Unique Value Proposition Turns into a Business
I was working on a business development plan for someone, and we discussed her business, what she envisioned being able to do for clients, and various approaches she could take to find new clients. This came, after some discussion, to the concept of unique value proposition – that is, what would set her business apart from her competitors. We discussed a few options, such as offering some merchandise to clients who sign up for certain packages, or pairing her services with those of someone offering a complementary service.
These are common spins on how to set your business apart from the competition, but we wanted to take this a step further. Eventually, we landed on offering a custom service that would be given to her clients at no charge, for as long as they were her clients. In the short-term, this might have reduced the amount she could charge each client, but it would also ensure that clients would stay with her for many years.
Working in IT, I went to determine how complicated it would be to build the web application we envisioned. I came back a day later and realized that the application itself, what we had considered to be a unique value proposition for one business, could actually fill a void in the market. That is, many of her competitors and non-competitors (i.e. people offering the same service to a different geographic market) would love such a service, and would likely pay to use it.
The assessment continued to the point where a price could be placed on developing the application, as well as sales models for it (usage and membership fees), as well as marketing angles (it’s a B2C service, so market it to other businesses). The whole business could actually be run in conjunction with her existing business, taking little effort to set up new users on the system (most of this would be automated), but would require significant effort upfront.
What ended up happening is that a business was created for the sole purpose of giving a unique value proposition to ONE client. However, anyone who wanted to use the business, even competitors, could do so – but for a price. That is, we found a way to get the competition to pay to be the competition.
When looking at a business, and its approach to attracting customers, sometimes it will be discovered that something that was added to the business to make it more appealing is actually part of another business. When that’s the case, it might be smart to spin that part of the business off into its own entity, so that you can charge your competitors for using what you give away to your clients.