3 Ways to Discover Your Unique Selling Proposition You can't target your sales efforts successfully if you don't know what sets your business apart from the rest.

In their book, Start Your Own Business, the staff of Entrepreneur Media Inc. guides you through the critical steps to starting a business, then supports you in surviving the first three years as a business owner. In this edited excerpt, the authors explain what a USP is and how figuring out what your business's USP is will help grow your sales.

No matter what business you're in, if you're an entrepreneur, you're in sales. "But I hate to sell," you groan. Well, guess what? Anyone can sell—anyone, that is, who can learn to connect with the customer, listen to their needs and offer the right solutions. In fact, as your business's founder, you're better positioned than anyone else to sell your products and services. Even if you have a team of crack salespeople, there's no one else who has the same passion for, understanding of and enthusiasm about your product as you do.

Before you can begin to sell your product or service to anyone else, however, you have to sell yourself on it. This is especially important when your product or service is similar to those around you. Very few businesses are one of a kind. Just look around you: How many clothing retailers, hardware stores, air conditioning installers and electricians are truly unique?

The key to effective selling in this situation is your "unique selling proposition" (USP). Unless you can pinpoint what makes your business unique in a world of homogeneous competitors, you cannot target your sales efforts successfully.

Pinpointing your USP requires some hard soul-searching and creativity. One way to start is to analyze how other companies use their USPs to their advantage. This requires careful analysis of other companies' ads and marketing messages. If you analyze what they say they sell, not just their product or service characteristics, you can learn a great deal about how companies distinguish themselves from competitors.

For example, Charles Revson, founder of Revlon, always used to say he sold hope, not makeup. Some airlines sell friendly service, while others sell on-time service. Neiman Marcus sells luxury, while Walmart sells bargains.

Each of these is an example of a company that has found a USP "peg" on which to hang its marketing strategy. A business can peg its USP on product characteristics, price structure, placement strategy (location and distribution), or promotional strategy. These are what marketers call the "four P's" of marketing. They are manipulated to give a business a market position that sets it apart from the competition.

Sometimes a company focuses on one particular "peg," which also drives the strategy in other areas. A classic example is Hanes L'Eggs hosiery. Back in an era when hosiery was sold primarily in department stores, Hanes opened a new distribution channel for hosiery sales. The idea: Since hosiery was a consumer staple, why not sell it where other staples were sold—in grocery stores?

That placement strategy then drove the company's selection of product packaging (a plastic egg) so the pantyhose didn't seem incongruent in the supermarket. And because the product didn't have to be pressed and wrapped in tissue and boxes, it could be priced lower than other brands.

Here's how to uncover your USP and use it to power up your sales:

1. Put yourself in your customer's shoes.

Too often, entrepreneurs fall in love with their product or service and forget that it's the customer's needs, not their own, that they must satisfy. Step back from your daily operations, and carefully scrutinize what your customers really want. Suppose you own a pizza parlor. Sure, customers come into your pizza place for food. But is food all they want? What could make them come back again and again and ignore your competition? The answer might be quality, convenience, reliability, friendliness, cleanliness, courtesy or customer service.

Remember, price is never the only reason people buy. If your competition is beating you on pricing because they're larger, you have to find another sales feature that addresses the customer's needs and then build your sales and promotional efforts around that feature.

2. Know what motivates your customers' behavior and buying decisions.

Effective marketing requires you to be an amateur psychologist. You need to know what drives and motivates customers. Go beyond the traditional customer demographics, such as age, gender, race, income and geographic location, that most businesses collect to analyze their sales trends. For our pizza shop example, it is not enough to know that 75 percent of your customers are in the 18-to-25 age range. You need to look at their motives for buying pizza—taste, peer pressure, convenience and so on.

Cosmetics and liquor companies are great examples of industries that know the value of psychologically oriented promotion. People buy these products based on their desires (for a prettier face, luxury, glamour and so on), not on their needs.

3. Uncover the real reasons customers buy your product instead of a competitor's.

As your business grows, you'll be able to ask your best source of information: your customers. For example, the pizza entrepreneur could ask them why they like his pizza over others, plus ask them to rate the importance of the features he offers, such as taste, size, ingredients, atmosphere and service. You'll be surprised how honest people are when you ask how you can improve your service.

Since your business is just starting out, you won't have a lot of customers to ask yet, so "shop" your competition instead. Many retailers routinely drop into their competitors' stores to see what and how they're selling. If you're really brave, try asking a few of the customers after they leave the premises what they like and dislike about the competitors' products and services.

Once you've gone through this three-step market intelligence process, you need to take the next—and hardest—step: clearing your mind of any preconceived ideas about your product or service and being brutally honest. What features of your business jump out at you as something that sets you apart? What can you promote that will make customers want to patronize your business? How can you position your business to highlight your USP?

Don't get discouraged: Successful business ownership isn't about having a unique product or service; it's about making your product stand out—even in a market filled with similar items.