Chapter 4
Understanding Your Best Customers: The Foundation of Positioning
When building a systematic approach to positioning, the interdependencies between components create a challenge. The solution lies with your best-fit customers-they hold the key to understanding what your product truly is. By focusing on ecstatic fans rather than moderately happy customers, clear patterns emerge that can guide your positioning strategy.
Best-fit customers are those who buy quickly, rarely ask for discounts, and refer others to you. They don't just like your product-they love it. When resources are limited (and they always are), focusing on prospects who resemble these ideal customers is the most efficient path to success.
For businesses, characteristics like industry, location, and company size aren't enough to identify ideal customers. You need to understand what makes certain customers love your product more than others. For example, if you sell invoicing software for small businesses, those sending many invoices monthly will value you most. Or if you offer data analysis tools, banks needing rapid analysis for security threat identification will appreciate your solution more than general companies with large data volumes.
Positioning should be a team effort with cross-functional representation. Each department brings unique customer insights from different touchpoints in the buyer journey. The business leader responsible for the product must drive the effort-positioning is a business strategy exercise that impacts every department, not just marketing. While marketing often initiates positioning discussions due to feeling the pain of weak positioning first, no single department can "own" positioning.
Chapter 5
Breaking Free from Positioning Baggage
To effectively reposition a product, teams must establish a common positioning vocabulary and consciously set aside old ways of thinking. Most products can serve multiple purposes for different buyers, but we're often blinded by our history with the product.
Consider Arm & Hammer baking soda, invented in 1846 for baking. When sales flattened in the 1970s as packaged food rose and baking declined, they leveraged the product's odor-absorbing properties to reposition it as a refrigerator deodorizer. This shift drove sales from $16 million to $318 million and led to expansions into cat litter and personal care products.
Similarly, Clearpath Robotics initially positioned their mobile industrial robots as "robots," but this confused manufacturers who associated robots with stationary machines performing repetitive tasks. Their innovative robots autonomously navigated spaces-more like self-driving vehicles than traditional industrial robots. By repositioning as "self-driving vehicles for industrial uses" under the OTTO Motors division, adding car-like design elements like headlights and taillights, they made their unique strengths immediately obvious. This repositioning accelerated sales, attracted $30 million in investment, and earned them a Silver Edison Award for innovation.
Market confusion often stems from the disconnect between how creators understand a product versus how customers first perceive it. The positioning team must recognize that each member carries different levels of "positioning baggage"-founders and long-time employees view the product through its full history, while newer employees and customers don't.
Chapter 6
Identifying Your True Competitive Alternatives
To position effectively, you must understand how customers categorize your solution in their minds. When asked what problem they're solving, customers often provide technical or feature-focused answers that don't reveal how they truly perceive their alternatives. The critical question that cuts through this confusion is: "What would our best customers do if we didn't exist?"
The answer to this question frequently surprises companies. While you might expect customers to name your direct competitors, the reality is often more nuanced. Common alternative scenarios include:
• Maintaining existing manual processes ("use a pen and paper")
• Creating makeshift solutions ("cobble together spreadsheets")
• Delegating to junior staff ("hire an intern")
• Outsourcing to contractors or agencies
• Simply living with the problem ("do nothing")
• Using adjacent tools not specifically designed for the task
Focus exclusively on your best-fit customers' perspective when conducting this analysis. These are the customers who get the most value from your solution and represent your ideal target market. Create a comprehensive ranking of alternatives, from most to least commonly cited, and then group these alternatives into natural clusters based on their characteristics.
This clustering exercise often reveals surprising patterns in how customers actually categorize your offering. For example, a project management software company might discover their true competition isn't other project management tools, but rather email and spreadsheets. A recruiting software provider might find they're primarily competing against internal HR teams and manual processes rather than other recruiting platforms.
Understanding these true alternatives helps shape more effective positioning by:
• Highlighting the real pain points driving customer decisions
• Identifying the actual cost-benefit comparisons customers make
• Revealing gaps in the market where your solution can uniquely add value
• Informing pricing strategies based on alternative solution costs
• Guiding marketing messages to address specific alternative scenarios
This insight fundamentally shapes how you communicate your value proposition and can dramatically influence product development priorities. It ensures you're solving the right problems and competing against the right alternatives in your customers' minds.
Chapter 7
Isolating Your Unique Attributes and Mapping Them to Value
Strong positioning centers on what your product does best compared to alternatives. Document every distinctive attribute your offering has compared to alternatives-from patented technologies to unique skills, partnerships, or sourcing methods. Include even attributes some team members might view negatively, as these could actually be strengths for certain customers.
Avoid listing subjective claims like "outstanding customer service" or "easy to use" without concrete evidence. Focus instead on provable features that drive these benefits. If you claim superior customer service, can you demonstrate more support staff or specialized certifications? For ease of use, can you quantify faster proficiency times?
While features are important, customers ultimately care about what those features can do for them. When mapping features to value, translate technical capabilities into meaningful customer outcomes. A feature like "15-megapixel camera" delivers the benefit of "sharp photo images," which provides value by enabling zooming or large-format printing without losing quality. Similarly, "all-metal construction" means stronger frames that save $50,000 yearly on replacements.
When organizing your value points, take the customer's perspective to identify natural relationships. Features like "works on any mobile device" and "works without internet connection" might both serve customers with field workers in remote locations, clustering under "supports remote environments." The goal is to condense your list to one to four value clusters that reveal meaningful patterns.
Chapter 8
Finding Your Best Market Frame of Reference
After identifying your ideal prospects, unique attributes, and value proposition, you must choose a market frame of reference that makes your value obvious to your target segments. This is more challenging than it seems. The market you originally conceived may no longer highlight your strengths effectively due to product and market evolution.
A "market" must already exist in customers' minds (except when deliberately creating a new one) and triggers assumptions about competitors, features, and pricing that should work to your advantage.
There are three main approaches to positioning within markets:
1. **Head to Head: Positioning to win an existing market**
When competing head-to-head in established markets, you must quickly defend against competitors trying to shift buyer attention to other criteria while continually demonstrating your superior delivery on established criteria. If you're fighting to unseat a leader, you need hard evidence and undeniable facts supporting your claims.
One startup initially positioned as a "database," forcing them to compete directly with Oracle and prompting inevitable comparisons they couldn't win. By repositioning as a "data warehouse," they shifted to a different market where their analytics capabilities were a true differentiator. This positioning shift immediately distanced them from competing with Oracle, aligned with their strengths, and allowed them to command premium pricing in a less commoditized space.
2. **Big Fish, Small Pond: Positioning to win a subsegment of an existing market**
When targeting a subsegment, you must ensure three critical conditions exist: First, the subsegment must be clearly identifiable. Second, you must demonstrate that this subsegment has specific unmet needs that are important enough to warrant a specialized solution. Finally, you must prove your ability to meet these special needs substantially better than category leaders.
Janna Systems began as a struggling CRM company facing Siebel Systems-a $2 billion industry giant. However, Janna had one unique feature-the ability to model relationships between people in ways competitors couldn't. While most prospects didn't care about this capability, it deeply resonated with investment bankers.
Despite internal concerns about limiting their market, Janna repositioned from "enterprise CRM" to "CRM for investment banks." The results were transformational. Their sales and marketing teams developed deep industry expertise, used banking terminology, and demonstrated why they were superior to Siebel specifically for investment banks. They raised prices and rapidly closed deals globally, growing from $2 million to over $70 million in eighteen months, eventually being acquired for $1.7 billion.
3. **Create a New Game: Positioning to win a market you create**
Sometimes new technology or circumstances create opportunities for entirely new markets. This approach should only be used when your offering truly cannot fit into any existing market category without compromising your key differentiators. It requires a product that is demonstrably, inarguably different from anything in existing categories.
Creating a new category means educating customers about problems they don't yet realize they have. You must convince them why the category deserves to exist, why existing solutions fall short, how to evaluate solutions in this new space, and why you're the best provider.
Eloqua initially offered website visitor chat capabilities for sales reps. When chat proved unpopular, they added email marketing functionality that allowed tracking of prospect behavior online. This resonated strongly with "demand generators"-metrics-focused marketers obsessed with creating qualified sales leads. Recognizing this distinct audience, Eloqua built specifically for these users and positioned itself as "demand generation automation."
Despite success with customers, investors and analysts couldn't categorize Eloqua within existing marketing software segments. Around 2005, as marketing processes matured and demand generation professionals proliferated, Eloqua's revenue surged. By 2006, they repositioned from "demand generation automation" to the broader "marketing automation" to highlight their strategic value and differentiate from simple email tools. This shift propelled Eloqua from $12 million in 2006 to $96 million in 2012, when they went public and were acquired by Oracle for $870 million.
Chapter 9
Leveraging Trends to Enhance Your Positioning
Layering a relevant trend onto your positioning can make your offering appear more current and important to customers right now. This step is optional but potentially powerful when done carefully. Think of your product's strengths, market context, and a relevant customer trend as three overlapping circles-you're aiming for the center where all three intersect.
Redgate Software, a Cambridge, UK-based leader in database tools since 1999, wanted to better showcase how their many products could work together to deliver more value. Though successful with over 800,000 users, customers didn't always see their products as urgent, strategic, or "cool" purchases.
Rather than changing their well-established market category, Redgate aligned their positioning with the emerging DevOps trend they noticed gaining popularity among their development team customers. They recognized that nobody was addressing the crucial role of databases in DevOps transformations, particularly as new data privacy regulations raised concerns about security and compliance.
By creating content about "database DevOps" and training their sales teams to consult with senior development leaders on implementing DevOps processes, Redgate successfully connected their existing products to this hot trend. The result was dramatic: customers began buying multiple Redgate products simultaneously, and inbound leads increased by 100%.
However, focusing too heavily on trends while neglecting to clearly define your market can severely confuse customers. It's like describing why you're interesting without first explaining who you are. For instance, a company described their app as "the sharing economy for pets" and then "Uber for cats"-both trendy but bewildering descriptions. Only after probing did they explain they were actually a marketplace for pet services like sitters and groomers.
If you can't naturally connect trends to your positioning, don't force it. Many successful companies operate in traditional markets without being trendy at all.
Chapter 10
Implementing Your Positioning Across the Organization
For positioning to be effective, it must be shared across the organization to inform branding, marketing campaigns, sales strategy, product decisions, and customer-success strategy. Rather than using brief, awkward positioning statements, create a detailed positioning document that breaks down each component and shows how they interact.
After completing the positioning process, the next step is implementing it across the company. Before tackling messaging, it's more effective to craft a "sales story" that translates positioning into a practical framework, especially for companies with complex B2B sales cycles.
A good sales story follows a common arc: defining the problem your solution solves, describing how customers currently attempt to solve it and where those solutions fall short, painting a picture of "the perfect world" solution, introducing your product within its market category, and detailing your value themes. This approach ensures everyone agrees on how positioning translates into a pitch.
Positioning changes often impact product development priorities and pricing strategies. The roadmap for "accounting software" would differ significantly from one for "financial services." Similarly, pricing should align with market category expectations-as demonstrated when Janna raised prices for their "CRM for investment banks" to match customer expectations. A positioning shift effectively becomes a business strategy shift that impacts every department.
Products and markets evolve, requiring regular positioning reviews every six months or after major market events. Check your positioning when competitive landscapes shift, especially when credible, established competitors enter your market. Large competitors can quickly change prospect perceptions about features, pricing, and possibilities.
Beyond new competitors, various external forces can disrupt your positioning. Government regulations can suddenly elevate previously unimportant features, giving certain competitors an edge. Economic shifts alter customer priorities-during downturns, businesses typically focus on cost-cutting rather than revenue expansion, requiring vendors to adjust their positioning accordingly.
Chapter 11
The Transformative Power of Deliberate Positioning
Positioning initially appeared to be an unpredictable amalgamation of buyer psychology, market dynamics, and serendipity. However, through extensive research and practical application, we've discovered it can be systematically influenced and strategically engineered. The key takeaways that emerge from successful positioning are:
1. Any product can be positioned in multiple markets - A software tool might serve as project management software for startups, a collaboration platform for remote teams, or a workflow automation solution for enterprises. The key is identifying which positioning creates the most value.
2. Great positioning rarely happens by default - It requires intentional effort to understand market dynamics, customer needs, and competitive landscapes. Companies like Slack succeeded not just because of their product, but because they deliberately positioned themselves as the solution to email overload.
3. Understanding your best customers' alternatives reveals your differentiators - Before Zoom, people used complex video conferencing systems or unreliable free services. By understanding these pain points, Zoom positioned itself as the reliable, easy-to-use solution that "just works."
4. Position yourself in markets that highlight your strengths - Tesla initially targeted the luxury car market where their higher prices could be justified and their innovative technology would be appreciated, rather than competing directly with mass-market vehicles.
5. Use trends cautiously to increase interest - While emerging trends can provide positioning opportunities, they must align with genuine value. The blockchain hype of 2017-2018 showed how trend-based positioning without substance can backfire.
The Joshua Bell subway experiment perfectly illustrates positioning's impact. The world-renowned violinist performed in a Washington D.C. subway station, largely ignored by commuters. Despite his extraordinary talent, the context - his positioning - made people unable to recognize his value. Similarly, poor product positioning forces prospects to work unnecessarily hard to understand your value proposition.
Your positioning choice ripples through every aspect of your business strategy - from marketing messages to sales approaches, from product development to customer support. When you methodically break down positioning into its core components - market category, customer problems, key benefits, and competitive alternatives - you can craft a narrative that resonates with your ideal customers.
The transformation occurs when you align your positioning with customer needs and market opportunities. Products that once seemed complex become intuitive. Services that were overlooked become indispensable. By deliberately positioning your offering in the sweet spot where your strengths meet market needs, you create a context where your value becomes self-evident and your competitive advantage clear.
This deliberate approach to positioning requires ongoing refinement as markets evolve, but the fundamental principle remains: strategic positioning transforms good products into must-have solutions by making their value immediately apparent to the right customers.
