Typically it goes like this:
Investor: "What is the USP of your product? Why should I invest in it?"
Start-Up: "Hmm.. What about being motivated and having an office in Berlin, does it do for you? Or better, please give me time till tomorrow and I will send you few!"
Let's be clear, there is nothing wrong with the concept of USPs. Most market segments are obeying the same rules.
In order to be competitive, you need to make the customer perceive your product being better (either significantly or in a different way) than the one of your competitors.
Product
It can be the product itself, which stands out by its usefulness (a possible result from innovation) for the aimed target user (unfortunately seldom sustainable, because easy to clone...).
Pricing
It can be the pricing, which results from lower costs, which again result from a better production process. You are capable to produce the same or better output with less invested ressources (although typically invisible by the customer, given most online products are free anyway). Scale effects play a significant role here, but if the production is not optimal, more efficient players could catch up very fast.
Marketing
It can be the distribution or marketing, by being exceptionally aggressive, creative or widely spread. In this category also the strength of the brand can play an important role.
Service
Or it can be the service, either pre-sale or after-sale.
Thanks to this elegant concept, you can analytically explain ex-post why a product is successful or not. But you can also use it to identify white spots which a future product of yours could target.
And exactly here is the key misunderstanding among many:
A product with USPs is not going to be successful by definition. But if your product doesn't have any, it IS going to fail by definition.
Here are some crucial take-aways:
- When you design a new product, you don't invest months of work to design and plan everything and then sit down to think what USPs your end-product may have (mainly in order to satisfy the investor). The qualities with which you want to differentiate your product from other has to be in the core of it. It is not just a polish on the surface to make it look cool (either to customers or investors), but it is the essence of the whole product concept.
- UPSs are not for free. These have an actual value and require significant investments. If you are not willing to invest (time, money etc.) you are not going to have a competitive product.
- USPs are not equally important. Every market segment has particular key success factors. It is not the number (quantity) of bullet points with USPs with which you managed to come up for your presentation that make the difference. But those which really matter for the target audience. It is better to offer one killer differentiation than a dozen of minor ones.
- Existence of a strong USP for your product, does not relieve you from fulfilling the must-have's set by the market. Example: If you choose to compete with Dropbox on Cloud storage, it is not sufficient to offer more space at lower costs. You also need to offer at least the same premium user experience, flexibility and speed in order to be competitive.
- Nobody sits down and comes up with UPSs! You need to start with a vision for a product which perfectly fits a need, which is not sufficiently satisfied right now in your customer's eyes (or in a way it could be satisfied once your vision becomes true). Using agile, incremental development, fast prototyping and customer feedback - you should move further. And challenge yourself if you are coming closer or not. After the first few steps, you are going to realize if you have developed an USP that really matters or not.
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| Source: Dilbert.com |
:-)
