For a long time, there was no detailed methodology for startup product positioning.
Al Ries and Jack Trout in 'Positioning: The Battle for Your Mind' introduced us to the fundamental concepts of brand and product positioning commonly used in advertising.
But that was published in the 1980s and left something of a gap in knowledge. While Ries and Trout's concepts are still fundamental, there wasn't really a method for putting them into action.
That's where April Dunford's methodology comes in.
April is a positioning 'guru', consultant, author, and keynote speaker. After more than 20 years in marketing in the tech world, and fueled by her many experiences of positioning product, she decided to fill the positioning knowledge gap.
I first came across April's book very naturally about a year ago. I found it so useful that I knew I had to interview her for How the F*ck as soon as possible.
I wanted to hear a story that would illustrate the value of product positioning, but one that also gives insight into 'how' to position a product the Dunford way.
The one that I got was perfect: Never publicly told before, full of details, fun, impressive ($1 billion in revenue!), and super insightful.
Here are the unique learnings I got from April:
- Throw away the traditional product positioning statement (For X, is a Y, which provides Z value). It's unclear and the output is a weird, unsharable sentence.
- Find out why your best customers love what you do, and position your product in a way that isolates what they love most. In this story, they tried to sell a database that was an alternative to Excel but no one wanted that. What their customers loved was that it was packaged small enough to be able to use it on mobile devices. Repositioning: embeddable database for mobile devices.
- Find your competitive comparable. Don't make the mistake (as I did before) of thinking your competitor is another company who makes similar software. It might be, but it's likely that your real competitor is something more simple: the way your customer is solving the problem right now. If they are using an intern to do that annoying task, then you better be explaining why your product is better than chucking an intern at the problem.
- Finding your true competitive comparable means you can isolate your uniqueness. Your positioning can now include "Our customers value us because of X, Y, Z unique features that an intern does not have".
I'm going to drop a couple of links at the end of the article this time. They include one of April's templates, and an example published by a real company who used this method to position their product.
Listen to April Dunford on Youtube:
A product positioning story from April Dunford
Where does your story begin?
This one's a really old story, one I haven't told before, but it's really neat.
With most start-up's, the idea for a product is based on what I would call a positioning thesis. So, you have an idea for something like 'I want to build better email' or, like in the case of this story, we wanted to build a better database.
At the time, relational databases were all big, complex things that you had to install on a server. You needed an administrator, they took a lot of resources, and they were very difficult to install, difficult to set up, and difficult to use. This story was a long time ago, and we were in the early days of smart mobile devices (we were actually in the early days of technology like laptops).
We had this idea that we would create a database that allowed you to program in SQL (like you would in a big database) except that we were going to make a low footprint, two-click install, doesn't need an administrator, kind of database that you could run on a PC. The idea was that we were gonna sell it to people as an alternative to a spreadsheet.
We envisioned it as 'business productivity software'. You would put this thing on your PC or laptop, and if you had to manipulate some data and write structured queries, but you didn't want to do it in Excel spreadsheet format, you could use our thing.
We thought that was cool (we were super techy) and we validated the idea by talking to some of our existing customers who were, for the most part super techies, too. Everybody went 'yeah, that sounds cool!'.
What happened when you released the product to the market?
We released the product, and we were selling it as this little standalone database. Although we were really positioning it as productivity software that was an alternative to Excel.
We launched the product and ran marketing campaigns around it, put it out in the market, and we did not sell very many. It turned out that nobody wanted it. We sold a couple hundred copies, but we were only selling these things for $100 a pop, so we'd needed to sell thousands of them. And, we weren't selling thousands of them, so it looked like a bit of a failure.
A few months in we decided we were gonna have to 'end-of-life' the product because it was a stinker.
What happened next, and what was your role in all this?
I was junior on the team, in a product marketing role. My boss said to me next "I want you to call our customers, we've only got a couple hundred of them, but it would be great if you could get a hold of around 100 of them. Just feel them out for what they're doing with the product and see if they're gonna be mad if we end-of-life it."
Now, this product was not SaaS, it was a standalone software that you installed on your computer, so we didn't have any customer usage data. We knew we weren't selling very many, so we had the suspicion that people also weren't using it all that much - but we didn't know for sure, and we didn't want everyone to get angry if we told them that we were gonna turn the product off. So we thought we should call them first and see what everyone's doing and then we'll gauge how mad everyone's gonna be.
I got the list of customers, and I started calling everybody. I didn't do anything else for a month, and I'm having three-four conversations a day if I'm lucky. At the end of the first week (after about 15-20 people) I found that almost every call went the same:
Me: "Hi, I'm April, I'm calling from company WATCOM and I just wanted to know about your usage of this product."
Them: "I don't have that."
Me: "Yes, yes, you did, let me pull up my records. Yes you bought it on the 10th of January."
Them: "Oh yeah! Yeah, I mean it seemed cool. We bought it, we fooled around with it for a little bit, but then we didn't really use it."
I had so many of these conversations, so I was thinking 'yeah, this is gonna be no big deal, we want to end-of-life this product and no one even knows they have it.'
But then I had customer call number 21. I get the guy on the phone and he says: "Oh! That thing! It's amazing, it's like magic!"
"Oh! That thing! It's amazing, it's like magic!"
And, he starts into this big story of what he's using it for.
His story was that he had all these salespeople with laptops (this was the early days of giving your salesperson a laptop) which they used to go out in the field. He says that his problem is that all his salespeople go out in the field, but the company's order system is in-house and runs this big Oracle database. His salesmen would go out in the field to take an order, write it down on paper and then they would come back to the office to manually enter the order into their database.
He said that sometimes they'd make a mistake or they'd misquote the order or miss a piece of information and end up having to go back and forth with the customer three or four times before they get the order right.
So, how was he using your company's database product to help that?
What he was doing was putting our SQL database on the laptop, because the footprint was so small it fitted on the laptop's small memory space, and it was compatible with his Oracle database back at headquarters. Our customer wrote a small program so that they could take the order on their laptop while they were with the customer. They'd then come back to the office plug-in and automatically sync up with the big Oracle database at headquarters.
He thought it was amazing.
I thought 'that's weird, that is not what we built this product to do'. But I didn't have the guts to tell the guy we were going to end the product and so I wrote it down and kept calling more customers.
I did a whole bunch more calls and for the most part, all the other people were not using it for anything.
But then I got another guy who was doing the exact same thing. It was a little bit different in that he had field service reps rather than salespeople. Still, the field service reps needed to take some notes and track things and so again they had put the database on the laptop or mobile device. Again that data would be synced with the large Oracle database when the rep got back to headquarters.
I ended up doing a hundred calls, and I had six or seven that were putting our database on some kind of mobile device to enable their teams who were not at headquarters to do stuff and then they could sync that up back at headquarters to a bigger SQL database.
What next, did you still end-of-life the product?
I go back to my boss at the time and the executive team, and I'm like 'good news and bad news'. Good news is that I made a hundred calls I know what people are doing with the product, and the vast majority don't use it, don't like it, and aren't gonna be one bit sad if we turn it off. But, I've got this handful of outliers that are using this product in a way we never expected, and they're going to be very disappointed when we turn it off.
That sparked a conversation internally about how we could we reposition this database into something completely different and sell it successfully as this other thing.
We did it, we repositioned it so that instead of being desk productivity software that competes with excel, it would be an embeddable database for mobile devices.
The good thing was that there was not a lot of competition for 'embeddable database for mobile devices' at the time. However, there were people building homegrown things trying to accomplish the same thing that we did.
What changed after the new product positioning?
It required a completely different shift in the business. We made a different pricing model: we were no longer selling it one database at a time, we were gonna sell hundreds of copies at a time depending on how big the customer's salesforce was. We needed to change our route to market, we were previously selling it one copy at a time from our website, but this was going to require a salesperson to go and talk to IT and the head of sales to explain what this thing was about.
The deals went from $100 a pop to potentially thousands of dollars of revenue in a bigger deal.
The product positioning process
What was the repositioning process?
The product positioning process started out with the idea that we could simply tell the story in a different way.
We had to work through what the product was becoming, because we had had an understanding of the competitive comparable for the old product (Excel), but we knew that now, for our most happy customers Excel was not the comparable. Just the unhappy customers were comparing us to Excel, and now the happy customers didn't see us as an Excel alternative at all.
What our happy customers were comparing us to were the makeshift scripts that they'd built for data storage, that sits on a laptop and can sync back to Oracle. Their current solutions were very complicated and homegrown.
So our first step was to look at this new scenario: we have a new comparable; therefore, we have different features that are interesting. Our happy customers loved us because we had SQL that was compatible with their headquarters database, and our database was low footprint enough that it didn't take up too much hard disk.
This meant that they could put it on a very resource-constrained laptop or a mobile device and send people out in the field.
So, it started with insight into who loved our stuff and why. That got us to thinking about different competitive comparables and, therefore, different key features and, therefore, the different value we could deliver to the customer.
We then chose different customers to target and, finally, we shifted our market category away from 'business productivity software' to an 'embeddable database for mobile devices'.
What were the results of the product positioning process?
I think the result of that story is where it gets cool. We did this as a test originally, so we started out by hiring one salesperson to figure out the pricing. We sold some deals and, then we hired more and more salespeople, and the product started selling like crazy.
the product started selling like crazy
Eventually, we got acquired by a huge database company in Silicon Valley, and the product continued to sell and sell and sell. That product still exists today (look at it here: SAP SQL anywhere) and is still used as an embeddable database for mobile devices.
At its peak, is my understanding, that it was making $1 billion in revenue. And we had almost killed the product! Imagine if I hadn't had had those conversations and instead we had just done a survey saying 'hey do you like this thing'. We would have got the results back, and I would have said 95% of users think it's stupid and they don't like it.
At its peak it was making $1 billion in revenue
That's super lucky, considering you hadn't set out to do 'discovery'.
They ended up being very much discovery conversations by accident because my goal was not to ask them about new features we could build or you know any of the normal things you would do on a customer call, my goal really was to figure out if they were using it, and if so what were they doing and how business-critical was that.
This was before we even knew what customer discovery was, so it was by accident but the insight that we got was just like a customer discovery call. It enabled us to essentially walk through a position process just like the positioning process I outline in my book (Amazon UK; Amazon USA)
In other words:
- What's our competitive comparable
- What features must we highlight given that comparable
- What features are most valued by our audience
So, did you get a promotion after that?
Ha. It's important to highlight that I was junior at this time, and although it was based on the insight I had gathered, from there on, it was not me. This was a significant business decision, and very much the CEO's. My little contribute contribution was kind of minor when compared to the whole team's contribution, but big strategic shifts are like that.
Us marketers are often in a place to shine a light on insight or to educate the rest of the team on what the customers are doing and what we are hearing. But, the whole team has to get on board and make the decision if you're gonna make a shift.
Marketing doesn't get to do that on their own and so, as a consultant now with my clients, I don't do a positioning exercise unless we can get representation, and usually, it's the whole executive team in the room together. That's because if I can't convince sales, customer success, or the CEO that it's a good thing to do, it ain't gonna happen.
We don't get to do these things in a bubble it's gotta be everybody coming together if there is going to be a big shift in business strategy.
Can you tell me a bit more about what happened to that company?
There was my very, very, very first product and that product lives on now as part of SAP. The original company was a spin-out from the University of Waterloo here in Canada, the company was called WATCOM.
WATCOM was eventually acquired by a Sybase which, at the time, was I think one of the biggest database providers in the world. Years later, Sybase was acquired by SAP, and because our mandate fit so nicely under theirs, they funded us well and kind of left us alone.
After that, we just continued to grow like crazy because we were at the right time for the rise of mobile devices – our neat embeddable database was needed on every device.
One thing my team and I found particularly useful was that idea of competitive comparables. Would you mind going into that, too?
So, the competitive comparable was a bit of a breakthrough for me too. To tell you the truth, I didn't start out in marketing, but I ended up running a big marketing team (How the F*ck: April led a global marketing team two years out of college), and so I did a lot of marketing courses and read a lot of marketing books because I felt like I had to catch up.
One of the things that I found intriguing was this idea that positioning was a foundational marketing concept and yet we didn't seem to have a methodology for doing it.
I thought that was really interesting for the longest time. And, I was trying to build a methodology that would break positioning into pieces and then have a process for putting it back together.
Clearly, a competitive alternative is a key thing in positioning. You can't know what your distinctive value is without knowing who you're compared against.
But for a long time, I was thinking about competitive comparison in a typical way: when someone says 'who is your competitor' you tend to think of other providers out there that do software just like yours.
However, in B2B markets, often the thing you are actually competing against is something like a spreadsheet that your target customer is using to solve the problem at the moment.
(How the F*ck: In her book April uses the example of a customer simply using Excel or hiring an intern to do the job your product does. If you compare your product against similar software, but your customer is using an intern to do in manually, you aren't making the right comparison.)
I first came to this conclusion when I was reading a lot of Clayton Christensen and jobs to be done theory. It got me thinking about the idea that companies hire your product to do a job, and that job is not always obvious.
You've really got to nail the competitive alternative. After all, if I don't understand who my real competitive alternative is then, I don't understand what's unique about my offering because I don't know who I'm comparing to. If you don't nail this, your whole positioning will be wrong.
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