the day, the sum-total of all innovations in your business. It’s what makes the business worthwhile to you, and to your customer.
So try to define a one sentence Unique Value Proposition. Some people call it the ‘elevator pitch’ but we just like to call it the part of the business plan that has the most clarity. Take some time. It’s not easy and do it last. Like they say when you’re writing a great article in publishing you write the title last.
Describe your product
The Unique Value Proposition (UVP) should be a single clear compelling message that captures the essence of your product and the solutions it offers your target audience with respect to the problems you are trying to solve.
A UVP should:
1. Be easy to understand in about five seconds.
2. Communicate the benefit a customer receives from using your products and/or services.
3. Explain how your offering is different from and better than competitors’.
Careful! A UVP is not a slogan. Melts in your mouth not in your hand (M&M), Just Do It (Nike), Belong Anywhere (Airbnb) — these are slogans, not Value Propositions. Don’t be unique for the sake of being unique. Adding a quirky flaw (a specific colored product, a cookie with every purchase!) to differentiate your company is useless. If you want to stand out in your field, your company must have something notable that sets it apart. Avoid hype (never seen before amazing miracle product!), superlatives (best, most-powerful!) and jargon (value-added interactions and top-notch assets) when writing your UVP.
A key part of creating value for your customers, which drives revenue growth, is knowing what the alternatives are to what you’re offering.
Your biggest competitor: “Doing nothing”
So you’re running a business and you know that your customers have a particular problem, or that you can solve a particular list of problems. The next thing you want to do is to find out what the existing alternatives are for your solution. It may not necessarily even be a competitive product. It may actually be that your prospects do nothing at all. It may be that an existing alternative is to not do anything because they are too scared of making the mistake of getting the wrong product, or getting the wrong service. So your would-be customer delays the decision-making process even longer.
An existing alternative might be a competitive product, in which case you need to figure out, “Well what is it that I solve that my competitor doesn’t solve?” If you’re a Business-to-Business (B2B) company selling tasks that are outsourced to you, an existing alternative could actually be your customers hiring an internal team to do it instead. So you might actually be competing against an internal team. In this case you’ll want to frame your solution in a way that explains the benefits of using an external team versus an internal team.
The point is, don’t just think about competitive products. Also think about some of the excuses and the things that people do, sometimes even just out of human nature, that would replace your solution in their problem context – even if it means they’re doing nothing.
So what are the existing alternatives?
How else can your customers address their problems? What products or services already exist as alternatives to yours? This section is where you identify competition. Who are you up against?
Research your competition using multiple methods. Ask target customers about other products or services they’ve explored or used. Utilise search engines, social media and trade publications to become an authority on your industry.