- WHAT IS POSITIONING?
- Positioning as Context
- The Two Positioning Traps
- The Five (Plus One) Components of Effective Positioning
- THE 10 STEP POSITIONING PROCESS
- STEP 1: Understand the Customers Who Love Your Product
- STEP 2: Form a Positioning Team
- STEP 3: Align Your Positioning Vocabulary and Let Go of Your Positioning Baggage
- STEP 4: List Your True Competitive Alternatives
- STEP 5: Isolate Your Unique Attributes or Features
- STEP 6: Map the attributes to Value "Themes"
- STEP 7: Determine Who Cares a Lot
- STEP 8: Find a Market Frame of Reference That Puts Your Strengths at the Center and Determine How to Position in It
- STEP 9: Layer On a Trend (but Be Careful)
- STEP 10: Capture Your Positioning So It Can Be Shared
- PUTTING POSITIONING INTO PLAY
Every single marketing and sales tactic that we use in business today uses positioning as an input and a foundation. Nothing works without positioning as a starting point.
Positioning is the act of deliberately defining how your are the best at something that a defined market cares a lot about.
Like speaking Japanese slowly and loudly to a person that only speaks English, putting a bigger marketing budget behind confusing and unclear positioning doesn't work. - April Dunford
The market is crowded with multiple products competing for people's attention. Positioning is how you break through the noise, take into account your own strengths and weaknesses, and contrast them against the competitive to put you in a unique leadership position in the minds of your customers.
How do you beat Bobby Fischer? You play him at any game but chess. - Warren Buffet
A lack of clear positioning leads to:
- prospects inventing a position for you, one that potentially hides your key strengths
- long sales cycles, low close rates, loosing to the competition
- high churn rates shortly after purchase
- new customers constantly asking for features you have no plan to build
- customers complaining that your prices are too high
WHAT IS POSITIONING?
Positioning as Context
When people encounter a product they have never seen before, they will look for clues to help them figure out what it is, who it's for, and why they should care about it.
If you're in a bakery making bread, you're a baker. If you make the best bread in the world, you're not an artist, but if you make the bread in a gallery, you're an artist. So the context makes the difference. - Marina Abramovic
The Two Positioning Traps
Trap #1 - You're stuck on the idea of what you originally intended to build and you fail to realize that your product has become something else.
When you put your product into the hands of customers, it can take a life of its own, and over time it can evolve into something different than you originally intended. Many businesses fail to realize this and continue positioning it in the incorrect way.
For example, cake and muffins are essentially the same thing, but positioning your product as such can have a dramatic difference on your business. 👇
Target buyers and where you sell
People looking for fancy desert at a bakery, food store, restaurant
People looking for a quick snack or breakfast at coffee shops and diners
Other cakes, ice cream, pies, assorted deserts
Donuts, danishes, bagels
Pricing and margin
Similar pricing to other fancy desert options
A buck or two, need to sell a lot
Key product features and roadmap
Features that appeal to restaurant goes that want cake for desert, gluten free, organic, fancy french caramel
Make it BIGGER, more chocolate, deep fried
Trap #2 - Your product hasn't changed, but the market surrounding your product has changed. What once worked in terms of positioning is no longer effective given the change in what the market is looking for.
Ex. Today your bakery is killing it selling "diet muffins" to office workers. But tomorrow, people may think less about "dieting" and more about heathy living, bodybuilding, etc. so the bakery across the street selling "gluten free paleo snacks" steals all your business.
Find out who you are and do it on purpose. - Dolly Parton
You cannot be everything to everyone. If you decide to go north, you cannot go south at the same time. - Jeroen Flander
The Five (Plus One) Components of Effective Positioning
- Competitive Alternatives - What customers would do if your product didn't exist. Customers have often never purchases a solution like yours before. You may be concerned with new competitors, but they've likely never heard of them. In most cases the competitive alternative is spreadsheets, docs, manual processes.
- Unique Attributes - The features and capabilities you have that other lack. Often technical features, but could also be things like your delivery model (ex. on premise vs cloud), business model (rent vs buy), experience and expertise (Python devs that have experience in retail point-of-sale).
- Value (and proof) - The benefit that those features enable for customers. Why should someone care about your unique attributes. Need to be provable in an objective, demonstrable way.
- Target Market Characteristics - The characteristics of a group of buyers that lead them to care a lot about the value you offer. You don't have unlimited money and salespeople, so you need to focus on the buyers that are most likely to buy. The customers that buy quickly, rarely ask for discounts, and tell their friends.
- Market Category - The market you describe yourself as being a part of, to help customers understand the value. A convenient shorthand to help your buyers quickly understand what you do. Brings assumptions around competitors, functionality, and price. (Ex. CRMs competing with Salesforce, have Salesforce-like features, and a similar price) The wrong category can hurt you if it puts the focus on features and value that you don't offer.
- Relevant Trends - Trends that your target customers understand and/or are interested in that can help you make your product more relevant right now. Can make your product a more strategic and urgent purchase. Example trends are AI, Blockchain, AR. (Ex. Sampler repositions from online sampling to "Direct to Consumer Sampling"
THE 10 STEP POSITIONING PROCESS
STEP 1: Understand the Customers Who Love Your Product
Make a short list of your best customers. They represent the perfect type of customer you want to buy from you — your best-fit customer.
Is your best-fit customer more likely to have certain characteristics? Big vs small, a certain Industry, business model type, etc?
What are the reasons these customers were so happy with our offering, while others were not? What was it about these customers that made them such a good fit for us?
Think of your product as a fishing net. You have a theory that it's good for catching grouper, but you haven't tested it yet. Start by going to a place with lots of different fish and see what you pull up. Then, based on what you start pulling up, move to a place with lots of those types of fish.
Look for things that work, then decipher why. What campaigns brought in the most leads? What content is consumed the most? What events/webinars had the most attendees? Asking these questions helps lead you to the happiest customers.
STEP 2: Form a Positioning Team
A positioning process works best as a team effort including different functions:
- Exposes how diff groups hold assumptions about your attributes, value, target markets
- Each group holds different perspectives on competitive alternatives and characteristics of your best-fit customer
- Expose those ideas and align the team on desired results
- It's a strategic exercise, so the person who owns business strategy should be there (for startups, that's likely your CEO/founders)
- Marketing can't own positioning alone, it's a broader business strategy
- You want every group engaged, because you want every group's buy-in
- If possible, bring in an outside facilitator to guide your positioning discussion. They make sure everyone's opinion gets heard, challenge long-held assumptions.
Positioning impacts every group in your org, with outputs like:
- Marketing: messaging, audience targeting, campaign development
- Sales and Biz Dev: target customer segmentation, account strategy
- Customer Success: onboarding, account expansion strategy
- Product and Dev: roadmaps, prioritization
STEP 3: Align Your Positioning Vocabulary and Let Go of Your Positioning Baggage
If you've managed to get senior leadership together for a day, don't waste it arguing over what positioning actually is. Everyone needs to be on the same page regarding:
- What positioning is, why it's important
- Which components make up a position, and how we define each
- How market maturity and competitive landscape impact the style we choose
You need to let go of your positioning baggage.
What got you here, won't get you there. - Marshall Goldsmith
STEP 4: List Your True Competitive Alternatives
The foundational component of positioning is the problem your customers are trying to solve, and how they perceive your offering in comparison to other ways of solving it.
When April asked customers what they would use if her database product didn't exist, none of them named another database. Instead, they suggested business intelligence tools or data warehouses.
We typically think that our main competitors are other products like ours. But most customers are not nearly as knowledgeable of our market, so without our product they would do things manually, with a spreadsheet, or not do it at all.
STEP 5: Isolate Your Unique Attributes or Features
In this step, focus on features and capabilities, rather than value. List all of the attributes your product has that your competitors don't. Can include:
- a 15-megapixel camera
- integrates with Quickbooks
- one-click installation
- a proprietary process
- expertise in a special area
- distribution channels
- special skills
What may seem like a negative could actually be positive. Ex. A software company is the only vendor on the market who requires a services team to install on-site. To some this could be a negative, but others see customization and high-touch service.
Don't list things that are subjective to feelings, like "we have the best service." Stick to things that are factual that you can prove. What about your company makes it have the best service?
STEP 6: Map the attributes to Value "Themes"
Customers care about what your features can do for them.
Features unlock benefits that can be translated into customer value
In your list you should see themes start to emerge. The goal of this step is to see patterns and shorten your list in to 1-4 value clusters. Look for the most critical things that bring our unique value to the front and center.
Ex. you could see "works on any mobile device" or "works without an internet connection." Those attributes might provide value to customers who want to use your solution with work in the field in remote locations. Lump those attributes into "supports remote environments"
STEP 7: Determine Who Cares a Lot
Look at which customers really care a lot about the value you offer. This is also called Segmentation.
Segmentation is more than just demographics and technographics. You need to look for characteristics about a person or company that makes them really care about what you do.
In general, a segment needs to meet at least two criteria to be worthy of focus
- It needs to be big enough that it's possible to meet your business goals
- It needs to have important, specific, unmet needs
STEP 8: Find a Market Frame of Reference That Puts Your Strengths at the Center and Determine How to Position in It
We position ourselves in a market (category) to trigger a set of assumptions — about competitors, features, and pricing — that work to our advantage.
Deliberately choose a market frame of reference that makes your value obvious to the people who care about it the most:
- Use abductive reasoning - look at your features and value and ask: what products typically offer those features and value?
- Examine adjacent (growing) markets - looking for adjacent markets that are growing quickly, trending, appearing new and cool.
- Ask customers (but be cautious) - customers will only try to position you in markets that relate to their industry or role, the most obvious market to them, that may not highlight your strengths.
There are 3 different approach to isolating, targeting, and winning a market:
1. Head to Head: Positioning to win an existing market
Customers are well aware of what solutions can and can't do. They compare alternatives using a set of features where you come out on top. You are claiming to be better for most, if not everybody.
Choose H2H when the status quo suits you and you want to continue to define it that way.
Head to head is rarely a good choice when launching a new product, especially if you're bootstrapping, but one situation when it can work is when a clear winner has not yet been established in a category. (Ex. Smart Glasses)
2. Big Fish, Small Pond: Positioning to win a subsegment of an existing market
You can subsegment by a number of things, like industry, geography, company size, etc.
You are taking advantage of what buyers already know about the broader category, but calling out the fact that there are important needs that are not being met by the category leader.
May need to convince people that many of your features are good enough, compared to the broader category leader.
For sub-segmenting to work, it needs to represent a large enough market opportunity, allowing you to meet your revenue goals.
Moving to focus on a subsegment may worry some people, but consider that you are deliberately choosing not to waste your focus on a part of the market that was never going to buy from you anyway and instead, focusing on where you have a distinct advantage. And just because your initial target market is narrow, doesn't mean it needs to stay that way.
When to use this approach:
- When your category is well defined, with a clear leader — and you're not it. If the broader category is not well defined, sub-segmenting will only confuse people more
- There is a clear, definable group of customers with unique needs that are not being met by the category leader
- The subsegment is easily identifiable
3. Create a New Game: Positioning to Win a Market You Create
You aren't just capturing demand, you have to create it first.
Creating a category is so hard, that you should only do it after evaluating every possible market category and determining that you can't position your product there, because doing so would fail to put focus on your differentiators and value.
This style of positioning involves the most "teaching" because you aren't leveraging what people already know about an existing category. Customers needs to first understand why this category deserves to exist, why is the problem unique, why do existing products in other categories fall short? You also need to teach them how to evaluate products in this category and why you're the best vendor to deliver on that solution.
The most successful efforts in category creation do not result from company executives creating an acronym at an offsite. Rather they are discovered from deeply understanding a narrow set of customers. - Mark Organ, Eloqua Founder
Category creation is hard, slow work, but if you are successful the rewards are huge. - Mark Organ, Eloqua Founder
STEP 9: Layer On a Trend (but Be Careful)
Trends help you explain why your offering is important right now.
You are looking for where your product, the market category, and a compelling trend overlap.
STEP 10: Capture Your Positioning So It Can Be Shared
Positioning needs to have company buy-in so it can be used to inform branding, marketing campaigns, sales strategy, product decisions, and customer success strategy.
April uses the positioning canvas below, to provide a concise version of positioning that can fit on one page.
PUTTING POSITIONING INTO PLAY
Translate Your Positioning Into a Sales Story
This is the pitch your sales team would give on a first call with a customer. It generally follows a common story arc:
- Define the problem
- Describe how customers are attempting to solve it and where the current solution falls short
- Describe the perfect world
- Introduce your product and position it in the relevant market category
- Talk about each of the value themes with more detail on how the solution enables that value
- Additional info:
- address common objections
- a case study or list of customers
- whatever you want the prospect to do next
Translate your sales story into messaging that can be used in marketing and sales material, for campaigns, and on your website.
Have a single source of truth (messaging document) will give everyone a starting point when creating any marketing material. Without it, every piece of marketing will build off the last and you risk moving away from your core messaging.
Product Roadmap and Pricing
Changing the way that a company thinks about itself will usually have an impact on how features get prioritized.
There are also price expectations in each category, so you may need to consider changing your price to better fit what's expected in your category. (ex. investment banks expect a CRM for them to be more expensive than the one-size-fits-all CRM)
Tracking Your Positioning Over Time
Check in on positioning every six month or when there's been a major event that could change the competitive landscape or the way customers perceive and evaluate solutions.
Major events could include:
- Established competitors enters your market. May trigger a change in customer thinking around pricing, expected features.
- New government regulations. Can get customers to care about features that were never important, giving a competitor an advantage if that's where they are strong.
- Economic downturns. Lead to customers focusing on cost cutting vs revenue expansion.
- New technology, like access to faster Wifi. Can shift a market by opening up new possibilities.
- Customer attitude and preference changes. (ex. the importance of hardware "design" in banking data centers)
- Any product can be positioned in multiple markets
- Great positioning rarely comes by default - be deliberate, try, fail, test, and try again.
- Understanding what your best customers see as true alternatives to your solution will lead to your differentiators.
- Position yourself in a market that makes your strengths obvious to the folks you're trying to sell to.
- Use trends to make your product more interesting, but be careful - it's better to be successful and boring, rather than fashionable and bewildering.