Product positioning as a concept has been around for ages, but just because we know what it is doesn't mean we know how to do it.
April Dunford presents her guide for how to analyze your USP and package and present it to the market in such a way that truly communicates its value. In this video April covers:
(00:00:08) - Hi, I'm April Dunford and I'm here to talk to you about positioning one of the most important business tools we have at our disposal. And yet one of the most misunderstood positioning is so misunderstood that generally when I talk about it, I have to start by talking about what positioning is not. It is not a tagline, it's not messaging, it's not, some people talk about brand positioning. That's a pet peeve of mine. We have branding, we have positioning. Those two things are completely separate. In fact, everything on this slide flows from positioning, but positioning has to come first. You can think of it this way, if everything we do in marketing and sales is the house, positioning is the foundation upon which the house is built. I like to define it this way. Positioning describes how our product is the best in the world at providing something that a well-defined set of customers cares a lot about.
(00:01:05) - You can think of it this way. It answers the fundamental questions, what is this thing and why should I care? It's a bit like context setting for products. Context is important, particularly when we're talking about products that we have never encountered before. We'll look for clues in the context as to what that product is all about. Here's an example of a product that I came across once completely out of context. Um, when I first saw this product, I thought for sure what this was, was a shoe. I thought, ah, Crocs, they really doubled down on this whole ugly shoe thing and they've, they've said, how can I make this shoe even uglier? Oh, I know, I'll open up the toe and I'll put the thing around the back. Then later I saw the product in context and it turned out, uh, that wasn't a shoe at all.
(00:01:53) - When I saw it in context, it was obvious what this product was all about and what it was good for. What it is is a dog muzzle. What it's good for is embarrassing your dog in public. Now, how do we actually figure out new products that we've first encountered when we've never seen them before? The research on this shows that customers use what they know to make sense of what they don't, so they use what they already understand to make sense of something new. Uh, that's important because the markets that we operate in are intensely crowded. So this is an example that I use sometimes just to illustrate just how crowded markets are. If you think about the universe for all the software in all the world to solve any problem, this is one person's attempt to model just one tiny corner of that universe, just the solutions to marketing problems.
(00:02:49) - And look at that slide. There's 7,000 companies on there. If you're one of those solutions, what do you do to make sure people can understand what your solution is all about? How do you stand out? How do you even get on a short list if you are a buyer for one of these solutions? You've gotta make sense out of all this to figure out what you should pay attention to and what you shouldn't. Market categories are one of the main ways that we figure out what we should pay attention to and what we shouldn't. If you look at this chart, you can see the person who made it has attempted to divide things into market categories, macro and micro ones. The macro categories are things like the colors, and that's the red is advertising and promotion. The orange is content and experience, for example. Uh, and then inside each of those, there's micro categories and those are the individual boxes.
(00:03:43) - Let's say I'm a vice president of marketing and I'm looking for a solution to do live chat on my website. I, I would look at this chart and say, Hmm, that looks like the yellow stuff, social and relationships. And uh, sure enough, there's a box in there called bots and live chat. That's great. Now I'm not paying attention to 7,000 things anymore. I'm paying attention to, well, you know, to be honest, it doesn't look that great. There's still a lot of things on here, but at least it's not 7,000. But that's not all positioning a product in a market category does. What it does is it sets off a really powerful set of assumptions in the minds of customers about what your product is all about. It looks a bit like this. If I were to tell you that my product was a crm, for example, and that's all I told you, just that market category, you would make some pretty big assumptions about who my competitors are, what the features are.
(00:04:44) - Like let's say for example, crm. If I told you my solution is customer relationship management, who is my competitor? Well, it's probably Salesforce. They're the leader in that market. What features would you expect me to have? Well, you would expect I would do tracking an account, tracking, uh, a deal across a pipeline. You would expect the person I sell that solution to to be the sales manager or the, the VP sales. Now here's where it gets crazy. What's my pricing? Well, you don't know. I just told you I was a CRM and that's it. But you know, I compete with Salesforce, so you would probably assume that since they're the leader, my solution costs less than that. Here's an example. Once I got a call from a startup that, um, the investor had just made an investment and he said, April, customers love this thing.
(00:05:34) - Once they buy it, they love it. The problem is on a first meeting, nobody can figure out what the heck it is. Maybe you can help them. So I said, sure. We got the guys on the phone and I said, Hey, explain your thing. And they said, well, we are lawyers ex-law, and we got this idea for a new product and it's email for lawyers. My first thought was, who do the lawyers needed their own email, but okay, not a lawyer, that's fine. And they said, yeah, we're email for lawyers. They jump into the demo, they show it to me. And eventually I said, Hey, how does the calendar work on this email? And the guy said, oh, we don't have a calendar. And I'm like, you don't have a calendar? Wait, that doesn't make any sense. How do you replace Gmail and Outlook if you don't have a calendar?
(00:06:14) - And they said, oh, no, we don't. We don't compete with them. And I'm like, okay, now you're telling me the lawyers need to have two emails. That's confusing. So back up. Apparently customers love you. Why do they love you so much? They said, well, uh, the reason customers love us is we have this cool feature. And what it is, is this super secure context aware file sharing. So if lawyers have to collaborate with their clients, um, what this thing does is it automatically figures out who should have access to a document, puts it in a super secure place, and everybody that should have access to it does. And everybody that doesn't not supposed to have access to it does not. Neat, amazing magic actually. But that's also not email. If I wanted to solve that problem, would I hire email to do it? No. So what these guys have is this really innovative, neat, groundbreaking product disguised as kind of crummy email.
(00:07:16) - Now, what if I took that same product and I put it in another market category? What if instead of calling it email, I said, Hey, what this thing actually is, is team collaboration for lawyers. Now you have different expectations for this product. Completely. I didn't change the product. All I did was change the context around it. So now all of a sudden, team collaboration. I don't compete with Gmail anymore, I compete with Slack, Microsoft teams maybe. And what would I expect? I would expect that this team collaboration for lawyers is kind of like Slack, but it does something super cool and special just for lawyers. And that's exactly what it does, is super secure. Context aware, a file sharing thing that change in context can completely change the way that we think about a product. It also highlights another problem we have is that most of the time we fail to position our products deliberately.
(00:08:12) - We have an idea for what the product should be and we put it out in the market and then we add things, we take things away. People like things they don't, they do things with our product we never could have imagined. And then eventually, you know, our email starts looking like team collaboration. Our database starts looking like a business intelligence tool. Um, things change. And we as the inventors don't always take a step back and say, what is the best context that I could put this thing in? Here's another example. Early in my career, super early, uh, when I was very junior, I was working at a startup and uh, we had a new product that we launched and we had envisioned it as desktop productivity software. This was years ago. This thing was not software as a service. Uh, it was standalone software. We sold it off the website for a hundred dollars a pop.
(00:09:04) - We ran big marketing campaign. After a few months, uh, it turned out we didn't sell all that many. We had sold a couple hundred, but the business wasn't gonna survive on a couple hundred. We needed thousands of these. So we decided that we were probably gonna end of life the product. Now I was junior on the team, so I got given a job. Uh, since we had no data about how this thing was getting used at all, the only way we could figure out how folks were using it was if somebody would call them. So I go, as the lucky person, got the job, I had 200 customers, they gave me the list and they said, talk to a hundred of these people and find out what they're doing and importantly, find out if they're gonna be mad if we turn it off. So I went about my duty and I made a hundred calls over a month.
(00:09:51) - Well, I actually made thousands of calls, but I had a hundred conversations. And here's how the conversations went. Uh, the first 20 people that I talked to, the conversation was exactly the same. I said, hi, I'm new girl in marketing. I'm calling to find out why we're using product X, Y, Z. And the the person would say, what? Uh, we don't have that. What are you talking about? And I'd say, Hmm, I don't know. I got a spreadsheet right here. It says you bought it on uh, July 27th. They're like, oh yeah, that thing. Yeah, you know, we fooled around a bit with it, but you know, we don't use it at all. Yeah, we don't use it at all. We don't do anything with it. And I'm like, oh, okay. I guess it won't be bad if we turn it off. Then 20 conversations like that.
(00:10:36) - Then I had customer conversation number 21, customer conversation 21 was very different. I called the guy, I said, Hey, uh, I'm calling from this company. You have this product. The guy says, I love it. That thing saved my bacon. I love it. It's the greatest product I ever bought. And he started describing how they were using it. Now, we had envisioned this product as desktop productivity software. What it was, was like an, it was like a spreadsheet except you could do an SQL query on it. So we were geeky. We thought everybody wants a spreadsheet that does sql, right? Um, turns out, actually no, uh, but when I talked to customer 21, I said, what are you using it for? And he was not using it for that at all. He said, you know what? Um, this is back 20 years ago or so.
(00:11:24) - We were just starting to give salespeople laptops to go out in the field. He said, you know what's great about this database? It runs sql, but I can put it on a laptop and I could never do that. Before our Oracle database had to run on great big servers. So I put it on a laptop. I let my salespeople have it, I wrote them a little program. They can now go and take orders in the field. Before they had to do that on pen and paper. They'd come back, they entered this stuff in manually. They'd make mistakes. They'd have to go back. Customers were unhappy. This thing has saved us a lot of money, saved us a lot of time. And we find that our sales reps actually do more business because they can take the order on the spot. Weird. I said to myself, that's not what we built that thing for.
(00:12:08) - I wrote down his details and I didn't have the heart to tell him, look buddy, we're gonna cancel this product. I had 20 more calls and they were all the same. Oh, nobody, nobody's using the thing. Nobody even remembered buying the thing. And then I found another one and he was doing the same thing. He said, oh yeah, I put the database on all my field service reps, devices. They can go out, do a service call, the thing captures it, they go back to the office, they plug in, it's great. It's SQL, it talks to the Oracle database back at headquarters. I'm like, oh man, there's two of these weirdos. I did 100 calls and in that I found five that were doing something with putting the thing on a, on a device and taking it out to the field. So I came back to my executive team and said, Hey, I got good news and bad news.
(00:12:57) - Depends on your definition of good news and bad news here. So the the the, the good news is vast majority of people are not gonna be sad when we turn this thing off. Bad news is I got a handful of people are gonna be really, really upset cuz they're doing this with it. And I described it now, uh, we, this resulted in a lot of hand ringing internally and we thought, you know what? Maybe we should try, maybe we could try repositioning this thing as an embedable database for mobile devices. Uh, will hire a sales rep and we see if we can sell some. Turned out we sold a lot. In fact, we sold so many. The product took off. We eventually got acquired by the biggest database provider in the world at the time. And at its peak that product was doing almost a billion dollars in revenue.
(00:13:50) - It exists today and does hundreds of millions in revenue. And we almost killed it because we did not understand what it was. It also highlights what we can do today that we couldn't do previously is usage data would've saved me a lot of time on the phone calling people to find out. The key to this stuff is in the way people are using your products today. Now, if positioning is so important, how do we actually do it? Um, this is a question that troubled me for a really long time. Um, if you go to marketing school, um, the closest thing you get to a methodology for positioning is this thing called the positioning statement. It's a bit of a madlibs fill in the blanks exercise where you say we are a blank that does blank, unlike blank. And you fill in things like your market category and who your competitors are and things like that.
(00:14:46) - Uh, I first came across it when taking a marketing class, uh, and the professor explained how this worked and then he tried to move on to another lesson. I was like, wait, hang on, I don't understand how this actually tells me how to do positioning. There's a blank there that says market category. I was just involved in a repositioning where we thought we had, uh, desktop productivity software and it turned out what we had was an embedable database for mobile devices. Which market category is the best one? How could I save myself six months not to mention a lot of phone calls? How could I have figured that out with this methodology? You know what the professor said to me? I explained the whole situation. I said, how do we know? How do we know which market category to put in there? Which is the best one?
(00:15:30) - He leaned in and he said, trust me April. You'll just know. That's when I knew that nobody actually knows how to do that. That's what that answer means. I decided I was gonna figure this out. If we think about it, you can break positioning up into five component pieces and the component pieces are the blanks and the positioning statement. And they are one, market category. What's the market I intend to win? Two, competitive alternatives. Who do I gotta beat to win that market? Three, what are my unique attributes or features that make me different than the competitors? Four, how do those features translate to value for customers? And then the last one is five, market segments. Who is the best fit customer for what it is that I do? Now the trick with this is you can't just do them in any order. It turns out all those five components have a relationship to each other.
(00:16:26) - Let's take value. The unique value that my product can deliver to customers is completely dependent on the differentiated features, but those features are only differentiated if I compare them to a competitive alternative. So those things are all related. Uh, my best fit customer, by definition, these are the people that care the most about my value. So those two things are related. And lastly, I have market category. What's that? Well, that's the context I weave around my product that makes this value obvious to these people. So where do I start? Now it took me a long time, but eventually I came up with this flow. We actually have to start with competitive alternatives. If we don't, then we'll end up with neat positioning, but it isn't necessarily gonna win in the market because it's not differentiated. Now, competitive alternatives, we often mistake those for competitors, but a lot of the times our hardest competition to beat is not other companies that do what we do.
(00:17:32) - It's things like, let's do it in a spreadsheet or let's hire an intern to do it. I've worked with companies where they thought their competitor was were other products in the market that looked like them. And they were positioning around things like ease of use. They'd say, look the other competitors, it takes 15 clicks to do this thing where ours, it just takes one click. So we are easy to use, that's why you buy us. But then when you look in the market, when you ask yourself, what would those customers do if this product didn't exist? And the answer is, well, they just hired an intern to do it. Now trust me, you're never gonna beat the intern on ease of use. You just aren't. These are the, the interns really easy to use. Joey, give me a coffee, come back, fill in the spreadsheet.
(00:18:21) - Now the intern's bad at a lot of other things. The intern makes mistakes. The interns can't save a customer profile. The intern quits on you. And then you gotta do everything all over again. So the first step is you need to understand your competitive comparables. Then you can say, what's unique about me? How does that translate into value for customers? Which customers care the most about that value? And therefore, what is the best market category for me to position my stuff in? Now, uh, turns out, uh, everybody that watching this video right now, if you want to go deep dive on how to do this positioning methodology, I wrote a book about it and I think you're all gonna get a copy of it. Uh, thanks to our gracious host today. I wanna touch on something right at the end because I think it's timely. Uh, people will ask me, when does positioning change?
(00:19:14) - And I'll say, well, you know, we can't just set it once and forget about it. It changes a lot depending on things that are happening in the market. Sometimes you add features or remove features and that results in a change in positioning. Sometimes you have new competitors come into the market that changes your competitive alternatives and requires that you do a shift in positioning. Other times what we have are forces beyond our control. So these are things like a change in government regulation happens and all of a sudden customers are thinking about different things your positioning might need to change. We also have things like an abrupt change in the economy. So we're going through that right now. Um, often what happens is we'll have an abrupt change in the economy and it changes the priorities of the customers you're trying to sell to. Now in strong economies, typically, um, if I'm selling to businesses anyway, I kind of only have two value propositions.
(00:20:14) - I can either help businesses make money or I can help businesses save money. That's it. I only have those two things. Um, and in a good economy, make money is a stronger value proposition than save a couple of bucks cuz everyone's trying to grow. The economy is good. So you may posi be positioned around, Hey, this is gonna help you get new clients. Hey, this is gonna help you expand your business. Hey, this is gonna help you do more stuff. However, that logic gets turned on its head when we're in the middle of an economic downturn. In an economic downturn, you may have customers that are suddenly saying, you know what? Growth isn't possible. I cannot grow right now. And suddenly your message around this thing helps you grow, seems irrelevant. And a secondary message of, Hey, this would help me save some money, suddenly seems extraordinarily relevant.
(00:21:09) - If this is happening in your customer base right now, you may wanna consider going back to square one on your positioning and figuring out does your positioning need to change because your customer's priorities have shifted. So I wanna leave you with three key takeaways. Uh, first, if you are gonna reposition, you need to position deliberately. That includes, uh, taking a good hard look at who you actually com compare to and compete against. Secondly, you need to pay attention to who loves your stuff and why. And that includes having a good hard look at your usage data and your metrics to see what are people using, what are the commonalities across those folks. And then lastly, if you do need to reposition, uh, because something big is happening in your market, if you do it, you need to use a structured process to do that. My name's April Dunford. You can drop me an email or uh, find firstname.lastname@example.org. Thanks so much. It's been so great talking to you.