Market Positioning Guide: Become a natural choice for your clients
- by: Vladimir Blagojevic
Our B2B businesses are being disrupted faster than we ever thought possible.
Technology and globalization landed us in a highly competitive environment without borders. Until recently, this meant having to battle for the attention of our clients and avoid the ‘race to bottom’.
But the recent crisis takes that to a completely new level.
In this emerging new world, companies will keep buying — but they’ll focus on what’s essential, will have more choice and will be more critical.
If it was already hard to stand out before, think about how fierce the competition is becoming now.
In this article, I’ll describe a strategic tool you can use to position your business as essential to your clients. It’s comes down to making 7 strategic choices that allow you to be perceived as a unique fit solution by your best clients.
How essential are you (compared to alternatives)?
When earlier this year we searched for a doctor to help with our son’s enlarged adenoids, we didn’t just settle for a GP, nor just any otorhinolaryngologist.
We searched for a pediatric specialist with relevant experience, and finally chose based on recommendations from another parent — after extensively checking any information we could find about the doctor.
We felt like we found a uniquely fit expert for our situation, to solve an essential problem we were dealing with.
B2B buyers are no different.
This year, I helped my clients survey and interview more than 300 B2B buyers. One of the questions we asked was how they searched and chose a solution provider.
What did we learn?
B2B buyers have very similar preferences to me as a parent. They also prefer to ask around and check references, and want a partner with proven expertise with other similar companies.
They choose a reputable, specialized provider
who’s a unique fit with their situation.
(unique among the alternatives they are considering)
But wait, how do our clients know we’re a unique fit before the purchase?
The short answer is: they don’t.
This is especially true if you are selling complex B2B products or services, such as niche or enterprise software, or professional services such as consulting. Or if your solution is so innovative that clients don’t have a point of reference yet.
Because you are selling so-called ‘credence goods’ — products or services that can only be evaluated after the purchase.
So what do the clients base their decision on?
Clients evaluate the fit based on the perception they form
as they get to know, like and trust you
This perception is formed based on the total sum of all their experiences with your team, website, email, social media... as well as what others say about you.
Successful companies deliberately engineer their clients’ perception
Say ‘cola’, and people think Coke. Say ‘CRM’, ‘marketing automation’ or ‘market research’, and most people are likely to think of SalesForce, Hubspot or Gartner.
We don’t even say ‘to search the web’ anymore, but simply say ‘to google’.
This is because these companies occupy a unique position in your mind. Specifically, the position of the market leader in their respective category.
BTW, note that most of the examples above weren’t the first product in their category. They’ve worked hard to build and defend their position.
But what about our smaller B2B businesses?
A client of mine developed a new survey tool that gave higher response rates and more relevant responses. Their technology was innovative, provided unique benefits, and they had a few corporate clients. But it remained a struggle to build traction in the ‘usual suspect’ markets, like employee surveys.
After a veteran CEO joined their team, they decided to take a step back and review their existing customers. The most promising use-cases seemed to be in the healthcare market.
The team embarked on a difficult journey that resulted in a unique competitive advantage:
- The first step was to find an early adopter. After speaking to many healthcare providers, they managed to sign a pilot project with an innovative hospital.
- The startup then parleyed that first success into a few more projects with other hospitals.
- Finally, they were ready to go after their real target: pharmaceutical companies. Again, through a pilot with an 'innovator', they slowly started signing bigger deals.
- They still had to overcome all other barriers to entry, like getting required certifications and corporate approvals.
- In addition, they had to invest even more in building specific features to increase the value of their offering, and transform "an app" into a solution.
But once they were in, the rewards were great too.
Their average deal size grew by a factor of 10, while their competition was a fraction of what they faced before
This is a classic ‘bigger fish in a smaller pond’ move.
And how about smaller B2B service companies?
When a B2B service “sells itself”
When I switched from being a software programmer to advising software and consulting companies fourteen years ago, I knew nothing about sales or marketing.
But soon after joining, I was sent to accompany my colleagues while finding new clients for our projects.
Since I knew nothing about sales, I had to ask my teammates.
One told me: “you need to become furniture in the client’s office”, meaning, you need to develop a deep relationship overtime.
Another colleague showed me that I didn’t need to sell, but rather focus on listening to clients, take the time to analyze their challenges and recommend solutions, indicating along the way how we can help them.
This didn’t sound that hard!
A few years later, I started bringing in quite a lot of projects, some worth millions to my former employer.
But not because I was a talented salesman (I was no salesman at all).
We had a unique position in the market
My employer was one of the largest and oldest organizations in the industry, enjoying a special status and trust in the market. We were unique in many ways.
But this is not just for established organizations.
When I started my business nine years ago, without realizing, I built a unique position for my business.
Soon after starting, I discovered that the worst thing you can do is position your business by saying what you are doing. I still remember the initial awkward calls I had with potential clients explaining how I can help them with “digital marketing”.
Nobody was interested.
I realized that I needed a unique story, and a platform to tell it to my potential clients
First, I worked on the story. Instead of talking about what I do, I built a story around a methodology, a special approach (and mindset) for growing B2B tech companies. I still remember the first PowerPoint presentation I made for a sales call with one of my first clients.
I’ve since stopped using presentations during calls, but that story carried my business for many years to come.
Next, I created a ton of content on the topic and shared it with my network. While these were seemingly different topics, it was all about the same approach and the mindset.
Then, I co-founded two of the biggest Belgian tech startup meetups. I went on to speak to all major cities in the country. The topic was hot, and I was one of the first to speak about it.
I was essentially evangelizing our local market about B2B marketing, but I’ve been telling the story from my client’s perspective. The story was a communication bridge between their business problems and the emerging trends (and my solution).
For many years that followed, I didn’t have to do almost any proactive sales and marketing. Clients were coming to me, often without even speaking to other providers. All I had to do was to nurture these relationships.
Without realizing, I’ve engineered my clients’ perception in a way that positioned me as a natural choice.
The strategic tool companies use to engineer their client perception
The unique position that a product or a company occupies in their prospect’s mind doesn’t happen by chance.
Successful companies choose their position. They make a series of strategic choices about their ideal clients, their expertise area and their market category. Then, they build a narrative around it.
But the success doesn’t come from the choices nor the narrative itself.
Their success comes from what they do. These companies deliberately design their product, their communication and all their client’s experiences around this narrative.
They walk the talk
This process is known as positioning. Put simply, positioning explains to your ideal clients why your products are the best choice for their business.
But wait, isn’t positioning some old school marketing theory thought in management schools? Isn’t it out of date, and not applicable to today’s fast evolving world?
Well, yes and no. Positioning itself has a positioning problem.
But in reality, it’s the most impactful ‘growth hack’ you can apply to your business.
The many benefits of unique positioning
Unique positioning helps you to:
Stand out and cut through the noise of the over-marketed environment and attract your clients without being spammy
Win the client when other serious players are bidding on the project too
Win the right type of client who will:
Value and appreciate your services and gladly refer you to others
Partner with you in creating exceptional client results
Command premium prices
Make your business easier to sell, or to get an investment
Feel more confident, congruent with your values and inspired to think bigger and grow faster
Attract the right people and partners to join your mission and build something bigger together
Make key decisions and say “no” with more confidence
In addition, it allows service-based companies to simplify their proposals and systemize their delivery. This in turn creates more time to work on business development, and allows them to shift from being “bodies for hire” to becoming a go-to expert in their niche.
And while the benefits of unique positioning might be clear, where most of the positioning advice fails short is on the ‘how’ of it.
The UNDISRUPT process
How to reposition your business as essential to your clients?
In their legendary book “Positioning, a battle for your mind”, All Ries and Jack Trout wrote:
“The mind, as a defense against the volume of today’s communications, screens and rejects much of the information offered it. In general, the mind accepts only that which matches prior knowledge or experience.
In the communication jungle out there, the only hope to score big is to be selective, to concentrate on narrow targets, to practice segmentation. In a word, ‘positioning’”.
The authors give us two clues.
The first one is that without an effective positioning, the prospect will put you in a box with other similar solutions. In other words, they’ll see no difference between what you and your competition offers.
This will make your offering non-essential, because it’s easy to replace.
The second clue is about the way out from this situation: “be selective, concentrate on narrow targets, practice segmentation.”.
You’ll need to (re)focus. What do you say ‘no’ to?
Who would you prefer treating you — a highly reputable doctor specialized in your condition, or a GP who cold-emailed you yesterday with a generic pitch?
Study after study shows that focused, differentiated offering always wins out.
Bain & Company’s Chris Zook has studied the principle of focus extensively. A two-year study he led at Bain concluded that:
“A narrower focus and concentration of resources on a single core business... proved the most frequent road to sustained, profitable growth.”
If this was true back in 2001 — before Facebook, LinkedIn and 7000+ marketing and sales automation tools — imagine how important this is becoming now.
This much is clear. There is less and less room for undifferentiated, generic solutions.
But what does it actually mean ‘to focus’?
“The essence of strategy”, says Michael Porter, “is choosing what NOT to do.”
Positioning is about making a series of strategic choices about what you focus on (and what you say ‘no’ to).
Let’s look at the choices you need to make.
The 7 strategic choices of effective positioning
Over the years, I’ve been collecting practical methods and the best practices to define an effective positioning, for my own and my clients’ B2B businesses.
What follows is my current view of the choices we need to make for an effective positioning.
1. Ideal Client Profile: Who are you positioning for?
“You cannot be everything to everyone. If you decide to go north, you cannot go south at the same time.” — Jeroen De Flander
If you are like most B2B businesses I know, 10-20% of your clients will stay longer, generate more revenue, give you the best referrals… and value your contribution the most.
As a part of my own repositioning, I did an analysis of all the customers I worked with over the last five years. It turns out that half of all my revenue came from about 9% of my customers.
Zooming in further, among those 9%, I found an even smaller group. Clients where I created the most value, who gave me the best testimonials and warmest referrals, who I learned the most from, and who have appreciated my contribution the most.
An effective positioning will feel highly appealing to your best clients and repel those who are not a good fit
Once you figure out who your best clients are, you’ll want to “get into their head” and figure out:
Who they are — i.e. what’s common about them? Look at their demographics (industry, size, function, gender, age...) and technographics (what technology stack are they using), but also their interests and topics (e.g. on social media)
Why they’re buying from you: what their business triggers and goals are, what challenges they are trying to solve, what purchase criteria they use, what competitive alternatives they considered, and why they chose you
What and where do they get their information during their customer journey, that is, what social media they use, who they follow, what kind of information they need depending on their phase, how they search for the information, how they source vendors or service providers…
Now, my example may make it seem that just sorting your clients by revenue will give you all the insight you need.
In reality, this is a long and iterative process, requiring deep-dive interviews and surveys, analysis and thinking about other components of positioning.
But it’s an essential first step.
You know the popular advice to “follow the money” in unveiling political scandals and organized crime?
The motto here could be:
Follow your best clients
2. Competitors: Who are you positioning against?
You are not positioning your business in a vacuum.
The differentiation comes from comparing your solution to what April Dunford calls your “competitive alternatives” in her hands-on, zero-fluff step-by-step guide to positioning called “Obviously Awesome”.
Competitive alternatives are what your ideal clients would “use” or “do” if your product didn’t exist. This can include Excel, ‘do nothing’ or ‘hire an intern’.
You cannot rely on guesswork here.
In your ideal client interviews, include questions like: What have you tried in the past to deal with the challenge you’ve just described? What did you find lacking - and what do you think the right solution should have been? What other solutions did you consider in the past (and why did you choose us)?
Then, analyze the main competitors’ positioning strategy. Do they have a niche focus? How do they differentiate themselves? What arguments do they highlight in their main web pages? How do they call themselves?
While you’re at it, I’d suggest you also analyze where your competitors get their traffic from, how they use their social media, what kind of content they post, what types of post their audience is engaging most with, and how they go about lead generation and nurturing.
You are looking to understand any potential threats and opportunities for your own positioning, and later, go to market strategy.
3. You: what makes you unique?
You’re looking for what your company and your product do best — compared to your competitive alternatives.
So now, list all attributes, capabilities and features that you have that the identified alternatives don’t.
Bain’s Chris Zook calls these “core capabilities”, and only includes those that create value to your customers AND are a source of differentiation.
For example, ‘easy to use’ may not be the best unique attribute — unless it creates “provable” value. E.g. do your competitors’ products require training and your product doesn’t? Can you quantify how long it takes to become proficient with your product versus alternative products?
Note that unique attributes are not only the features of your product.
You may have a unique approach to serving your customers, a different business model, a better guarantee, unique methodology, faster payback (time to ROI) than other solutions…
In your client interviews, you would ask: what specific feature of our product did you like the best and why? And also: when evaluating a solution like ours, what do you find important? And of course: why did you choose us?
But do look inside.
What are your unique “TASKS”: talents, attitudes, skills, knowledge and style? What do you do better than anyone in the industry? Do you have a different set of beliefs (in a way that benefits your client), or have you figured out a more effective mindset? Do you have a different style and approach your clients differently than your competitors?
Ask yourself deeper questions too.
Like, why do we exist, besides making money? What inspires us to come to work each day? What would our business be like if we were leading a movement instead of running a business? If our people were volunteers instead of employees, what would they be volunteering for?
These will come in handy as you work on your positioning story, and could help connect to your clients more deeply.
4. Unique Value Proposition: being different in a way that matters
Knowing what makes you different and unique is only half of the story.
You want to be different in ways that are meaningful to your ideal clients.In his book “Positioning for Professionals”, Tim Williams talks about two separate dimensions of positioning: relevance and differentiation.
The quadrant 2 on the diagram above is where most brands live, according to the author. They meet their customers needs, but are not differentiated. The quadrant 4 contains brands that are different for sake of being different. The difference they make is not relevant to the customers.
The goal of positioning is to move to quadrant 3.
You can do this by crafting and validating your unique value proposition in three steps.
Step #1: Map your unique attributes to value
In the previous step we’ve identified what makes us unique. We’ve essentially moved rightwards on the graph above.
Now we want to go upwards to, by mapping our unique attributes to value we create for our ideal clients. Note that:
- The unique attribute is something your company or your product does or has (that your competitive alternatives don’t)
- The benefit is what the attribute enables for your clients
- The value is how it maps to an important goal your client is trying to achieve
While such a list can be long, you want to end up with a few ‘value themes’ that matter most to your clients by combining or removing options.
Step #2: Craft several value proposition statements
Now take the selected value themes and turn them into value proposition statements.
A unique value proposition is a succinct statement that describes the benefit of your offer, how you solve your customer's needs and what distinguishes you from the competition.
While there are many excellent guides and suggested value proposition ‘formulas’, there is nothing magic in the way that you put your statement together. You’re simply trying to hit all three elements of an effective value proposition:
Relevance — who is it for and what problem is solves
Value — what goal does it help clients achieve
Differentiation — how is it different in a way that’s meaningful to clients, and that’s provable
Feel free to use the extended “headline + subhead” format to precisely nail your relevance and differentiation. Here are a few examples:
Step #3: Validate your value proposition
Once you’ve crafted a few versions of your value proposition statements, you can validate them with your clients.
Give them a call, and instruct them to speak their mind as they look at the different value propositions. Show them each proposition in turn for 8 seconds (the average people take to decide if a website is relevant to them) and just let them say whatever comes to their mind.
What do you think this is?
Do you think this would be valuable to you?
Do you think this is different from other solutions out there?
Do you think this highlights well why we are different and worth buying?
You may need to iterate several times before you feel like you have the right elements.
5. Market category — your clients’ frame of reference
From the perspective of your client, a market category is what they’ll label your business or your product with. “Oh, it’s a CRM system”, or “ah ok, they’re a marketing agency”.
It’s their frame of reference, and a way to deal with thousands of solutions and products fighting for their piece of mind.
You cannot avoid being “put in a box”, or labeled with a market category. So it’s important to understand a few things about it:
Each category comes with a set of expectations (about features, prices, business models…) and purchase criteria
Category will determine which competitors you’ll be compared to
Categories today are much more “fluid”, the borders between different categories are not always clear, and categories and are evolving faster than even before
Most of your prospects are likely not aware of all the details of your market category, and may not even be aware of the general product category yet. That’s why connecting to your prospect before they are ready to buy is so essential, because you get to influence this learning and understanding, and hopefully also their purchase criteria
We all choose a category when we’re starting up (your response to the question “what are you building”), but this may not be the best frame of reference for the product or services we’ve built
The last point is important.
What we often don’t realize is that the choices we made early about our product category can present us in unfavorable way. Nor did anyone teach us how to choose a category that will present us in the best possible context.
The startup land is full of pivotal stories, when a struggling startup suddenly realizes they’ve built a different solution than they’ve set out to build. Flickr started as a struggling game, to later become a photo sharing website. Paypal was built for outdated PDA’s (‘palm computers’) but became successful as an online e-commerce payment solution.
But making these pivots is extremely hard.
In “Obviously awesome”, Dunford describes 3 possible strategies.
#1. Head to head: become the market leader in an existing category. Think Google or Hubspot. This strategy makes most sense when your product category is in early stages of development and there is no clear leader yet.
Dunford gives an example of her own startup that started as a “database”. But by being positioned in the database category, their prospects expected their product to have everything that Oracle’s database had, but better. They could never win head to head against Oracle!
By focusing on their main differentiator (fast analytics of large amount of data), they discovered a market category without a clear leader at the time: data warehouse market. This shift in positioning got them out of competing with Oracle, and it aligned with their strengths. It also allowed them to raise prices, because they shifted away from database (a commodity) to a data warehouse, which commanded premium pricing due to a smaller amount of offerings on the market.
#2. Big fish, small pond: your goal is to win in a well-defined segment of the market. You do this by targeting buyers in a subsegment of the broader market who have different requirements that are not being met by the current overall market leader.
The ‘survey solution for pharma’ example I described earlier fits the bill perfectly (see the section “But what about our smaller B2B businesses?” above).
This strategy combines the “best of both worlds” of the two other strategies, because it allows you to stand out without the hard and risky work of building a new category, or taking on the entrenched market leader.
This is also the easiest differentiation strategy for service companies — becoming a specialist in a niche.
#3. Create a new game. This is the hardest and the most expensive choice you can make, but the rewards can be huge.
Eloqua grew from around $12 million revenue in 2006 when they created the “marketing automation” category, to $96 million in 2012 when they went public and were shortly after acquired by Oracle for $870 million.
Now let’s see how a well-crafted position story helped Hubspot first grow, and then take a lion’s share of the category initially created by Eloqua.
6. Positioning story: becoming a natural choice
When Hubspot set out to win in the competitive market of marketing and software tools back in 2006, they did something different from most of the other tech companies.
They’ve invested most of their marketing efforts in promoting their methodology (Inbound Marketing) instead of promoting their product directly.
This was a classic example of what Andy Raskin calls “name the new game”. Instead of merely attacking the problem (as most B2B brands do), you attack the status quo, the “old game”. You are effectively naming the reason your competitors are becoming obsolete AND introducing a sense of urgency. “To survive in the newly emerging world”, you say, “what you’re doing today (and what the competitors offer) is not enough. The winning company play a new game, here is what that is. And our solution is designed ground-up to help you win the new game.”
The above examples are often used to illustrate creation of a new market category. But I believe the approach is useful for other strategies too. It worked really well for me when I started my own business, and I believe it’s a very useful tool for the current crisis too.
The key question now would be: how will this crisis — and the resulting emerging world — change the game for your ideal clients? Ideally, your approach was already playing into a trend that the new crisis has made even more urgent. For example:
We live in an over-marketed society with global competition. It’s hard to stand out and build trust with potential clients.
But Covid-19 takes that to a completely new level.
In this emerging new world, companies will keep buying — but they’ll focus on what’s essential, will have more choice and will become even more critical and mistrustful of marketing claims.
Your ideal client’s needs: Why this is especially important to your ideal client?
This is especially problematic for complex B2B products and services, because these are so-called ‘credence goods’ — products and services sold based on trust.
The old game: Who is the villain? Why is the old game not working?
Getting someone’s attention through mass outreach or advertising doesn’t make them a qualified opportunity – that’s just a numbers game that sacrifices trust for short-term results.
The new game
You need to position your business as essential to your clients, and communicate that positioning in everything you say and do while your clients get to know, like and trust you.
If you decide to go down this path, it’s important to consider that a good positioning story needs to hit a “sweet spot” within the context of your market. Dunford warns “It’s always better to be a little boring than completely baffling”, referring to the diagram below.
7. Go-to-market segments: a path to your prospects’ minds
Here we use another ‘MBA tool’ that’s often misunderstood: market segmentation.
Put simply, the goal of market segmentation is to find a group of prospects who are a lot like your best clients — and that you can easily ‘list’ (e.g. build or purchase a prospect list).
It’s a great ‘hack’, because:
Selling to the best-fit clients is easier, generates clients who stay longer, pay more and give you more referrals
It enables easier targeting of prospects and a better client-message fit (using segment-specific terminology, case studies and USPs)
Word-of-mouth spreads more easily in a well-connected segment
It gives you a chance to partner with industry influencers and network organizations
But marketing segmentation is also often misunderstood.
Instead of simply breaking down your market by demographics — or industries, you are looking for person’s and company’s characteristics that make them really care about your unique approach and features.
For example, your solution might be a better fit for companies who handle a lot of purchase orders and invoices in different formats (like fresh produce suppliers), companies battling for scarce talent (like engineering and tech), for companies using specific technologies, or for manufacturing directors in the process industries in Western Europe.
The point is not to position your business as a segment-specific solution. The point is to make your market entry easier. Dunford advises targeting as narrowly as you can to meet this year’s sales objectives.
In the emerging new world, companies will keep buying — but they’ll focus on what’s essential, will have more choice and will become even more critical and mistrustful of marketing claims.
They’ll choose a reputable, specialized provider who’s a unique fit with their situation.
Successful companies use deliberate process of positioning to become essential to their clients. They make a series of strategic choices, and build a narrative around it.
But narrative is only as successful as your ability to tell it through everything you do, as your clients get to know, like and trust you.
At a bare minimum, you’ll update your marketing and sales communication. But changing the way the company thinks about itself, brings about a new sense of purpose and creates a new momentum and energy. You’ll likely get inspiration for your product roadmap, the way you service your clients, and sometimes also on the business model.
And inspiration and a new sense of purpose is something we all need in these difficult times.