Every startup and every new business needs a unique selling proposition (USP) to get people’s attention these days, and make it stand out in the information overload we all see. Your concept has to be understood by customers and investors in 30 seconds or less, and everyone needs to immediately see how awesome it would be, or that they would be nuts not to have it.
That may sound easy, but I rarely see it happening. As a startup advisor and investor, I’ve heard and seen hundreds of pitches from entrepreneurs, and the majority of founders are convinced that if you will just give them an hour or more time, you will love their business. I’m looking for the “hook” right up front, or I lose interest quickly, just like every customer and investor these days.
The more potentially disruptive your technology, the more important it is that this message be quick, simple, and quantified. This point was illustrated well in the classic book, “The Power of Positive Destruction: How to Turn a Business Idea Into a Revolution,” by Seth Merrin. He has had his share of failures, as well as successes, with some good evidence to explain the difference.
Merrin is a serial entrepreneur and CEO of Liquidnet, who faced the challenge of major change to some of the most complex stock trading systems in the world.
I like his approach to first making sure the idea has the potential for a unique selling proposition, by asking yourself a few key questions:
- Does the idea solve a painful problem? Great ideas solve big problems, preferably painful needs that people will readily be willing to pay money for a solution. Will the solution give you an “unfair competitive advantage,” meaning no competitor already has it, or can replicate your solution without your skills or intellectual property.
- Is there an educated marketplace waiting? An educated marketplace is one where your target customers already understand the problem and the impact of your technology. Truly disruptive technologies are tough, since it always takes extra time and money to educate and motivate the customers to move away from current approaches.
- Is the opportunity large and growing? Professional investors normally like to invest only in billion dollar opportunities, with double-digit growth rates. A smaller market sizing may make a good family business, if you have the funding. Highly saturated domains (more than 10 existing players), such as niche social media sites, are highly risky.
- Are you uniquely qualified to deliver the solution? Don’t try to build solutions in areas you don’t know, even if you see a big problem there. The ideal startup founder is one who is an expert in the subject area, has prior experience running a startup business, and is surrounded by a project team and investors that he was worked with in the past.
If your idea passes muster on the above tests, it’s time to craft a unique selling proposition. Expect it to take some time and many iterations, but the results are well worth it.
Here are some specific guidance points for a great USP:
- Start with a “hook” to get customer and investor attention. This is an assertion or question that will pique their interest. Good hooks succinctly imply a real problem, and suggest the solution. Examples include Domino’s “We’ll deliver in 30 minutes or less, or it’s free!” or Geico’s "15 Minutes Could Save You 15 Percent or More on Car Insurance."
- Keep it simple and short. Skip the fill words and fuzzy phrases, like better, cheaper, easier to use, or more productive. A unique selling proposition is no place for industry jargon and acronyms. Don’t try to explain your technical implementation, your patent algorithm, or your unfair competitive advantage here. Do include some quantification.
- Make it ready to play in all media. A great selling proposition is one that you can use as a kickoff in all your investor and customer presentations, including your elevator pitch, executive summary, website, and customer collateral. A good one becomes your brand definition, and sets you apart from competitors and existing modes of operation.
Too many new businesses try to be everything to everyone. Creating your unique selling proposition forces you to focus on one thing, or the one element that sets your business apart from others. Startups that try to do many things end up confusing customers, and doing all things poorly, since they have highly constrained resources.
A great unique selling proposition is what your business stands for. It’s what sets your business apart from others because of what your business takes a stand on. Instead of attempting to be known for everything, businesses with a unique selling proposition stand for something specific, and it becomes what you are remembered for.
Pick your focus, make it sound simple, memorable, and valuable, and all the right people will wait in line to get a piece of the action.