And you know that your product has to stand out in the market. But you don’t know how exactly, right?
No worries. We are going to break it down for you and tell how to create a Unique Selling Proposition (USP) and attract investors with it.
What is a Unique Selling Proposition?
A Unique Selling Proposition, or USP, is a competitive advantage over rivals. Your brand and its products should offer a set of unique features to customers so they would switch to using your product.
And, obviously, with a proper USP, your startup will be more likely to catch the eye of potential investors.
Defining a USP is actually the first stage of building any successful startup.
And it is not surprising as having a Unique Selling Proposition helps to:
- Specify the problem your product is going to solve;
- Find the target audience;
- Determine your direct and indirect competitors;
- Define the core features of your product;
- Attract investors;
- Promote the product to early adopters.
How to create a Unique Selling Proposition?
To attract investors and their funds, you need to create a compelling proposition, or a pitch, that investors won’t be able to resist.
A USP is an inseparable part of such a pitch.
But first, you need to create this USP.
Step 1: Define the Problem you Solve
The first thing you should ask yourself is whether your idea solves anyone’s problem. If not, then you risk facing ‘no market fit’.
Having no value is actually one of the reasons why startups fail at lightning speed.
For example, Moped, a social messaging app, went down when it realized that their USP wasn’t working. Moped tried to update their content and introduce a few new features. Nevertheless, their competitors had the same features and were simply more popular. The fact that they fundraised $1M didn’t save the day.
Another example is a food delivery app - Take Eat Easy. Even though Take Eat Easy raised €16.4M, it wasn’t able to compete with food delivery giants such as UberEats, Delivery Hero or Deliveroo. It simply lacked uniqueness.
What I mean is that sometimes it IS possible to raise funds without a unique selling proposition, but it is next to impossible to survive.
Step 2: Conduct research
Uniqueness is a quality of being particularly remarkable, special, or unusual. Here comes a natural question - compared to what?
Thus you need to get the picture of your market and analyze your direct and indirect competitors. What features do your competitors offer? What can you offer to stand out from others?
In addition, you need to feel the market, discover if it has enough potential to attract investors.
Step 3: Get to Know your Audience
Get inside your potential customer’s head. You won’t be able to sell your product unless you really know who your customers are.
Nowadays, the client’s portrait is a pretty popular concept. But it’s not enough to know that your target audience is, let’s say, women in their 30s and 40s wanting to buy anti-ageing face cream.
Indeed you need to understand what these women want to look like and even more importantly, feel like. What are their problems, pains and life challenges?
It’s worth mentioning that even though you should aim for the unique features, you shouldn’t forget that customers fall for the message that comes with the product. People buy makeup products not only to look beautiful but also to be glamorous and chic just like celebrities are. So, along with the uniqueness you also need to promote the experience that your customers will get.
What do Investors Want to See in your Pitch Deck?
- Needless to say, investors love numbers.
- How much do you need to build an initial product?
- In what timeframe are you expecting to get your first traction?
- What traction are you going to get in a year?
- What is your 3 or 5-year plan?
- How many competitors do you have? Is there any at all?
These are the questions every investor or VC is going to ask. So be sure to make a presentation that will cover all the numbers.
Your proposition needs to be unique both for investors and for future customers. It is not enough to offer what your competitors already have. You need to target the audience with a solution to their excruciating problem, a solution that no one has thought of before.
According to the author of The Art of Startup Fundraising, Alejandro Cremades, investors are more likely to give money if they can relate to the problem you’re solving, it is clear in terms of Return On Investment (ROI) or it’s an understandable issue.
One of the core differences between startups and small businesses is that startups focus on disrupting markets and driving top-line revenue at a fast pace.
No investor or VC is going to give their money away until they are 100% sure that the market is potentially profitable. And even more - they are much more likely to invest in your startup if it is able to transform, disrupt or even reshape the existing market.
The bottom line is that your product should be unique. The uniqueness can be achieved by having a solution to a troublesome problem that no one has thought of or coming up with a phenomenal solution to a pretty well-known problem.
Your USP will be able to capture your investors’ attention if you:
- Solve a real problem on the market;
- Know your target audience;
- Know your competitors;
- Operate in a promising market;
- Are good with numbers;
- And, finally, offer something unique.
The USP theory says that only a unique proposition can make customers switch to a new product. And that is exactly what all startups need apart from the funds. But the same principle works for investors - they want to see that the product is competitive and market-disrupting.
Well, fortunately, сreating a unique selling proposition is not rocket science - define the problem you solve, analyze competitors, and finally, come up with the best possible USP on the market.