How you position your business/product/service is one of the most important things you will ever do as a business owner or a founder. In today’s world, “jack of all trades,” businesses are left behind because they cannot compete with companies that have clear positioning. For example, you don’t hire just any realtor, you hire a realtor specializing in Belmont Shore – Long Beach, CA. You don’t open just any restaurant; you open a Mexican restaurant. You don’t develop CRM software for all businesses; you develop it for a specific segment (e.g. Solopreneurs in the U.S.)
Successful businesses don’t sit on the fence. They take a clear position in the market place.
Simply put, positioning describes the market and customer you intend to target, and why you are best suited to do so (with your unique selling proposition).
Why Great Positioning Is Essential
Having consulted over 100 companies of all sizes, we can categorically state that startups and small businesses cannot compete with large (well established) companies without excellent positioning. Can a local brewery compete with Anheuser-Busch? Of course not; they have to find a small niche that Anheuser-Busch is not serving, for example, catering to craft beer enthusiasts. In this specific case, a local brewery might position itself as the premier source of high-quality IPAs in Austin, Texas.
Positioning will give your business a clear direction, and more importantly, make it easier for customers to see why you are meaningfully different.
The resistance we see from founders/business owners to positioning typically boils down to one factor – the fear of limiting the market size and the number of potential customers.
As we discussed in our previous posts, this is an illogical fear because positioning and focusing on a smaller market segment typically results in more business, not less.
A frequent mistake we see with positioning is when a company abandons its new positioning too quickly. Even with great marketing and communication, it will take time for customers to realize your new position/focus. In our experience, positioning takes 2-3 years to execute. More specifically, it will probably take 2-3 years before most of your customers can recall your positioning and why you are meaningfully different.
If you abandon your new positioning after only 12 months, then you didn’t give it a chance to succeed. We have seen companies change positions every two years, and it is one of the most distractive and confusing things a business can do. Not only are they confusing their customers, but they are also confusing their employees, suppliers, and partners.
For example, a car dealership deciding to change its positioning from selling affordable cars to selling European luxury cars. Naturally, this new position will alienate existing customers (cost-conscious buyers) before attracting new customers (luxury car buyers).
Unsurprisingly sales start declining because they are alienating the customers they spent years building. During this transition period (usually the first 1-2 years), many business owners panic and revert to their old positioning. In this case, go back to selling affordable cars to cost-conscious buyers. Creating a lot of confusion in the market, and more importantly, in your customer’s mind. Now you have a mix of affordable and luxury cars on your lot trying to appeal to two very different buyers.
Flip-flopping on your positioning will do more damage to your business than weak positioning.
Risk vs. Reward
It sounds like positioning or repositioning your business can be very risky, so why even take the risk? We encourage you to take a close look at any business that has been stagnant for years, and we can comfortably predict that they have weak positioning and no unique selling proposition.
By weak positioning, we mean they don’t appeal to any specific customer segment – they are the “jack of all trades, and master of none” business. And by no unique selling proposition, we mean there is nothing unique about their product/service/business that separates them from their competition.
These businesses often survive but experience stagnation, and eventually lead to a slow decline and shrinking profit margins.
While it’s certainly true that bad positioning can put your business at risk, the same is true with weak (or no positioning). You are taking a huge risk by not clearly positioning your business in your customer’s mind.
How To Identify Your Positioning
As we mentioned earlier, positioning describes the market and customer you intend to target, and why you are best suited to do so. With that in mind, you have to ask yourself a few questions:
- Which specific problem/need are you trying to solve?
- Who is your ideal customer?
- Who is NOT your ideal customer?
- What is your unique selling proposition (why should a customer buy from you?)
- Which specific market segment are you targeting?
Please note: Positioning is not your brand. Your positioning comes first, and your brand comes second. More specifically, you cannot build a brand without creating your positioning first.
Positioning and unique selling proposition are intimately connected. You cannot have one without the other. This is why positioning is one of the most powerful things you can do to kick start your business into growth.
In many ways, positioning is your starting point, because it will drive your brand, marketing, and sales. Without a question, excellent positioning makes your marketing and sales more effective, and poor positioning makes your marketing and sales worse.
We cannot overstate the importance of “positioning” to your business!