What’s the situation?
The fact that market research keeps confirming the statistic that 9 out of 10 SaaS startups fail bothers me – a lot. Sure, I realize there are 100s of reasons for it, but I also believe it’s out of proportion. It’s not that the ideas behind the business are always bad. It’s not that the product that’s been created is useless. Very often all of that is sound, the fact is, traction stays out – and too many don’t get to deliver their mission.
That’s why I decided to do a deep dive into one of the basics to get right: Positioning.
What are the symptoms of weak SaaS product positioning?
I’ve written many times about the symptoms and problems that arise when product positioning strategies are ‘off’. In my blog “Unclear positioning, The negative effects no one realizes” I highlighted 5 of those symptoms:
- Underperforming marketing metrics. When your positioning is off – the cost to attract new leads will rise.
- Waste in your pipeline. Because your positioning is too wide and vague, the bulk in your pipeline are ‘tire-kickers,’ people who do not need what you have and will for sure not make a purchase decision.
- Low sales productivity. Sales are wasting time chasing the wrong deals. They’re busy and consequently don’t get to spend enough time closing the deals with our ideal target customers. This hampers growth.
- Your product strategy and roadmap are all over the place.
- The unclarity of your positioning puts your development in limbo, setting them up to fail. They’ll shoot too wide, spread resources too thin, and are inability to move the needle where it really matters.
- Profitability under pressure. Your cost of doing business will be far higher than your peers that get positioning right. Just think about the money you leave on the table (selling at a too low price point) and not being able to create leverage.
The odd thing is that regardless of the fact these symptoms are often very clear, positioning is often an afterthought. For some reason, our business strategy focuses on trying to solve the issues in other ways – developing even more features, throwing more marketing money at the problem, pushing even harder in sales, and throwing in more unpopular reorganization.
My question: What if we’d fix the foundation of our value and nail our positioning? How would that give us the differentiation we’re dreaming about? How would it optimize the impact of your marketing strategy?
What makes SaaS positioning so hard?
Now obviously, not a single SaaS business starts with the aspiration to make doing business hard. Delivering the transformational change they’re dreaming about is hard enough. Fact is: There’s no such thing as bringing a brilliant product to market and ‘then they’ll come.’ The sad thing – inferior products positioned brilliantly outperform remarkable products with poor positioning. And as such – poorly positioned products will never reach their full potential no matter how well it is marketed.
So the question is: what is positioning in marketing, and what makes it so hard? To answer that question, let’s start with the definition – or better, some definitions:
- Ries & Trout defined it like this in 2001: “A position that takes into consideration not only a company’s own strengths and weaknesses but those of its competitors as well.”
- In her book “Obviously Awesome“, April Dunford defined it like this: “Positioning defines how your product is a leader at delivering something that a well-defined set of customers cares a lot about.” (April Dunford)
As you see – there’s a significant difference in the essence of the definition. I personally believe April’s definition hits the market simply because it departs from what the customer deeply cares about.
Reflecting on all the SaaS benefit positioning projects I’ve done in the past +4 years, there are three categories of mistakes I constantly see:
- Everything is about ‘them’ i.e. the focus is inside-out rather than outside-in
- Trying to be ‘better’ i.e. they’re obsessed over the competition, not the customer
- Not taking position at all i.e. the language used is purposely vague
The first two are, in my opinion, a negative consequence of how Ries & Trout have defined positioning. The latter is often a problem is fear – fear that the Total Addressable Market (TAM) gets too small – so instead of being super specific (i.e. doing what the word dictates: taking position), many take the route of trying to please everybody.
Here’s a question for you to reflect upon:
If you critically look at the positioning of your SaaS product – does it suffer from any of the three mistakes above? What if you did the opposite?
How to get your SaaS positioning strategy right?
In the coming paragraphs, I’ll share 5 strategies that I’ve seen working time after time in my work with SaaS products and the businesses that create them. But we’ll start with the foundation – level 0. Buckle up!
#0 – Deeply understand your ideal customers from 3 different levels
Let’s bring back to the definition of positioning again: “Positioning defines how your product is a leader at delivering something that a well-defined set of customers cares a lot about.”
Let me break this into pieces. It all starts with a deep understanding of three things:
- What defines your ideal customer? And for this, we need to go beyond the traditional demographics.
- What do they deeply care about? Remember – positioning is about connecting with people
- Where can you make the biggest meaningful difference? This is about the customer, not your competitors.
To understand this I always analyze is three things:
- What key difference(s) do you see between the decision-makers at your customers that have become your ambassadors, and those that have become a customer, but will never become a fan? What’s different (even though they look alike from a demographic perspective)? What’s different in what they care about, what frustrates them, what makes them anxious, and what they aspire to?
- Secondly, I zoom out to a company level to get a deep understanding of what your ideal target audience stand for. What do they promise their customers and employees (Tip: their about page or hiring page is normally a very good source for this). Also – check where they aspire to go in the near- and long term. What aspirations do they communicate and what goals have they defined to get there?
- Thirdly – zoom out even more – and look at the external factors that are/will be influencing their business. Those factors that they have no control over: The shifting customer experiences, the new technologies, the economic or political conditions, the regulations, the new competitors entering the market, and so on.
This information will give you a lot of clues about what keeps your decision-makers up at night. Because the three categories above are the cocktail of change they have to deal with. If nothing changes, what worked will remain working. But with change comes friction.
What I am always looking for is that gap between where they (your ideal customers) are today and where they want to be tomorrow. The bigger that gap, the better. Fact is – it’s never a straight line. The external factors will ‘push the line down’ and the internal frictions will ‘pull the line down.’ This is where the pain comes to the surface – the things that keep them up at night (because they care).
So the fun starts with developing that long list of ‘what keeps them up at night.’ This is about showing deep empathy for your ideal customer, i.e., the profile you’ve created about the decision-makers that are your ambassadors. (Tip: I formulate this always around a formula: “The inability to [followed by a commitment to / expectation from the business that your decision-maker struggles to keep]).
The words ‘keep them up at night’ are critical. Far too often we don’t dig deep enough and end up with vague problems. If you dig deeper (keep asking Why?) you’ll feel when you are there. Suddenly you’ll feel that itch – the thing that indeed would keep you up if you’d be responsible for it.
And then the last phase: Ranking the list of problems. Here’s why: Not all problems are equal. So a valuable exercise to do is to answer to look at each problem on the list and answer three questions:
- On a scale of 1-10 – How valuable will it be for our ideal customer to solve this problem?
- On a scale of 1-10 – How urgent/critical will it be for them to solve this problem?
- On a scale of 1-10 – what’s our ability to exceed expectations in solving this problem?
If you now multiply the three answers on each line (1 * 2 * 3) and sort your list (I normally do this in Excel), then you’ll suddenly see the foundation arising for your most profitable positioning. The foundation that will help you attract those customers that will place a 10x higher value on what you offer compared to ‘others’ in your target market.
From here you have various journeys to explore.
What are the four types of market positioning for SaaS that work?
#1 – Position yourself around what your ideal customers stand for
Now that you know what defines your ideal customer, and in particular what they deeply care about, the opportunity is to use this to your advantage to carve out a space in your dense market that you can own.
One way to go about it is to position yourself around what your ideal customer stands for. I particularly value this approach because it forces you to put yourself in the shoes of your ideal customer. With this technique, you hone in on their worldview (not yours).
In his book, “All Marketers are Liars Tell Stories”, Seth Godin defines a “worldview” as the set of rules, values, beliefs, and biases people bring to a situation. As he says, ‘Good marketing is NOT about changing a person’s worldview, but rather framing your story in terms of their pre-existing worldview.’
The latter part is key. Done well, your story and that of your ideal customer blend perfectly. This means you’re communicating on the same wavelength. The result: When they see how you position yourself, they’ll instantly think ‘that’s for me!’
So how do you go about that?
Think about positioning as a grid with 4 quadrants. Now brainstorm about the two beliefs/things that define what your ideal customers stand for. What defines them at the core. For example – They’re all organizations that put ‘people first’ and are ‘purpose-driven.’ These become your top labels on your y-axes and the right side label on your x-axis.
Continue this process until you have clarity around at least 5 worldviews. This will allow you to create 3 to 4 grids and get insights into which combinations of worldview ingredients will provide your ultimate positioning opportunity.
The next step is to look at the opposites, i.e., the worldviews that define your not-so-ideal customers. What do they care about that your ideal customer cares less about. Let’s say that these organizations (although they fit in your target market prioritize their decisions around shareholder value and optimizing their profit. As such your bottom y-axis label will be ‘shareholder first’ and the left side X-axis ‘profit driven’.
Beware that all the labels you define on your positioning map are valid, valuable options. Remember, when your prospects bet their investment on different product categories or a competitor this doesn’t mean they are stupid, haven’t done their homework, or are bad organizations. They just stand for something else – and therefore make other choices based on different criteria.
Just because an organization fits in your target market from a demographic perspective (their size, their activities, their region,….) doesn’t mean they care about the same. And that’s why positioning around worldviews is so powerful. It will instantly attract the right customers, and detract the ones you really don’t want. Remember – Not everyone is created equal. That’s an opportunity. This starts with getting an eye for what your ideal customers stand for. So, showcase empathy.
Back to the actual positioning exercise.
My recommendation is to create an overview with 3 to 4 grids. Place combinations of the world views of your ideal customers top and right, and that of your not-so-ideal customers bottom- and left.
Then plot the logo of your company in the right top quadrant, and place it further up (or down) based on how you feel your company helps your potential customers make a difference in amplifying what they stand for.
Now, look at your competitors. Put them on the grid as to where you believe they make the biggest difference. Be critical and honest about this. The goal is to find the intersection in the market that you can own – a place where no one can ignore you, i.e., the positioning that puts all your competitors 1-0 behind.
#2 – Position around what your ideal customers secretly want
Another solid approach for carving out your most lucrative positioning is taking the angle of ‘desires,’ i.e., what your ideal customers secretly need or want. It’s so strong because it plays to the emotions in a way the other options don’t. It addresses the transformation they hope for.
Let me run you through an example. Imagine you ask your customer what they need. What you’ll get is a direct answer. F.ex: more efficiency, more control, faster decision making, smoother processes, fewer errors, and the list goes on.
The trap here is to take this for the truth – and stop digging. But, unfortunately, the first reaction your customers give is rarely the real thing they need. So it pays off to keep digging to uncover their hidden need and, even better, their super-hidden need. Simply asking ‘why’ will get you there. In this process, you’ll uncover the bigger needs behind their initial response.
What happens next is magical.
Suddenly the need starts to get a ‘feeling.’ The bigger need behind the typical ‘we need to be more efficient’ is, for example, the desire to ‘get freed from frustrating delays’ or ‘never having quality checks falling through the cracks anymore.’
But don’t stop here – keep digging because the bigger need behind this response is where your gold is. For example, the bigger need that drives ‘get freed from frustrating delays’ could be ‘being seen as ultra reliable’ or ‘Being able to exceed expectations constantly’. Even beyond that, think about Maslow’s hierarchy of needs (or the tweak Bain Company made on that specifically around B2B Value drivers) and how this helps to change the characteristic of a brand: Prestige, status, reputational assurance, and so on.
Going back to the art of positioning: Which SaaS vendor would you invite for a meeting? The one positioning themselves around making you ‘More efficiency’ or that positions themselves around giving you ‘Unusual reliability? The art is in hitting the right nerve. And that starts by deeply understanding their specific needs and what your ideal customer secretly wants. As you can imagine, this is particularly effective as it will allow you to create the bridge between ‘what is today’ and ‘what can be tomorrow.’
It leaves me with a critical question: What does your ideal customer secretly want? What if you’d make that front and center in how you communicate with them?
#3 – Position around the essence of the most valuable problem your customer wants to be solved
The two positioning angles discussed above are very much about aligning your story with the deep aspirations and beliefs of your customers. It’s about the desired result.
Another super powerful way to position is to zoom into the essence of the problem. Choosing this positioning route often feels like a big hurdle to jump because you’re addressing a negative, rather than a positive.
But the fact is: Your customers always look for the problem you can help them solve. It that’s not instantly clear – they’ll move their attention away. And that’s why it’s so powerful in positioning.
I’ve recently experienced this dilemma in my own company as well. In the process of further tuning the value foundation of my own business, I asked some SaaS marketers for feedback on my website where the headline was “I save SaaS CEOs the stress of ‘not enough’ traction.”
The instant reaction was: ‘this feels negative, deemphasize the word stress, lead with a positive.’ And I get that.
I then decided to test four aspirational positioning claims and four pain-related versions with over 50 SaaS CEOs in my network. Guess what: “[offering] to end the stress of ‘not enough’ traction” received the most votes, followed by an aspirational one ‘[offering] to become the SaaS business the World talks about.’
- It paints a vivid picture of the biggest pain my ideal customers struggle with – again and again – in every growth stage they’re going through.
- It’s simple and super concrete – doesn’t need further explanation
- If this is what you struggle with it will instantly grab your attention
- It carries an emotion expressing how this problem ‘feels’ in two ways i.e. ‘stressful’ and ‘not enough’ traction.
What’s key here is that you go to the essence, and here’s why. I could have mentioned other pains such as ‘…to end poor sales performance’ or ‘…to shorten long sales cycles’ or ‘…to fix low win rates’ – but these are the obvious choices. And obvious is what everyone does and that crowds up the market. That’s where it becomes noise.
The strongest positioning starts with narrowing down and picking the two options that are overlooked or neglected. And you’ll find those by digging two or three levels deeper than anyone else and getting to the essence.
Yes – and this will feel tough simply because it is so specific. Our natural urge is to keep all the options open and compromise because we can help in so many other areas. But that’s not what positioning is about. I’ve said it before – it’s about daring to take position. And that means killing your darlings and getting rid of all the obvious things.
You want to find that hook where you surprise and hit the right nerve (check out chapter 10 with the same name in my book The Remarkable Effect).
You want to break patterns and state the unconventional. It’s about clarity. It’s about being concrete and increasing contrast. It’s about simplicity. And the funny thing is: that brings credibility and gives you an edge over alternative options.
So my question to you: What’s the essence of the most valuable problem your customer wants to be solved?
#4 – Position around the values your customer embraces to stand out
This approach focuses on the attributes you help amplify within your customers’ organization. Particularly focus on the attributes they’ll use to differentiate themselves in their market i.e. what would strengthen their unique selling proposition. For example, think about how your product characteristics impact their speed, flexibility, quality, cost, service offers, time to market, reliability, brand identity, ethics, expertise, performance, culture, responsiveness, stability, etcetera.
This approach is powerful because of the combinations you can select. They’re sheer endless. And very often, your ideal customers are very articulate about what they value. It’s this, not that. And it’s that, and not this.
The same is true for the customers that are not-so-ideal. Customers you can serve with your functionality but never turn into ambassadors simply because they value different things than your ideal customers.
Look at the different buyer profiles described in the book Crossing the Chasm – Innovators, early adopters, early majority, late majority, and laggards. They could technically all have precisely the same demographic profile (i.e., the same size, industry, geography, etcetera) – but they all value different things.
Innovators, for example, typically value speed, creativity, and individuality, whereas the early majority are likely to appreciate high quality product, standards, and cost.
But even with those niche groups, you’ll find an abundance of value preferences. And that is what makes this approach so powerful. It’s pretty easy to find a position in the market that you can own and become a magnet for exactly the right customers – the customers you can help make the most significant difference.
So how do you go about it?
- Step 1: Brainstorm about the values your ideal customers have in common – Particularly look for those values that define them and are critical to their success.
- Step 2: Then assess per value which one you can amplify best with your SaaS offering. On which value can you make the most significant difference. This will narrow your options.
- Step 3: Do the same assessment for all the relevant alternatives your customer could choose from the market. What two values can each alternative make the difference in – and which ones (if any) do they already claim? Be brutally honest here.
The art is to find the two values you can uniquely own. So my question is: which two values could you claim and lead with?
#5 – What are the key ingredients that make your SaaS brand positioning remarkable?
Is it enough to take one of the positioning angles above? To be honest – no. There’s more to it. Remarkable positioning is exceptionally focused on what’s going on in your ideal customers’ minds and building a perceptual map – however – it also has some other qualities that matter. So let me dig into that:
- It communicates your edge.
- As said – the essence of positioning is this: Taking position. It’s about defining your extreme, the whitespace that you can own and dominate – your own category, if you will. It doesn’t compromise.
- It instantly paints a vivid picture.
- Reading or hearing your positioning should give your ideal audience an instant picture of where you fit in their world. It should trigger a smile, an aha! or that ‘finally…!’ reaction.
- It’s pattern-breaking
- The best positioning is unconventional. It breaks the pattern, the thing that everybody expects. Or, as they say: ‘it ruffles some feathers.’ This is possibly the most significant ingredient that helps you stand out. Beware of doing this credibly.
- It triggers the right emotions.
- Facts are good – emotions are even better. The best positioning statements hit people – they trigger their frustrations, anxiety, or hopes.
- It is simple, concrete, short
- Brevity always wins. But that’s not enough. A 6-year-old should be able to get it. This means – no jargon. It communicates your essence in a way that nothing gets lost in translation. Why is this key? Because only then it will be understood – and have a chance to be communicated for you to the people that need to hear it
Mix them, and you’ll be able to position yourself most memorably and make your competitors cringe. Moreover, it will change the perceptions the marketplace has about you and make it irresistible for the right customers – magnetizing is possibly the right word.
So my question: If you review your positioning statement. Does it have the magnetizing effect for the right customers? What if it had?
In Summary: Brand positioning for SaaS in a nutshell
It all starts with recognizing what’s creating the traction problem in your business:
- Not getting enough of the right, high-quality leads is often not solved by throwing in yet another campaign
- Long sales cycles or low win rates are often not solved by throwing salespeople out and hiring new
- Challenging product adoption is often not the fault of the quality of your development department
More often than not it comes down to foundational problems – and weak product or brand positioning is one of them.
The second thing to embrace is that positioning is not about you, it’s about your ideal customer. It’s about taking position about what they deeply care about and how that helps to paint the right reference point (relative to others) in the mind of the prospect. This is about empathy. About deeply understanding the problems that they perceive most valuable and critical to solving. Your positioning goldmine is hidden inside that knowledge.
Thirdly it’s about choosing the positioning angle for your SaaS model:
- Position yourself around what your ideal customers stand for
- Position around what your ideal customers secretly want
- Position around the essence of the most valuable problem your customer wants to be solved
- Position around the values your customer embraces to stand out
- Or any combination of the above
And lastly, it’s about tuning for impact i.e. working on the key ingredients that make your positioning remarkable.
Strengthening your value foundation in this way is extremely valuable and brings numerous results
- A significant increase in ROI on your marketing investment i.e. better leads
- Shortened sales cycles, increased win rates and deal value and an ability to sell at a premium price
- Increased customer loyalty and far more customers turn into ambassadors that will not only spread the word for you, but also keep coming back for more
- Resourcefulness in your development department, i.e. an ability to focus more time on further strengthening the quality of a product and its point of differentiation
- And so on
Need help? I am here, simply book a free call to explore if there’s a fit to do this together.
Other guides I created
- The ultimate guide to tuning your SaaS Segmentation
- The ultimate guide to creating a SaaS Value Proposition that works
- and obviously, my book The Remarkable Effect
- Alternatively simply subscribe to receive a daily reflection on how to become a SaaS business no one can ignore