Our 10-step approach to positioning for startups
James Hannon and I have worked on positioning and messaging with hundreds of companies over the past 15 years or so, including 80+ startup companies that were acquired or went public.
Positioning and messaging comes first, before branding. Once positioning and messaging are sharp, it’s much easier to create and build a brand. It’s also much easier to do marketing, sell things and raise money from investors. If positioning and messaging aren’t sharp, then all of those things will be much harder, and you won’t really have a brand, you’ll just have a visual identity.
Also, worth noting—many successful companies aren’t really “brands” in the way people talk about brands. They’re “companies” more than brands, but their positioning, messaging and offerings are sharp and differentiated and their customers, investors and other stakeholders can easily understand, and make decisions about them more quickly and confidently.
About positioning
“Positioning refers to the place that a brand occupies in the minds of the customers and how it is distinguished from the products of the competitors.” - Wikipedia
Positioning is critical to any company or product’s success. It determines, very quickly, where customers, investors, employees, partners and other stakeholders place your offering in their minds vs. competing offerings.
Important reasons to get positioning right:
The words companies use to describe themselves and their offerings trigger many immediate associations in the minds of potential customers, investors, employers, industry watchers and other constituents and those associations define you
Positioning establishes mental reference points for the big customer problem a company solves, the category a company’s solutions fall into, the types of customers it serves, and who its competitors might be. Once those references are encoded in people’s minds, they’re not easy to change
When positioning is done properly, potential customers and other constituents can easily understand what a company or product does and how they’re different from other similar sounding offerings, and…
Investors, potential employees and other constituents will value the company more highly
When positioning is off or not sharp, potential customers have difficulty accurately understanding a company’s offering and investors/industry watchers assign a lower value
And when positioning is not strong, competitors have an easier time de-positioning a company
So it’s critical to be thoughtful and disciplined in any approach to positioning.
Our 10-step approach
Positioning is a reductive exercise. How little can you say and still get all the important points across? What big problem a company solves for customers, the category or categories it’s part of, how it’s different from competitors, what kinds of customers it serves, who it competes with, what the company does; all are very important. Also important—what a company doesn’t do, the kinds of customers it doesn’t serve, the categories it’s not in and the companies it doesn’t compete with. Here are the steps we take to sort it all out:
Define the big problem your company solves for customers. This is critical. Customers care a lot more about their problems than your company, and nothing grabs attention like a credible solution to their big problems
Research current categories and subcategories that attempt to solve the same or related problems
Do the same for leading competitors in those categories. Determine how they position, how they differentiate, and what benefits they say they deliver to customers
Define what you do, and what you don’t do
Clearly define why your company’s solution is different than other options, and why this different approach delivers better outcomes for customers. Being different is key for grabbing attention; incrementally better isn’t compelling enough to compete effectively for mindshare
Define who you compete with, and who you don’t
Define which customers care about your company the most
Consider whether your company is different enough from competitors to warrant a new category. (This is hard for most startups, more on that in a subsequent post), or whether you’re better off as a highly differentiated player in an existing category. Yes, we’re aware of various hypotheses about the need for startups to create their very own new categories. We don’t agree with many of the assumptions and conclusions contained in these theories, and we’ve seen plenty of companies succeed without being a first or second mover, or a category leader. However, for the right company in the right situation, we’re all for category creation. For most startups, great value can be created by being a very different, interesting challenger in an existing category.
Name your positioning
Test your assumptions and draft positioning out privately with employees, advisors, investors, customers and knowledgeable outsiders to get their reactions. Revise and repeat as necessary.
And remember, keep it short. If you need a lot of words or more than 3-5 bullets to address any of the points above, you still have work to do. You should be able to say it and write it with short snippets of content, and forcing brevity assures that every key point is significant. Nuance and detail can be added in messaging after you’ve arrived at a sharp positioning.
Our positioning framework:
We use the following framework to guide our efforts with our clients. As we go through the steps, we fill in the blanks.
This is a framework we use to understand where a company actually fits now, and where it might need to go to succeed or outperform.
After doing the research, filling in the blanks, looking at the diagrams, collaborating and iterating with your team–clear insights always emerge, the thinking and words get sharper and sharper. You’ll eventually arrive at a positioning that’s crisp, authentic, clear and differentiating—and you’ll have a head start on messaging around some of the most common questions people will ask about your company.
Thanks for reading. I hope you found this helpful. Please get in touch with comments, questions or additional thoughts.