Scaling the Revenue Engine — Chapter 6: Competitive Positioning
Competitive positioning is a bold, defensible claim. You start with the market and top priority segments you serve. You consider the competitive dynamic. You evaluate major trends. You glean your essential value as captured in your Value Proposition, Chapter 5 of Scaling the Revenue Engine. Using all of these (the market, competitor positions, trends, and your key value attributes), you create a positioning statement that crystallizes your unique differentiated value while boxing in your competitors.
Competitive positioning requires that you:
- Understand your top priority segments and their buyer and user personas
- Define your market and market type
- Research competitors
- Create market maps to position both you and your competitors
- Determine the critical emerging trends in your market
- Create a claim that succinctly conveys competitively advantaged value
- Test, iterate and optimize
Segments and Personas
In your Customer Segmentation, Chapter 4 of Scaling the Revenue Engine, you confirmed your top priority segments. Inside these segments are the buyer and user personas that are the target audience for your positioning statement. Their unique psychographic, demographic, and needs-based profiles have already informed your value proposition. Keep those profiles handy.
When you craft your positioning statement, you will find the right tone if you concentrate on “speaking” to your targeted personas.
Market and Market Type
Your top priority segments exist in a market. It might be the multiplayer online gaming market. Or the multi-cloud workload processing market. Or the automotive marketing automation market. Or the health media market. Or the predictive medicine market. Or the logistics market. What’s your market? Define it.
Once your market is clearly defined, you can determine its type. As Steve Blank articulated in Four Steps to the Epiphany¹, there are three market type options:
- You compete in an existing market
- You are re-segmenting an existing market (either with a low-priced “good enough” strategy or a niche strategy)
- You are creating a new market
For instance, in 1999 Salesforce entered into an existing market — the CRM market. In 2003, Eloqua created an adjacent but new market — the marketing automation market (now populated by others, such as Marketo and HubSpot). And more recently, in 2012, Insightly re-segmented an existing market (CRM), focusing exclusively on SMB customers.
On the B2C side, Flickr created a new market — the social photo sharing site. Pinterest and Instagram (now the largest social sharing site with over 500 million monthly active users, according to Wikipedia) entered into an existing market, differentiating with new features.
Establishing your market type helps you define the basis for competitive advantage, important in constructing your competitive positioning statement.
Research your competitors on the following dimensions:
- Market share
- Brand awareness
- Brand reputation
For each competitor, review and consider:
- Their website
- Any publicly available research
- Online social reputation
- Substantive online customer reviews about product features/efficacy/ utility
- Conversations with current customers
- Conversations with former customers
How well do competitors address the tasks, expectations, and pain points of the buyers and users in your top priority segments? What positioning can they claim? Where are they vulnerable?
The result of your research will be a grid that looks like this:
Using the competitive research data, you can create market maps that sharpen your understanding of your position vs. competitors. For B2B technology companies, it’s possible this has been done for you. Gartner’s Magic Quadrant² measures competitors on completeness of vision (x-axis) vs. ability to execute (y-axis). This map has four quadrants: Niche Players, Challengers, Leaders, and Visionaries.
Here is the Magic Quadrant for the Cloud Infrastructure as a Service market, worldwide:
Other market maps that could help you define your unique points of competitive advantage include:
A competitive positioning map may help clarify key dynamics. Here is one for the Business Intelligence (BI) market. It was developed by Lawson Abinanti, founder of Messages that Matter:
This map can clarify both the perceptions of prospects and the claims of competitors. With such a map, you can find your own, sufficiently differentiated positioning.
If you are re-segmenting an existing market, your segmentation scheme (often presented as a large square representing the market, divided into boxes representing segments) is a useful contributor to positioning. And if you are creating a new market, it might help to draw a map that puts you at the center and defines the forces creating this new market.
These market maps will help crystalize your points of differentiation and firm up your claims.
Within your chosen market, it is important to define the critical trends. What emerging problems, opportunities, requirements, and technologies are impacting your top priority segments and reshaping the landscape? What key features are becoming popular? What shifts in market share are occurring as some competitors rise and others fall? Why? Does this dynamic accrue to your benefit or harm?
List the trends. Rank them in priority based on their impact on your growth prospects, and display them:
The answers to trend questions will help you determine whether you are rising on the tide or fighting against the current. If the former, your positioning will more likely be based on a quality advantage. If the latter, price may need to be your advantage.
Create a Claim
You are now ready to craft your bold claim.
This positioning statement must first achieve the “vision lock” threshold: “I get what you do and why it’s relevant for me.” Then, it must positively differentiate, accentuating your value while boxing in your competitors.
You have already determined whether you’re serving an existing market, a re-segmented market or a new market. If entering an existing market, product-centric positioning (feature advantages) makes sense. If re-segmenting an existing market, you’re either positioning on price or on niche product advantage. And if entering a new market, you position versus the alternative of doing nothing; positioning is evangelical and descriptive.
The first two market types (an existing market or re-segmented market) enable you to assess your competitive advantage on quality price dimensions.
- If you have both a quality and price advantage, you can employ a “dominate” positioning strategy
- If you have a quality disadvantage but offer a lower price, “sell price advantage”
- If you have a quality advantage but a higher price, “defend value”
- Of course, if you have inferior quality and a higher price, you must either drop your price significantly or exit
In the writing of positioning statements, Martina Lauchengco, Operating Partner at Costanoa Venture Capital³, warns against two pitfalls: the first, the “TMI” (too much information) problem; and the second, the “so simple it’s meaningless” problem.
Here’s her TMI example:
[Data Security Suite], the leading data loss prevention solution, accurately prevents data leakage, secures business processes, and manages compliance and risk by discovering where data is located, monitoring its use, and protecting it, on the network and at the endpoint.
Here’s her “meaninglessly simple” example:
“Better detect and defend your most valuable data by gaining visibility.”
The first is mind-numbingly cumbersome. The second doesn’t tell you anything. Neither achieves its intended effect: an engaged, interested prospect.
Lauchengco offers three points of advice in the development of a positioning statement:
- Choose clarity over comprehensiveness
- Be authentic vs. authoritarian
- Really know your audience
Here are some positioning statements that achieve these objectives:
Tesla highlights the advantages most impactful to its socially conscious high-end car buyer. Note that the objective is achieved while simultaneously boxing in competitors. The car market (even electric car market) is an existing market; the positioning statement underscores product advantage clearly, succinctly and powerfully.
Similarly, Salesforce conquers the CRM space with its message, “Salesforce, not software.” When first launched, its unique SaaS pricing model combined with cloud-based hosting to provide flexibility, simplicity, and affordability that was not previously available (with legacy CRM systems such as Oracle). While the CRM market existed prior to Salesforce, the predominant model was a software licensing model with on-premise software and ongoing support requirements. Salesforce re-segmented an existing market with a new product delivery model and a new pricing model. The positioning statement emphasizes this product and pricing advantage and takes advantage of the trend towards SaaS.
Expensify brought simplicity and usability to the expense reporting process, crystallized in its positioning statement, “Expense Reports That Don’t Suck.” The follow-on phrase, “hassle-free expense reporting built for employees and loved by admins,” says it all. For the target buyer and user personas — admins and front-line sales employees — the direct talk works. Unlike other expense report software, which was built with a company-centric mindset, Expensify’s positioning statement underscores its employee-first orientation, which differentiates it in this existing market.
In the IT world, containers offer a way to virtualize the operating system. Docker entered this existing market, but has dramatically grown it due to its unique product advantages. Docker focuses its positioning on its status as the world’s leading open containerization platform for distributed applications. It delivers to developers and sysadmins the development and implementation simplicity they seek. These value attributes are summed up in its positioning statement, “Build, Ship, Run,” with the follow-on line, “Docker is the world’s leading software containerization platform.” This, of course, boxes in everyone else.
Lightbend has created a new market. The company’s CTO, Jonas Boner, wrote “The Reactive Manifesto,” popularizing the movement from monolith to micro-services based infrastructures. Lightbend provides the leading reactive application development platform for building distributed applications and modernizing aging infrastructures. It uses micro-services and fast data on a message-driven runtime. It enables applications to scale on multicore and cloud computing architectures seamlessly.
Given this technical description, it would be easy for Lightbend’s positioning statement to fall prey to the TMI problem. But it doesn’t. “Modernize your enterprise at startup speed” speaks clearly to the technical leaders, architects and development managers at large enterprises who must update their infrastructures to deal with a fast data, distributed world. Positioning to a new market, Lightbend’s statement clearly describes the benefit to an audience still coming to grips with the need to change. It also takes advantage of the modernization trend.
Your company’s positioning statement will hold center stage in all of your messaging, so it’s very important that you put the sweat into creating a good one. Do the research necessary to get it right. Write from the perspective of your target personas. Say something that captures their attention and appreciation.
One positioning statement is sufficient if, on its own, it is adequately salient and resonant for all of your top priority segments and personas. If not, then as with Lightbend, your company-level positioning statement may need to be augmented with positioning statements that are customized at the levels of product, segment, and persona.
Test, Iterate, Optimize
Positioning statements can and should be tested. Get prospect and customer feedback. Talk with salespeople. A/B test via email, paid search campaigns, and website page tests. Iterate. Optimize. Eventually, you’ll have a positioning statement you can run with.
Remember, the market will keep shifting on you. Your positioning will need to evolve. Keep your ear to the ground and keep testing.
- Steve Blank, Four Steps to the Epiphany, 2003
- Gartner Group, Magic Quadrant, gartner.com
- Martina Lauchengco, Operating Partner, Costanoa Ventures, in VentureBeat, August 2016