Podcast Summary: "Getting to the Root of the 'We Have No Differentiation' Problem"
Positioning with April Dunford
Release Date: October 17, 2024

Introduction

In the episode titled "Getting to the Root of the 'We Have No Differentiation' Problem," April Dunford delves deep into a prevalent issue faced by many B2B technology companies: the perception that their product lacks differentiation in a crowded market. Drawing from her extensive experience in positioning and consulting, April breaks down the underlying causes of this problem and offers actionable insights to help companies uncover and articulate their unique value propositions effectively.

Understanding the Core Problem

April begins by addressing the most frequently asked question she encounters:

"What do we do if our product has no differentiation?"
— April Dunford [00:03:15]

She explains that positioning involves three fundamental steps:

1. Identifying Competitive Alternatives: Understanding what other products or services customers might consider.
2. Highlighting Differentiated Capabilities: Pinpointing what sets your product apart from these alternatives.
3. Translating Differentiation into Value: Converting unique features into tangible benefits for customers.

However, when teams perceive that their product lacks any distinguishing features, it raises critical concerns about the product's viability in the market.

Two Possible Scenarios

April posits that when a company believes it has no differentiation, one of two scenarios is likely true:

1. No Differentiation Exists:

   • The product is indistinguishable from competitors.
   • Sales are lackluster, revenue stagnates, and overall business performance suffers.
   • In the B2B tech landscape, such products typically fail because purchasing decisions involve multiple stakeholders who require justified reasons for their choices.

2. Differentiation Exists But Isn't Recognized:

   • The product does have unique aspects, but internal teams fail to identify or appreciate them.
   • This scenario is more common and often results from internal communication gaps or misaligned perceptions across departments.

"Positioning isn't something like a Band-Aid that we just slap onto a product."
— April Dunford [00:04:45]

April emphasizes that in B2B technology, differentiation is crucial because buyers must justify their choices to various departments, making mere superficial positioning ineffective.

Exploring Scenario 1: Truly No Differentiation

When a product lacks differentiation entirely, the consequences are severe:

• Poor Sales Performance: The product rarely makes the shortlist in purchasing decisions.
• Revenue Decline: Stagnant or declining sales figures indicate a struggling business.
• Market Failure: Without unique selling points, the product cannot compete effectively.

April asserts that in such cases, repositioning alone won't remedy the issue. Instead, companies need to revisit their product development strategies to introduce meaningful differentiation, which could stem from:

• Unique Product Features: Introducing functionalities that competitors lack.
• Value-Added Services: Offering exceptional customer service, support, or professional services.
• Innovative Pricing Models: Implementing pricing strategies that provide better value or flexibility to customers.

"If we truly have no differentiation, we're not selling much. We're definitely not growing."
— April Dunford [00:07:55]

Exploring Scenario 2: Differentiation Exists But Isn't Recognized

More commonly, companies possess differentiating factors but fail to identify or leverage them effectively. April outlines six potential root causes for this oversight:

1. Value Blindness

Definition: The team fails to perceive the inherent value in the product's existing features or capabilities.

Causes:

• Lack of Exposure to Sales and Customer Interactions: Marketing teams might be isolated from direct sales activities, leading to a disconnect between product features and customer value.
• Comparing to Irrelevant Competitors: Teams might focus on marketing aspects of non-direct competitors, believing there's no differentiation when, in reality, the comparisons aren't valid.

Solution:

• Encourage cross-departmental interactions.
• Facilitate marketing teams' involvement in sales calls and customer advisory boards to gain firsthand insights into customer needs and preferences.

"You really need the marketing team to understand that."
— April Dunford [00:14:30]

2. Product Illiteracy

Definition: Marketing and sales teams do not fully understand the technical features that provide value to customers.

Causes:

• Complex Technical Features: Deeply technical aspects of the product may not be easily translated into customer-centric benefits.
• Insufficient Knowledge Transfer: The product team may not effectively communicate the nuances of product features to others.

Solution:

• Ensure the product team actively educates marketing and sales teams about technical features.
• Translate technical capabilities into clear, customer-focused value propositions.

"It's the product team's responsibility to make sure that marketing and sales understands how to translate that capability into what it means for customers."
— April Dunford [00:17:45]

3. Inside-Out Perspective on Competition

Definition: Teams assess competition based on internal viewpoints rather than understanding how customers perceive competitors.

Causes:

• Misidentified Competitors: Including firms that customers don't actually consider as alternatives.
• Overemphasis on Internal Observations: Assuming that all listed competitors are relevant without validating their actual presence in customer decision-making.

Solution:

• Focus on identifying competitors that genuinely influence customer choices.
• Regularly consult sales teams to understand which competitors appear on real deal shortlists.

"Differentiation has to be against the other alternatives that a customer would seriously consider."
— April Dunford [00:20:30]

Anecdote: April shares a personal story about misidentifying IBM as a direct competitor, only to realize that IBM targets a different market segment.

"I thought we competed with IBM... but IBM was selling to Fortune 100 companies that we weren't targeting at all."
— April Dunford [00:32:00]

4. Obsession with Losses and Ignorance about Wins

Definition: Companies become fixated on why deals are lost while neglecting to analyze why deals are won.

Causes:

• Misaligned Focus: Concentrating solely on improving weaknesses without leveraging strengths.
• Failure to Analyze Successful Deals: Missing opportunities to understand what worked well and replicate it.

Solution:

• Balance the analysis by examining both lost and won deals.
• Extract insights from successful deals to reinforce strengths and identify key differentiators.

"I think we can learn a lot more from the wins than we can from the losses."
— April Dunford [00:24:10]

5. Product Pessimism

Definition: An overly negative outlook on the product's capabilities and market potential, often perpetuated by the product team.

Causes:

• Continuous Feature Chasing: Obsessing over competitors' features instead of focusing on unique strengths.
• Negative Communication: Product teams may inadvertently demoralize sales and marketing by highlighting only deficiencies.

Solution:

• Foster a positive and balanced perspective within the product team.
• Highlight and celebrate the product's successes and unique strengths.

"Product pessimism is sometimes the root cause of this idea that we don't have any differentiation."
— April Dunford [00:29:20]

6. Sloppy Segmentation

Definition: Poorly defined customer segments that prevent clear identification of where differentiation lies.

Causes:

• Broad Target Markets: Attempting to cater to too wide a market, leading to diluted messaging.
• Wishful Segmentation: Defining segments based on aspirations rather than actual strengths and market demands.

Solution:

• Adopt a data-driven approach to customer segmentation.
• Focus on segments that genuinely value the product's unique offerings.

"Sloppy segmentation is where we feel like we don't have any differentiation because we have defined our best fit customer as this swath of the market that is so absolutely wide..."
— April Dunford [00:32:45]

Strategies for Uncovering and Leveraging Differentiation

April emphasizes the importance of cross-functional collaboration to bridge communication gaps:

• Positioning Workshops: Bring together teams from sales, marketing, product, and leadership to collaboratively define differentiation and value.
• Deep Dive into Wins: Analyze successful deals to understand what set the product apart in those instances.
• Tighten Segmentation: Refine customer segments based on actual value delivered and market responsiveness.

"The exercise of bringing everybody together and doing a positioning exercise goes a long way to help the whole team understand..."
— April Dunford [00:35:10]

Conclusion

The episode concludes with April reiterating that perceived lack of differentiation usually stems from internal misalignments rather than the absence of true value propositions. By fostering open communication, refining customer segmentation, and thoroughly analyzing both wins and losses, companies can uncover and effectively communicate their unique differentiators. This alignment not only enhances marketing and sales performance but also drives sustainable growth.

"If you think there's no differentiated value in a situation like that, the reality is there is differentiated value. You just don't know what it is."
— April Dunford [00:08:50]

Final Thoughts

April Dunford's insightful exploration provides a roadmap for companies grappling with differentiation challenges. By identifying the root causes and implementing strategic solutions, businesses can transform their positioning, making their products stand out in the competitive B2B technology landscape.

For those interested in further assistance with positioning, April offers consulting services tailored to B2B tech companies of various sizes. Visit aprildunford.com/consulting to learn more.

Notable Quotes:

• On Positioning and Product Differentiation:

  "Positioning isn't something like a Band-Aid that we just slap onto a product."
  — April Dunford [00:04:45]

• On Marketing Team's Role in Recognizing Value:

  "You really need the marketing team to understand that."
  — April Dunford [00:14:30]

• On Learning from Wins:

  "I think we can learn a lot more from the wins than we can from the losses."
  — April Dunford [00:24:10]

• On Product Pessimism:

  "Product pessimism is sometimes the root cause of this idea that we don't have any differentiation."
  — April Dunford [00:29:20]

• On Sloppy Segmentation and Market Fit:

  "Sloppy segmentation is where we feel like we don't have any differentiation because we have defined our best fit customer as this swath of the market that is so absolutely wide..."
  — April Dunford [00:32:45]

This comprehensive summary encapsulates the key discussions, insights, and conclusions from April Dunford's podcast episode, providing a valuable resource for entrepreneurs, marketers, and business leaders seeking to enhance their product positioning strategies.