← Positioning with April Dunford
Positioning with April Dunford
Getting to the Root of the "We Have No Differentiation" Problem
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April Dunford
Welcome to the Positioning show, where we discuss topics related to the practical application of positioning for marketing, sales, and product teams. I'm April Dunford, a consultant, author, and the world's leading expert on positioning for B2B technology companies. Hey, everybody. Welcome to another edition of the Positioning show with me, April Dunford. Today, I want to cover a question that I get asked a lot. A lot. Like, a lot, a lot. I would say maybe this is the question right now that I get asked the most. Aside from the question, what is positioning? The question I get asked the most is this question, what do we do if our product has no differentiation? So in my methodology, you know, we start by looking at what are the competitive alternatives? What have we got that's different from the alternatives? And then how does that, those differentiated capabilities get translated over into value? And then some people will come to me and say, well, you know what? We got a product, and it's got no differentiation. So what do we do? So I want to tackle that, and I want to kind of break it apart into two pieces, because some of what I'm going to say might be surprising to you. So I. I think that if we have this situation, one of two things is true. So either we truly have no differentiation, and we have a product that's just like everything else on the market. There's all kinds of other alternatives that a customer could pick, and those alternatives do the same thing we do. We got nothing special. There's no differentiation at all about our product, about our company pricing, things we wrap around the product. There's nothing. We have nothing. It's. It's all the same. Or the second option is we do have some differentiation, but for whatever reason, the team or parts of the team does not recognize that differentiation. So. So let's tackle the first one first. So the first one is we have no differentiation. What is life like when we have a product like this? It's terrible. The product is a failure, essentially. Sales is terrible. We're not selling anything. We barely make it on a short list. When we do, we don't get selected. Yeah, revenue's a disaster. There's no growth. You know, there are big, big problems with the entire business. And if this is the case, positioning isn't going to solve this problem. Like, positioning isn't something like band Aid that we just slap onto a product. That's. No. And we just, you know, invent some value or make up some value and then go run at that. In my experience in a B2B technology company, that is simply not the way it works now, this could be true in other places. You know, like, I think you might be able to get away with launching fizzy water that has no differentiation or bubble gum or, you know, a. A T shirt that's just like everybody else's T shirt. I don't, because I don't sell those things. But in B2B technology, we don't get away with a product that isn't differentiated. And you know why? It's because the person that has to select this product has to go back and justify it to a whole crowd of people, have to justify it to the economic buyer because they're writing them a check. They got to justify it to purchasing, legal, the end users. There's an absolute crowd of people, and the buyer is going to have to go back and make the case. And they can't simply go to this crowd of people and say, you know what, man, There were other things out there that were better. But I just like the vibes of this one, you know, like, that's just not how it works. There's stakes here. Like, that person doesn't want to look dumb in front of their boss. That person doesn't want to get fired for making a poor choice. It's that person's job to make sure that they get something that's a good fit for the company. Now, that doesn't mean that they're perfectly rational in these choices. We know that they're not. And there's a lot of irrational choices that get made simply because the buyer does not want to get in trouble. And so if they can go to their boss and say, look, we're going to buy Salesforce because everybody else is using Salesforce, and that seems like the safe choice that works. And in fact, for most incumbents or leaders in a market, being the leader in the market offers fantastic value. And that value is lowering the risk that the project will fail because everybody else is using them. So if you're not the leader in the market, you. You gotta have something else that you're bringing to the table. And if there's nothing else there, then, you know, a little positioning tweak isn't going to help you. You're gonna actually have to go back to the drawing board and figure out a product and an overall offering that has some differentiation. Now, that doesn't necessarily have to be product features. It could be services you wrap around it. It could be the way you do pricing. It could be other things that you have going on in your company that makes that particular product. Valuable. Even though the product, all on its own, might not be highly differentiated. I don't know what it is, but you're going to have to be able to help a customer answer the question, why this one over the other ones we could pick. So this is what we're going to have to do. If we truly have no differentiation, we're not selling much. We're definitely not growing. Everything is terrible. And we got to go back to the drawing board and figure out a product that actually works in the market, because the thing we have right now doesn't. That's it. Now, here's the other alternative. The other alternative is maybe you're wrong. Maybe you're wrong. Maybe the product is differentiated and the team or members on the team can actually see that differentiation. So I want to talk about that. Let's get to the bottom of that, because you would be surprised at how much I have seen this in the hundreds of companies that I've worked with now on positioning. I've seen this maybe a few dozen times where I go to work with a company and someone on the executive team will pull me aside and say, look like, I know we're going to do this positioning thing, April. But the reality is our product is just like everybody else's product. There is nothing special here. We have zero differentiation. I don't know how you're going to squeeze out differentiated value here. And I'll tell you, I heard that once from a company that was doing 70 million revenue and growing 35% year on year. I heard it from another company that was doing 50 million revenue and growing at about 40% year on year. Like, these things just don't match up. You know why? Because you're selling a lot of stuff. And not only that, you're growing. You know what that means? It means every day, every day, a customer is looking at you and all their other choices, and they're picking you. And so 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. Now, I want to get down to the root causes of this, because I think there's a set of things, and in fact, I have identified six things that could potentially be the root cause of this. And I want to kind of work through every one of the six and just give you some ideas, and maybe you could recognize if this is going on inside your company. So the first one is what I would call just straight up value blindness. So there's value there, but for whatever reason, the team doesn't recognize it. And I've seen this one in particular where it's the marketing team. Like, I hate to pick on you marketing team because you know, I come from there. But. But it's often the marketing team. And interestingly, it's the marketing team that doesn't get a lot of exposure to sales and to actual deals. And what happens is they tar, they start smoking their competitors marketing a little bit, if you know what I mean. Like they're looking at everybody else's marketing. They're maybe looking at the marketing of companies that don't even actually compete with them, but they're looking at this stuff and they're like, man, like that stuff sounds just like us. Like we, we don't have anything different from that. So when I was working in house, occasionally I would have senior people on my team come to me and say we don't have anything different. Like, I don't know why companies pick us because we don't have anything different. And I said, well, look like we're selling a lot of stuff, we're growing pretty good. Like obviously we got some stuff like customers disagree with you. And I would see that as a sign that folks on my team needed to get closer to sales. I needed to make sure that those folks were talking to customers. I needed to make sure that they were sitting in on sales calls. I usually had a customer advisory board and other things like this. And I needed to make sure that my team was going deeper on what does value mean for our customers? Who are they actually comparing us to? Where is the value of our stuff? Why pick us over the other guys? You really need the marketing team to understand that. Another time when you see this is, and I've seen this a couple of times, where companies have brought in a very senior marketing person from another company that is in an adjacent space or maybe even in the same space, but targeting a slightly different type of customer. And they come in and they don't. They haven't actually spent the time to really understand the segmentation and where the company sells and, and they'll get caught up in this, you know. Well, our big differentiator at the company I just came from was this. And you guys don't have that and therefore you have nothing. And sometimes what you need is the senior executive needs to actually spend some time with sales, spend some time with customers, understand the differences between the situation they just came from and the one they've got there. And this is the way I think you get around this value blindness. So that's the first thing. The second thing is what I'll call product illiteracy. So sometimes the marketing team and the sales team believe that there's no value because when there is, because the value comes from some deeply technical feature that they don't actually understand. And you know, you can blame this a little bit on marketing and sales, but you know what, you can also blame this a little bit on the product team. I think it's the product team's responsibility where we have a new feature or a capability that is maybe quite technical, maybe quite difficult to understand. It's their responsibility to make sure that marketing and sales understands how to translate that capability into what it means for customers or value for customers. I think this is super important because when it doesn't happen, sometimes what you'll get is sales doesn't understand it, so they just don't sell it. Or marketing doesn't understand it, they don't talk about it in the marketing stuff. And so I've seen this happen several times when I go in to do positioning workshop, you know, we'll talk about who do we compete with and then we'll talk about differentiated capabilities and some of this deeply technical stuff will land on the capability list and then we'll get talking about how to translate those capabilities to value. And, and the product team is completely shocked that the sales team and the marketing team don't really understand the value of something that they've often spent an incredible amount of time, energy and effort in building. So I think that's a thing to watch out for. This idea of product illiteracy I think is something you need to watch for. Number three. Sometimes I think what we have is an inside out perspective on competition. And here's what I mean by that. When we are talking about differentiation, what we're really talking about is differentiation in the minds of customers. And so that differentiation has to be against the other alternatives that a customer would seriously consider. So if we don't understand the alternatives that a customer would seriously consider, sometimes we get into trouble. So this can happen where we have the product management team is perhaps looking at a super, super long list of competitors. Some of these competitors might be things they've just heard about or they've googled and they've looked at the web page and they said, hey, this just looks just like us. So we're going to put it on our competitor list and we're going to worry about them. Um, but then when you walk over to sales and you find out well, who actually ends up on a short list and who do we have to differentiate against that that competitor is nowhere to be seen? So in my mind, if the competitor is never taken seriously by a customer, meaning a customer never puts them on a short list, then we don't need to worry about our differentiation against them. This happens a lot. Like, you'd be surprised at how many times I get into a conversation with a company and we're working on their positioning, and we start with this idea, well, like, if you didn't exist, what would a customer do? And there's parts of the team that are listing all kinds of companies. And sales will say, I don't know what you're talking about, man. Like, we've never seen them in a deal. This is often the root of this. We don't have any differentiation problem because there's three guys in a basement somewhere that have built the world's most technically advanced thing, and it does everything we do. And people inside the company like, oh, no, we don't have any differentiation against that. But often, you know, they failed to sell. They have a thing. They're just talking about it on the website. It doesn't actually exist in real life. There's lots of reasons why they. You might never see them in a deal. That doesn't mean we don't have to worry about them ever. At some point, if they start showing up in deals, we'll have to worry about how we're going to differentiate them against them. But quite often there are these competitors that look very scary on paper, but for whatever reason, they never actually end up on a short list. So we don't have to position against the ghost. So that's something. Here's another thing. Sometimes companies will say, well, there's this company over here and it does this value. Like, you know, it's really easy to onboard and get people to use this stuff. And then we'll have this other company over here, and they're not easy to onboard or whatever, but they deliver this other value where, you know, they're really going to help you drive costs down. And so the company will say, well, we don't have any unique differentiation because this company does this one thing and this other company does this other thing. But then when we work through it in a positioning workshop, the differentiation is the fact that you're the only company that does both. So even if the individual components are not differentiating, the fact that you bring this together generally brings this great value for customers. And if there's a certain type of customer that wants both of those things together, then that is your differentiated value. You're the only one in the market that can do those things together. So there's something to think about. So this inside out perspective on competition, that's something to watch for. Here's another one. It's number four. Number four is an obsession with losses and an absolute ignorance about wins. And some companies get really into this, they get really aggressive with this idea like we should be winning every single deal that we're in. And if we're not winning a deal that's a disaster, we will immediately go into like research mode and do this big loss analysis. Be like, how could we have avoided this thing? Oh my gosh. And I think that's the wrong way to think about it. Unless you are a extraordinarily large company that absolutely dominates your space most of the time, you're not trying to be everything to everybody. You're trying to sell to good fit customers. Sometimes what you get is, you know, a deal will come in and everybody get really excited about it, but then, you know, it's a deal that if you looked at the company, you know, we weren't a good fit for that deal and eventually we lose the deal and everybody's like, oh no, how did we lose the deal? But it wasn't a good for a good fit for us in the first place. On the flip side, these same companies tend to kind of, you know, wins. Who cares about wins? Like we're, we're just supposed to be winning them all, aren't we? And I think that's the wrong way to look at it. I think it's actually super, super instructive to get really deep on your wins. I think the way to create more wins is to understand the wins that you have right now. I think there's a lot of reason to, to not pick you, pick you in the market. And if we can get really, really deep on what kind of company loves us, why do they pick us? Who do they compare us against? What's value mean for that company? You know, why do we win deals? The more we understand that, the better we're going to do and the better we're going to understand our differentiation. And we can't figure that out from focusing purely on the losses. So I think we can learn a lot more from the wins than we can from the losses. So this loss obsession, win ignorance is sometimes the root cause of this idea that we don't have any differentiation. Next one, number five is what I call product Pessimism. I've done an episode on this before and I've written about this in my newsletter. But sometimes where this comes from is you have a product team that is really, really obsessed, like overly obsessed with the competition and believes that it's their job to make sure that if we ever get in a feature function checklist against anybody, we're at least at parity. If not, we have more things. And in fact, most of these teams that get really product pessimistic, they're always coming from behind. They're always looking at some competitor, real or imagined, and saying, oh my go missing these three things. Oh gosh, we have to have these other three things. Oh my gosh, the other guys just announced this thing. We got to go chase that too. I think this is really damaging to companies. And what I've seen is in extreme cases where you have a really pessimistic product management group, it will infect marketing and sales. They will convince marketing and sales that this product's a loser. We're not going to win any deals because it doesn't do these three things. And the other guys do those three things and they the this the teams will become blind to the stuff where the product and the company is ahead. And so where we think we have this happening, we got to nip this thing in the bud. Sometimes where I think it comes from is again, we've got a product team that's getting pulled into these bad fit deals because the deals are struggling and the sales reps are trying to salvage a deal that they never should have been chasing in the first place. But they'll pull us into these bad fit deals. Product management will get involved only in these sucker deals and they never get pulled into the nice clean deals that just closing one call, closing two calls and all they're ever seeing is like the hard cases. And so I think sometimes product management gets this overly negative view of the world because all they ever see is the bad stuff and they never see the good stuff. So one way to combat this is to make sure that the product team is seeing a lot of good stuff. The other thing is to just make sure there's more of an open line of communication between sales, marketing and product so that product understands where we win, how much we're winning. They need to hear the good stories as well as the bad stories in order for us to combat this kind of product pessimism. Related to this is number six, which is what I would call sloppy segmentation. And 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 that it's hard to actually see where our differentiation is because we're trying to be everything to everybody. And you know, and we're trying to sell over here where we have one set of competitors and over here where we have another set of competitors and all the little spaces in between. And so when we look at the wins and the losses, we can't actually identify any patterns. And so we start getting confused, like, oh man, we have this thing and you know, maybe we don't have any differentiation because we lost this one, we won this one, and everything feels confused. I have a story about this, like, I think, you know, this idea of differentiation, like it's really context dependent and some things that, you know, are beloved by one segment of the market are actually seen as a negative by another segment of the market. So at one point in my career I was working for this company and we thought we competed with IBM. And I think, you know, in the end, if I look back at it, I think we had this, this problem number three, which is this kind of inside out view of the competition. Because after I went to work at IBM and it turned out I discovered that we were never competing with them at all. But inside this company, we thought we competed with IBM. IBM had this product and we used to make fun of it when we were in customer calls. We say, you don't want to go with IBM like this, it's overkill for you. And it's a really terrible ui, really difficult to use, really difficult to learn. And we used to talk about there was a particular dropdown menu that if you clicked on it, it had something like 54 options, you know, just scroll, scroll, scroll. There are all these things we're like, look at that, like, how confusing is that for end users? It's terrible. And so we thought that was a real problem. And then later I end up going inside IBM and of course IBM's not selling to the same companies we were selling to. We were selling a sort of upper mid market, lower enterprise kind of thing. A space where IBM didn't even touch. And inside IBM they were selling these, the biggest of the big, like Fortune 100 companies only kind of thing. And I watched the guy give a demo to a Fortune 100 CIO and he showed a dropdown menu that looked almost identical to the one that we used to make fun of. And he clicked on that thing and he was talking to the CEO cio, and he said, look, look at the flexibility. Look at all these choices. And all of this stuff comes baked in. You don't have to do professional services to use it. And the guy loved it. And I was like, you know what? This idea of value really depends on your segmentation. You got to really understand who loves your stuff and why. So sometimes where you have this sloppy segmentation, it's hard to see it. And. And I think a lot of it comes from this idea that we do our segmentation based on this, like, wishful thinking, like, here's who we wish we would sell to, here's who we want to sell to, as opposed to looking at, well, what are we really good at? And who cares a lot about that? So in the positioning work I do with clients, we start with alternatives. We look at what we've got. That's differentiating, we translate that to value, and then we're kind of asking ourselves the question, well, you know, what is it about certain accounts that make them really, really care a lot about the value that you're only going to get from us? And I think that's a better way to do sort of a bottoms up segmentation and get at something that's a little tighter, a little more realistic. Now, in all of this, you might not like what you learn in that segmentation. So you might find that, yes, we do have differentiation, but the universe of people that care about that differentiation isn't big enough. And that's a completely separate problem. So you can tighten up your positioning and do a better job of selling to the segment of the market that really, really cares about your stuff. But at the end of the day, if the segment of the market that cares about your stuff is too small to meet your immediate revenue goals, now you got a problem. So it's not that you don't have differentiation, you do. It's that you don't meet the needs of a market big enough to actually hit your revenue target. Now, a lot of the times that's okay because you're building a product and what you have next year is going to look very different from what you have today. And so it's okay if you're only serving a small market now. As long as your roadmap gets you to a place where you're differentiated for a much bigger market, then you're going to survive and you're going to grow and all that stuff is going to be good. But you need to be a little bit conscious of this, and that's it one of the things that I think across all of this, if you look at the themes across all of these six situations where people don't understand the differentiation that the product actually has, it's usually due to a breakdown in communication like sales knows something, product knows something, market know, marketing knows something, the founder, CEO knows something, but the information is not evenly distributed across the organization. In the work I do, I think it's actually really, really fundamentally useful to get a cross functional team together and have a conversation about, hey, who do we actually compete with, who do we actually see on a short list in deals and what do we have that's differentiating? Does everybody know that and understand that? Let's translate that to value and get really tight on what that differentiated value is and then let's have a good look at, well, who's a really good fit for that and get tight on that definition or that segmentation. I think the exercise of bringing everybody together and doing a positioning exercise goes a long way to help the whole team understand here's where our differentiation is, here's why it's valuable to this kind of customer, and then we all can go out to market singing the same song and being aligned to the same positioning. Anyways, that's it for this week. Thanks so much for showing up like you always do. I love it. I'll see you again in a couple of weeks. Thanks. Hey, thanks so much for listening. If you're listening to this podcast and you're thinking to yourself, hey, my company could use some help with positioning, maybe we should talk. So as a consultant, I work with tech companies, but very specifically B2B tech companies that have a sales team. I don't really have a size requirement. I work with very, very large businesses, but I also work with growth stage companies that are as small as 10, 20, 30 million revenue. The work I do with companies is focused on getting a very tight definition of how you win in the market and then taking that, that and translating it into a really compelling story that clearly answers the question, why pick you over the other guys? If you're interested in learning about how we might work together, you can visit aprildunford.com consulting thanks again for listening.