Software Growth

Positioning

Positioning defines how your product is different and better than the alternatives, for a specific set of customers who care about that difference.

Positioning is the choice of what your product helps a particular customer achieve, why it is better for that job than their alternatives, and which market category makes that value easy to understand. Those choices guide your homepage, sales pitch, pricing, and product decisions.

Positioning defines how your product is a leader at delivering something that a well-defined set of customers cares a lot about.

April Dunford / An Introduction to Positioning (May 4, 2020)

In her introduction to positioning, April Dunford explains it as setting context. The category you choose changes what buyers expect from your features, price, and competitors. A tool presented as email gets judged differently from one presented as chat, even when some capabilities overlap.

Why it matters for a SaaS founder

When positioning is weak, prospects compare you to the wrong thing, usually the biggest incumbent, and judge you on features you do not prioritize. When it is clear, the right customers recognize themselves in a sentence and the wrong ones leave quickly. Dunford says strong positioning is the starting point for messaging, branding, lead generation and sales strategy, so a fix upstream improves each of them.

The components

In her quickstart guide, Dunford works through five connected components, starting with competitive alternatives:

  1. Competitive alternatives. What customers would do if your product did not exist. For a small tool this is often a spreadsheet or doing nothing, not another vendor.
  2. Unique attributes. What you have that those alternatives lack.
  3. Value. What those attributes let customers achieve.
  4. Target customers. Who cares most about that value. See ideal customer profile.
  5. Market category. The frame that makes the value obvious. Sometimes you fit an existing one; sometimes you have to build a new one, which is the subject of category creation.

Note the order. Many teams start with features and slogans, but you start with alternatives and work forward.

Start with the buyer's actual alternatives

Your positioning needs to position you against the status quo if you want to convince customers to act.

April Dunford / A Quickstart Guide to Positioning (March 15, 2021)

Dunford's buyer-centric approach to competitive positioning distinguishes staying with the current process, considering a different kind of solution, and choosing among direct competitors. Your competitor list needs to reflect what the buyer actually considers. A prospect may be comparing your reporting SaaS with a spreadsheet and an analyst, rather than with the vendor you watch most closely.

Ask customers what they used before, what else they considered, and why they decided to change. Include the effort of migrating data, retraining colleagues, and changing a workflow. A better feature list can still lose when keeping the current process feels easier.

A worked positioning example

Imagine a fictional approval tool for small design agencies. It lets clients respond to a design without creating an account and keeps the decision attached to that version. The following is a hypothesis to test with customers, rather than a claim about a real product.

Positioning choice Agency approval example
Actual alternatives Email threads, chat messages, and a general project management tool.
Distinct capability A client can approve a specific version through a link without signing up.
Customer value The agency knows which version was approved and can move the project forward.
Best-fit customer A small agency whose clients repeatedly lose track of design versions in email.
Market category Client approval software for design agencies.

The pitch could be: “Get a clear client decision on the right design version, without asking your client to learn a project management tool.” That follows from the choices above. Describing the same product as an all-in-one collaboration platform would invite expectations about chat, tasks, and internal team management that this narrow product does not meet.

Jason Cohen: connect positioning to customer value

Pricing is much more about positioning and perceived value than it is about cost-analysis and unconvincing ROI calculators.

Jason Cohen / How repositioning a product allows you to 8x its price (June 5, 2018)

In his positioning and pricing essay, Cohen uses a hypothetical advertising tool to contrast a cost-saving pitch with one about generating more growth. His point is to express value in the terms the customer already uses to judge success. The price multiples in his example are illustrative, rather than a promise that changing your wording will multiply revenue.

For the agency approval example, identify the outcome the buyer cares about: a decision that lets a project proceed. Then verify whether that outcome is valuable enough to pay for. The relevant value could differ for another buyer, such as a procurement team focused on cost.

Use the Opposite Test to find a real difference

If you want to not stand out from the crowd, use statements that everyone uses.

Jason Cohen / The “Opposite Test” (April 6, 2008)

In the Opposite Test, Cohen asks whether a competitor could rationally choose the reverse of your claim. “Customer-first” says little because its opposite is hard to defend. Supporting many integrations versus deeply supporting one integration can be a real strategic choice, with benefits and costs on both sides.

Our approval tool's narrow scope passes that test: another company could reasonably offer a full project management workspace instead. Neither is universally better. Your positioning needs to explain why the trade-off suits the customer you chose.

Positioning versus a unique selling proposition

A unique selling proposition is one claim you make. Positioning is the underlying strategy from which claims, messages and a tagline follow. You can write a USP in an hour. Positioning takes customer conversations.

How to start with no budget

  • Interview five to ten of your happiest customers. Ask what they used before, why they switched and what they would miss.
  • Look for the words they repeat. Use them on your site.
  • Record the alternatives, capabilities, value, best-fit customer, and category. A sentence can summarize those decisions after the research; filling in blanks is not a substitute for making them.
  • Test whether prospects understand who it is for, the outcome, and the difference. Track qualified trials and activation as well as signups; a before-and-after change alone does not establish causality.

For a small team, focus helps you decide which customers to serve and which requests to decline. Revisit the positioning when your product, buyers, or their alternatives change.

Sources

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