The second step of the ActionCOACH "6 Steps to Building a Better Business" is Niche. If you are not yet familiar with the 6 Steps, you can read more about it here. The goal of the 6 Steps is to build a commercial, profitable enterprise that works without you the owner.
The second step is all about generating a predictable and profitable cash flow in the business. With niche, many businesses compete on price, but what that does is set themselves on the track of eventual bankruptcy. The reason is that another business is always going to be willing to undercut them on price so it becomes a death spiral to the bottom - not making enough profit and ultimately going out of business.
So, instead of competing on price, the Niche step focuses on building a profitable enterprise. The 5 Ways tool below is a methodology that provides an approach that companies can follow to deliver consistent results. This can be referred to as the Marketing & Sales engine.
Once a month, we will come back to Niche and provide tips on improving cash flow and profits. If you are not familiar with the 5 Ways tool, here is a video on it.
The first area of focus in the Niche Step is a unique selling proposition. Rosser Reeves created the term USP (Unique Selling Proposition) in his 1961 book. Reality Advertising. He states that "The proposition must be one that the competition either cannot or does not, offer." This differentiates you from your competition. It is what makes you unique and different in a world of commodity, me-too products. Here is an article from Entrepreneur with a detailed definition.
The question I get often is "I offer the same services or products as my competitors, so how can I create an effective USP?"
It can help to look at the competition when looking for a USP. Look at their website, visit their location, and look at their marketing materials. Once you have done that, ask yourself these questions:
Here are some examples to help you develop your USP:
Package Shipping Industry
Pain - I have to get this package delivered quickly!
USP - "When it absolutely, positively has to be there overnight." (Federal Express)
Pain - The kids are starving, but Mom and Dad are too tired to cook!
USP - "Pizza delivered in 30 minutes or it's free." (Dominos Pizza)
Real Estate Industry
Pain - People want to sell their house fast without losing money on the deal.
USP - "Our 20 Step Marketing System Will Sell Your House in Less Than 45 Days At Full Market Value"
Pain - Many people don't like to go to the dentist because of the pain and long wait.
USP - "We guarantee that you will have a comfortable experience and never have to wait more than 15 minutes" or you will receive a free exam."
Cold Medicine Industry
Pain - You are sick, feel terrible, and can't sleep.
USP - "The nighttime, coughing, achy, sniffling, stuffy head, fever, so you can rest medicine." (Nyquil)
Pain - The market hates paying huge 300% mark-ups for jewelry.
USP - "Don't pay 300% markups to a traditional jeweler for inferior diamonds! We guarantee that your loose diamond will appraise for at least 200% of the purchase price, or we'll buy it back."
If you do not yet have a USP, that will be your homework for the week. When we have this completed, we can then focus on marketing and sales activities.
Read this article on differentiating with a guarantee.
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