The hidden Unique Value tax you pay on your business growth – The Growth Tax Newsletter #5

growth tax, noun

A hidden cost or inefficiency that slows down a company’s growth rate, reducing its potential to expand and succeed in the market.

There’s a lot going on at Tesla, the world’s most valuable automotive brand. For the first time, it experienced a drop in sales at the end of last year. Whilst this drop is a modest 1% (2024 vs. 2023), it looks stark given the brand enjoyed 38% and 40% growth in the two years prior. And the bad news doesn’t stop there, with the latest results showing a more than 9% slump in shares.

Commentators are busy searching for reasons, and at the front of the list is the negative impact that Elon Musk’s new and polarising role is having in American politics and how it’s impacting the brand. Second, is how Tesla’s competitors are catching up, eating away at its superiority in design and performance and in doing so, chipping away at the brand’s unique value.

Put another way, Tesla’s competitive advantage is being eroded and what helped it to maintain a premium price over the last 10+ years is disappearing in a fog of cheaper, nearly-as-good alternatives.    

Rewind 5 years and there were limited EV options. If you wanted an electric car that went further and charged faster than all other options, you chose a Tesla.  In 2025, it’s becoming less compelling to shell out £50,000 for a new Tesla when the alternatives are nearly as good at half the price. 

In this latest version of our Growth Tax newsletter we’re unpicking the ‘unique value tax’ to help ensure brands and businesses are (and remain!) focused on what matters most to their customers. 

Unique Value Tax, noun

The cost incurred when your brand fails to deliver or communicate what it does that’s different from its competitors and that which its intended audience is willing to pay for.

Stage 1 – innovation into value

First of all, let’s make the case for why unique value is so important. And it’s an easy case to make; brands and businesses with goods or services with unique value will command some sort of price premium over competitors, and enjoy better margins and healthier profits. 

Brands and businesses often emerge from good ideas that capitalise on underserved customers. That is to say, the current market offering for a good or service isn’t giving the customer exactly what they want. This results in them paying too much to get what they want or paying a fair price but compromising on the product or service itself. 

This is where disruptors emerge and explains the success of brands from Uber and Airbnb to Tesla and Sky Sports. 

In each case, these brands spotted untapped value that they could offer to the end customer, differentiating themselves from all other options within their market.

Stage 2 – developing unique value

Once a brand or business has found a source of value to offer a target audience, focus turns to developing and defending it, and this can be hard (I’ve written before about how genuine USPs are extremely rare). 

In Tesla’s case, they created new models of even more highly engineered cars, they developed their super chargers and saw the strategic value in creating national and international networks of these charging points. Visit any UK service station and there’s usually a massive bank of their chargers. This was the brand building on its source of unique value; something no else could offer the end user and aligned with what user’s wanted. 

For a decade or more, alongside a brand image that was viewed as powerful, cool and innovative, sales boomed, the share price rose, and market dominance emerged. 

Beware the three levers of value disruption

First, the brand or business itself changes resulting in less value being offered to its audience.

Second, competitors erode unique value by playing catch up on features, benefits or brand salience. This is what’s happening to Tesla right now.

Third, the customer needs or desires change, and this disrupts what they value. This often impacts a business’s ability to satisfy these new needs or demands as effectively. 

Many business leaders know the risks. It’s why innovation is often built into internal processes, why getting close to the voice of the customer is crucial and why product roadmaps exist. All these processes, and more, reflect the need to pro-actively manage this source of value. 

However, it doesn’t guarantee success and often barriers and other priorities get in the way.

This can lead brands and businesses down a very dangerous path where they’re busy creating new products and services, committing time, effort and resources that aren’t aligned to what customers really want (or value). 

Ask yourself, how many of your latest phone’s new features do you use? Most of us do the same simple tasks, using the same half a dozen apps as we did years ago. It’s why Apple’s unique value remains more in the brand and less in the iPhone’s hardware.  

Therefore, unique value needs careful and active management – without it, you risk it disappearing altogether. Just ask Woolworths, Toys R Us, Kodak, BHS and a very (very!) long line of other but less famous examples.

TELL-TALE SIGNS 💡

If your business starts struggling to offer something with unique value to your customers, there are a number of common things you’ll see impacting your day-to-day business.

• In B2B, losing out to look-a-like competitors in competitive processes.
• In B2C, smaller brands grow quickly eating into your market share.
• You seem to be coming up against greater pricing pressure, with customers or clients renegotiating on price.
• A wide range of opposing views internally about what your customers truly value; this can be a warning sign for a number of things, a lack of focus on what the customer wants being one of them.

A final word

We work with a lot of businesses that have seen their unique value become eroded over time. This is sometimes because of an expectation that things won’t change or that competitors are doing something different or aren’t catching up. It can also be an over focus on the day-to-day priorities and not enough on longer term planning.

If you’re noticing some of the above tell-tale signs in your business, now’s the time to act. A refocusing on priorities is more easily done from a position of relative strength than out of desperation from dwindling sales, falling price premiums or a loss of product-market fit. 

Someone should warn Tesla.

If you missed our last growth tax newsletter, you can read it here. And if you want to talk to us about any of the topics in our growth tax newsletter series and how they relate to your business, drop us an email. 

Next month we’ll be looking at the Data Tax. Sign-up to the series to make sure you get the next instalment and if you like what you read, share it with your colleagues.

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