Positioning isn’t a new or trendy concept, but its’ a critically important input and foundational element into every marketing and sales tactic a business uses.
Positioning impacts every group in the organization, including:
- Marketing: messaging, audience targeting and campaign development
- Sales and business development: target customer segmentation and account strategy
- Customer success: onboarding and account expansion strategy
- Product and development: roadmaps and prioritization
Positioning as “context”
Without context to guide us, we would be overwhelmed, maybe even paralyzed by the number of choices available. Context helps us quickly figure out whether something is important.
This is especially critical for new or innovative products. In order to understand what a new product is, people need to compare it to something they already understand – a frame of reference. Positioning helps us do this.
Positioning needs to be deliberate
A common failure is to not deliberately position products, but sticking with “default” positioning, even after the product or market changes.
Imagine the makers of cake pops had used the “default” positioning of cake on a stick. This would not work. “Cake on a stick” doesn’t sound like better cake or innovative cake—it just sounds wrong.
Instead, they deliberately position it as a lollipop. In that context, the stick and the ball make sense.
Signs you might have weak positioning:
- Your current customers love you, but new prospects can’t figure out what you’re selling
- Your company has long sales cycles and low close rates
- You have high customer churn
- You’re under price pressure
- You see a disconnect between how your happy customers and prospects describe you
Why You Should Never Create a Positioning Statement
The positioning statement is widely taught in marketing courses and business books, but it isn't super helpful.
- It assumes you know the best way to fill in the blanks
- It reinforces the status quo
- It doesn’t give you any hints about what to do next
The Five (Plus One) Components of Effective Positioning
Each of these components are interconnected, and flow from one to the other. So the order you tackle them matters a lot.
1. Competitive alternatives: The competitive alternative is what your target customers would “use” or “do” if your product didn’t exist.
In business software, the most common competitive alternative is a combination of general-purpose business software (spreadsheets, documents, presentations) and manual processes
2. Unique attributes: Your unique attributes are your secret sauce, the things you can do that the alternatives can’t.
These are often technical features, but unique attributes could also be things like your delivery model, your business model or your specific expertise.
3. Value (and proof): Value is the benefit you can deliver to customers because of your unique attributes.
4. Target market characteristics: Target customers buy quickly, rarely ask for discounts and tell their friends about you.
5. Market category: Declaring that your product exists in a market category triggers a set of powerful assumptions.
Market categories help customers use what they know to figure out what they don’t.
For example, if I describe my product as a CRM tool, you will assume my competition is Salesforce, and that the features include keeping track of contacts, activities and opportunities. You would also assume my pricing is similar to Salesforce.
6. (Bonus) Relevant trends: Trends can help customers understand why a product is important right now. This is an optional but but often desirable part of positioning.
10 Step Positioning Process
Here's April's 10 step process to do positioning the right way.
Step 1. Understand the Customers Who Love Your Product
Your best-fit customers hold the key to understanding what your product is. The first step is to make a short list of these customers.
If you don’t have any happy customers yet, hold off on tightening up your positioning until you do. It’s better to position your new product as a “fish net” since you don’t know if it’s better for catching tuna vs. grouper.
Also, if you’re a single product company, position the product and the company as the same thing.
Step 2. Form a Positioning Team
In startups, this team is usually led by the CEO and/or the founders. You want engagement from every group because you need buy-in from every group.At a minimum, the team needs to be on the same page regarding:
- What positioning means and why it is important
- Which components make up a position and how we define each of those
- How market maturity and competitive landscape impact the style of positioning you choose for a product
Step 3. Align Your Positioning Vocabulary and Let Go of Your Positioning Baggage
In order to consider possible new ways to think about a product, we have to consciously set aside our old ways of thinking about it.
E.g., Arm & Hammer switched from thinking of themselves as a baking product, and started thinking about their product as a deodorizer.
The most important part of this step is to get agreement from the team that the positioning may need to be changed.
Step 4. List Your True Competitive Alternatives
The features of our product and the value they provide are only unique, interesting and valuable when a customer perceives them in relation to alternatives.
You need to understand what a customer might replace you with in order to understand how they categorize your solution.
The competitive alternatives often naturally cluster, and if so, it’s helpful to group them (usually two to five).
Concentrate on “consideration” attributes – what customers care about when they are evaluating whether or not to make a purchase.
Step 5. Isolate Your Unique Attributes or Features
Once you have a list of competitive alternatives, the next step is to isolate what makes you different and better than those alternatives. To do this, list all of the capabilities you have that the alternatives do not.
Sometimes it is helpful to think about the feedback you get from customers when you ask them why they chose your offering.
Focus on the characteristics of your product or company that drives a potential benefit—ideally those features are based on objective facts and are provable.
Step 6. Map the Attributes to Value “Themes”
Once you have your unique attributes, it’s time to define exactly why customers should care about them. You want to frame benefits in terms of the goal the customer is trying to achieve.
For many consumer technical products, features are presented as valuable in their own right—but only because we do the translation to value automatically in our heads
Cluster the Value into “Themes” – look for patterns and shorten the list to one to four value clusters.
Remember: this positioning exercise is not about highlighting every little feature and attribute that our customers love, just the critical themes.
Step 7. Determine Who Cares a Lot
Once you have a good understanding of the value that your product delivers versus other alternatives, you can look at which customers really care a lot about that value.
An actionable segmentation captures a list of a person’s or company’s easily identifiable characteristics that make them really care about what you do.
You're looking for the best-fit customers, meaning those who are easiest to sell to and retain.
The broader your focus, the more difficult it is to connect with prospects and convince them that your solution is the best one for them above all others.
Target as narrowly as you can to meet your near-term sales objectives. You can broaden the targets later.
Great positioning resonates with your best-fit customers right now, and will evolve with them over time.
In general, the segment needs to meet at least two criteria to be worthy of focus: (1) it needs to be big enough that it’s possible to meet the goals of your business, and (2) it needs to have important, specific, unmet needs that are common to the segment.
Step 8. Find a Market Frame of Reference That Puts Your Strengths at the Center and Determine How to Position in It
You now have a good handle on your ideal prospects, your product’s unique attributes and the value those attributes can deliver. The next step is to pick a market frame of reference that makes your value obvious to the segments who care the most about that value.
Remember that your offering and the market may have evolved over time, so the original category may no longer be the best way to frame your unique strengths.
We position our offering in a market to trigger a set of assumptions—about competitors, features and pricing—that work to our advantage.
Use abductive reasoning to choose a market category by isolating your key features and their value.
- What types of products typically have those features?
- What category of products typically deliver that value?
- Examine adjacent (growing) markets
- Only choose a market if it makes your strengths obvious.
You can also ask your customers – but be cautious. Customers aren’t positioning experts, nor are they experts in how a market category works.
Frequently they will attempt to position you in the most obvious market possible, and this market is often not the best one for highlighting your strengths.
Here are three approaches for isolating, targeting and winning a market.
1. Head to Head: Positioning to win an existing market
You are competing directly against other established players in a well-defined market. For the most part, customers are well educated about what solutions in this market can and cannot do.
If you are launching a new product, particularly if you are a small business just starting out, the Head to Head style is rarely a good choice. Trying to beat an established market leader at their own game is a bit like trying to out-cola Coke.
A larger company might attempt to take on an established leader head to head, but only where the market sands are shifting in a way that could put the leader at a disadvantage or a challenger at an advantage. A new breakthrough capability, a change in government regulations or a shift in economic factors might give a strong challenger the opportunity they need to take down an established leader.
The only case where a company might want to position a new product in a known category is when the category itself is defined and understood by buyers, but a strong leader has not yet been established.
The advantage of positioning in an existing market category is that you don’t have to convince people the category needs to exist.
If you are looking to bootstrap your business, this may not be the way you want to enter the market.
2. Big Fish, Small Pond: Positioning to win a subsegment of an existing market
In marketing, the process of splitting up an existing market is called subsegmenting.
The goal of the Big Fish, Small Pond style of positioning is to carve off a piece of the market where the rules are a little bit different—just enough to give your product an edge over the category leader.
You get the advantage of a well-defined category without the stiff competition.Dominating a small piece of the market is generally much easier than attempting to directly take on a larger leader.
Word-of-mouth marketing happens most naturally in tight market subsegments.Companies tend to shy away from this style because they are worried that moving from targeting the entire market to just a small piece of it will mean less opportunity. In reality the opposite is frequently true: you are simply unselecting the part of the market that was never going to buy your product anyway in order to focus only on customers where you have a distinct advantage.
Just because your initial target market is narrow doesn’t mean you will stay narrowly focused forever.Once you are larger, you may be ready to take on the market leader head to head, or try to create a new market.
3. Create a New Game: Positioning to win a market you create
Often a category emerges when an enabling technology, a shift in customer preferences and a supporting ecosystem manage to come together at once.
To credibly create a new category, you need a product that is demonstrably, inarguably new and different from what exists in other market categories.
To successfully create a new category, you need to have strong arguments against any competitor that tries to convince customers that what you are selling is “merely a feature” instead of a product in its own right.
Category creation is about selling the market on the problem first, rather than on your solution.Because of the investment and time required, this style is generally best used by more established companies with massive resources to put toward educating the market and establishing a leadership position. For smaller companies, this style generally requires the participation of deep-pocketed, patient investors.
Step 9. Layer On a Trend (but Be Careful)
Once you have determined your market context, you can start to think about how you can layer a trend on top of your positioning to help potential customers understand why your offering is important to them right now. This step is optional but potentially really powerful—if you go about it carefully.
Ideally, if a current trend helps reinforce your positioning and the value that your offerings deliver, you can use it to your advantage.Note: ScreenshotCaution: if the trend doesn’t reinforce your positioning, it can also muddy your positioning waters. Describing a trend without declaring a market can make your product cool but baffling.
Trends can only be used when they have a clear link to your product. Start by making the connection between your product and the market obvious.
If you find that you don’t have a way to pull trends into your positioning, there’s no need to panic.
Many companies operate perfectly fine in markets that don’t have much sizzle and pizzazz.
Step 10. Capture Your Positioning so It Can Be Shared
Positioning on its own isn’t useful to a company. Once you have worked through your positioning, you need to share it across the organization. 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.
What happens next?
For B2B products, you should translate your positioning into a sales story. It’s very important that the positioning is embodied in the way your salespeople frame the product, particularly on a first sales call.
When selling to businesses, a sales story generally follows a common arc. It starts with a definition of the problem that your solution was designed to solve.
The story then moves to describing how customers are attempting to solve the problem today and where the current solutions fall short.
The next stage of the story is what I call “the perfect world.” It’s where you describe what the features of a perfect solution would be, knowing what you know about the problem and the limitations of current solutions.
Next, the story naturally flows into talking about each of the value themes with a bit more detail into how the solution enables that value.
There are already stores full of books that can teach you how to do a better job of messaging, so I will give you just one tip that I think is important: write a messaging document.