If you have some happy customers, but your sales calls aren’t going well, you might have a positioning problem.
Unfortunately, this is a major problem that a lot of startups struggle with and it can be the difference between a successful exit and bankruptcy.
So I asked the expert, April Dunford, who literally wrote the book on positioning to come on the show and explain how you know if you have a positioning problem, how to carry out a reposition and everything you need in place before you can create a go-to-market strategy.
She’s also an amazing storyteller and has some fun stories of how she repositioned brands to go from roughly $1 million to $1 billion.
Why did you decide to choose help with positioning startups?
April started as being a sort of repeat VP of marketing at a series of startups. She would usually come in before the company was really big or producing a lot of revenue and it was her job to really get the lead to revenue engine started.
Of course, once that engine was working the company would usually become acquired, and shortly after the acquisition, she would usually elect to go to another smaller startup. She did that with about 7 different startups over the course of about 25 years.
One of the biggest problems she found across the board was that they all had poor positioning. So she had to ask a lot of questions before they could build a go-to-market plan like:
Who are our competitors? Why are we different from our competitors? What is our unique value proposition?
After going through this process several times, she thought that there must be a better positioning strategy that she just doesn’t know. However, what she eventually discovered is that while most people agree on what positioning is, there isn’t really an accepted methodology on how to position a startup.
Once she came up with a methodology for positioning, the demand essentially came to her.
What were some of the underlying patterns you saw in the successful startups you helped exit?
To be fair, even though they were acquired, they weren’t all successful. The companies where they were very successful were the ones that really nailed their positioning. Those companies tended to experience explosive growth and get acquired for a lot of money.
A quick story about how one startup went from floundering at about $1.3 million to being acquired to $1.3 billion.
She joined a company that was in the CRM space and at the time, Salesforce was still on the low end. Instead the biggest enterprise CRM system was Siebel. Siebel was worth several billion dollars and their little startup was only worth a few million. At the time, their CRM was positioned as a direct competitor with Siebel and when prospects would ask how they were better than Siebel, they really didn’t have an answer.
However! The did have two features that Siebel didn’t have.
The first was the ability to model many-to-many relationships between people rather than between companies. The problem was that they didn’t really understand how it would help customers and or which customers would find it valuable.
The other thing is that they were a cheap CRM which really isn’t good positioning for anyone.
So how did they get out of this?
Well, first they hired a sales rep that knew someone very senior at Goldman Sachs (that’s one way to choose how you hire your sales reps)!
Once they got the meeting at Goldman Sachs, they realized that this many to many relationship feature was very valuable to investment bankers as it helped them with their sales process.
Once they figured out how valuable this feature was to investment bankers, they very quickly did several deals with investment bankers.
This is what really sparked a repositioning. It was easier to sell more when they niched down to selling to just investment bankers rather than selling to all enterprise companies.
It also helped them get out of the direct competition with Siebel.
Before, they just looked like a crumbier, cheaper CRM than Siebel. In the end, Siebel got so tired of them stealing the investment banker space that they acquired the startup for $1.3 billion.
The shift in positioning is how even a small startup can beat out a massive company.
Do you have a percentage breakdown of how many companies you helped niche down to better position themselves?
Well, that was the positioning solution for some companies, but for others, the solution was really to move the product to another category entirely.
An example of this was a database company that she worked with. It was able to run queries super, super fast (like 3 minutes) where previously companies would have to run the queries on Friday nights because it took 17 hours to get the result.
The problem was that as soon as they said they sold a database, most people in the room would lose interest. They already had a database and frankly, this new database they were being pitched didn’t have all the features that they already had.
Sure, it had this one cool feature, but that wasn’t going to replace the database they already had.
Thankfully, they eventually had a customer point out to them that they aren’t a database company- they are a business intelligence tool. That needle-in-a-haystack query ability is actually analytics. And if the customer has an analysis problem, they buy a business intelligence tool.
The team was hesitant to accept this, but they eventually did make a repositioning shift from a database to a data warehouse. In this case, their competition shifted from Oracle to inhouse data warehouses and it became much easier to sell. They still pitched to the same people they did before, but now they were selling in a different product category.
So how do you know if it’s a product positioning problem and what do you do when you first walk in and start helping people?
Many founders do want to know if it’s a product positioning problem or if their product just stinks.
The main deciding factor with this is that if you have a reasonable number of customers, those customers picked you for a reason. So it’s probably not that you have a bad product.
Another common theme you see is that when the salespeople pitch the product, prospects just don’t understand it.
So, if your first sales calls with an ideal prospect usually ends with some confusion, but you have some happy customers, there’s probably a gap that can be bridged with repositioning.
As April puts it, “If you’ve got happy customers that are using your product and they love it, but your first pitch with a customer that should love it is nothing but confusion, then you know there’s a gap between what your onboarded customers know and what a new prospect is hearing coming out of your sales person’s mouth.”
That gap signals that you likely have a positioning problem.
April’s Positioning Methodology
The first step is to understand who the real competitors are.
This is where most people get positioning wrong.
Competitive alternatives aren’t the same as competitors.
For example, a competitor is another startup that sells the same solution you do. However, a competitive alternative is what your prospects would actually do rather than using your service.
Notice that in some scenarios, instead of hiring you or your competitors, they may decide to hire an intern. So if you show them why you’re product is better than your competitors’ product, but the prospect is really comparing you to the intern, you haven’t demonstrated why they should use your solution over the competitive alternative they are actually considering. In other cases, they may be comparing your company to the current Excel setup that they have.
In other words, if you ended up going bankrupt, what would they use instead? Would they go back to the intern or hire one of your competitors?
So how do you pitch to companies that don’t even know a solution to “the intern” exists?
Well, it starts that a lot of people don’t even know they have a problem. In those cases, you’re going to have to devote a lot of your market to educating people on the opportunity cost of continuing to do things the way they are currently doing them.
For a lot of B2B software, that’s where we live. We’re trying to replace Excel, interns, and people. And then the way to you do this is if you first shine a light on the problem and then on the solution.
So how would you get in touch with these people that don’t even know a solution to the intern exists?
It still starts with positioning.
Before you can build a go-to-market plan, know who your customers are. And in order to know that, the prospects need to know what your unique value is. But you only know what your unique value is if you know what your competitive alternative is.
Only after she knows all of these things does she say, okay, now that I know all of these value propositions, what is the best way to deliver this to these people?
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