Defining your Value Proposition

by Zoe Wallis Email


Why do customers buy from you?

If you can’t answer that question, you don’t know what your business is all about.  Why people buy from your business, over and above any other is what makes you unique.  If you can’t articulate what makes you different, what your Unique Selling Proposition, or USP, actually is, then how do you expect to attract new customers as well as retain the existing ones?

The odds are that there are other businesses selling what you sell and doing what you do already.  Unless you happen to be the first person to hit on the next big thing, there’s no point trying to compete in terms of what you’re selling.  This leaves SMEs with 2 options to stand out from the competition:

1) Compete on the basis of price (ie sell things more cheaply)

2) Compete on the basis of offer (ie not just what you sell but how you package and sell it

For SMEs, competing on price is very risky.  You’ve set your price at a level for a reason and whilst there may be some margin for negotiation, the fact is that once you start entering the game of negotiation with customers on the basis of price, you’re putting yourself in a position where a) you will make less money and will have to work even harder to maintain profits (or for that matter remain profitable!) and b) you permanently devalue your brand and product.  You will forever be seen as a ‘cheap’ supplier; a position that is hard to live up to for an SME.

This then brings about the bigger problem.  Customers will pay a price because they perceive goods/services have a certain value and they therefore weight that perceived value in the context of the actual price.  By dropping the price of your goods and services, you’re demonstrating to your customers that they’re actually worth less and that the customer’s perception of value at the higher level was misinformed.  You’re effectively devaluing yourself, your business, your IP and opening the door for your customers to negotiate with you on the price of all of your products and services.

To avoid this trap, and indeed to pull yourself out of it, SMEs need to establish what differentiates them for their marketplace.  They need their customers to perceive them as better value for money, not because their products and services are cheapest but because they provide something that is unique to their product.

Most readers of this blog will be mobile phone owners.  You know that the mobile phone marketplace is saturated with network providers. Whilst price may be a small consideration in your choice of provider, it is generally outweighed by other factors such as brand, network coverage, freebies, level of customer service….etc  All things that contribute to an excellent experience as a consumer.

Most people will consider paying a couple of extra pound per month because it means they get good service, or that they get away from continuing to experience bad service.  In fact, the strength of these other ‘things’ often means that customers won’t even shop around.  I recall being a customer of one such provider and on account of receiving what, in my opinion, amounted to atrocious customer service (long call queuing times, rude customer service assistants, phone put down as soon as I got through requiring me to queue in the calling system yet again, transferred through to the wrong departments….the list goes on) I changed my mobile phone provider as soon as I could and have never gone back to them since.  In fact my experience with the new provider has been poles apart from the old provider; so much so that I have been with them as a customer since 2006 and would not consider switching.  Granted they may not always be the cheapest deal, however I can guarantee that I will benefit from a fantastic customer experience.


So... does this apply in the context of your business?  How can you compete on this basis?

Quite simply by identifying your core product and service and then surrounding it with added value elements that will deliver a great customer experience.  Things like great quality, excellent service, freebies, a recognisable brand.  The added value elements may differ slightly for each product/service you offer or may differ by market segment, but they’ll still be there and wills till be influential factors for your customers.  These can be used to help shape and develop your sales and marketing plans.

It is these added value components that will enable you to differentiate from the competition and clearly define what makes you as an organisation unique. When you establish this, you establish a clear reason why customers should buy from you rather than your competitors, not just this time but every time. This is your value proposition and it’s this that differentiates you from the competition and makes you unique.

Winning Moves Core and Surround

Defining your value proposition need not be a daunting task. Simply, pick one of your key products and services. Then….

  1. Identify your competitors and ask questions about how they operate, using the outer 2 circles of the model for prompts. How do they sell that product? who do they sell to, how do they package and display it (what’s the brand/image they apply)? What added extras do they provide? What skills do they have that make them better at delivering the product/service than us?
  2. Now ask yourself those same questions. Are you doing the same thing? Importantly, could you do something different? Is there a new way you could brand/package/sell/deliver the product/service that’s different from everyone else?

This isn’t about reinventing the wheel but it is about looking at things differently. Ask yourself "Why" – Why do we sell that way? Why do we call it that? Why do our customers buy from us? Why might our customers shop elsewhere? Why do we call our product that?


When you’ve asked “Why” start asking “What If” – What if we called it “x”? What if we made it pink/green/blue…instead of black? What if we provided our service at a different time? What if we worked different hours? And so on.

Let all questions be valid ones and answer them honestly. Use these as the basis for changes you could make that allow you to define your products and services in a different way and that make your value proposition unique.