← Positioning with April Dunford
Positioning with April Dunford
Harnessing the Power of Differentiated Value: How To Win Over Customers and Outperform Competitors
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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, it's April. So nice to see you. That's actually a joke. I can't see you. That would be creepy. If I could see you, you'd be able to walk on your dog and it'd be like, I see you. I'm over here behind the bush. Yeah, no, nobody wants to that. But it's nice of you to join me today, especially today, because today I'm going to talk about my absolute favorite topic in marketing and sales, which is value. Value, in my opinion, is the most important concept in marketing and sales. And unfortunately, it is also one of the most misunderstood. It is tragically, tragically misunderstood. So I'm going to tackle a few things around value. So first of all, what is value? At its simplest, value is why your features or capabilities matter to customers. It's the impact your features or capabilities have on a customer's business. Put another way, it's the so what of your features for a customer? Now, value is actually really hard to understand. And I'll get into a little bit about why that is. But let me first, I'm going to tell you a story. This is a story I tell a lot. So, you know, some of you are going to say, hey, I've heard April tell that story before. But listen, this time is different. There's going to be more context and there's nobody here to cut me off. This is the joy of this podcast. This is a story about a company I worked at a long time ago, 100 million years ago, called Jana Systems. So Jana, when I joined, was positioned in the enterprise CRM space. So CRM, customer relationship management. And this was a long time ago. So, you know, Salesforce was around, but they were focused on really, really small businesses. But the kings of enterprise CRM at the time was this company called Siebel Systems. And Siebel Systems was an amazing Silicon Valley success story. Fastest company ever to reach a billion revenue, I think. And at the time we started in the space, they were big, like 8,000 plus employees, close to a couple billion revenue, doing really amazing. So they're the kings of enterprise CRM. We come into the market, we are positioned also as enterprise CRM. So unsurprisingly, every time we get a meeting, customer says, so, so how are you better than Siebel? And the answer to that question was we kind of weren't like in any way better than them. Like they had 8,000 employees. I think we had 20 ish at the time. They had 2, 2 billion or billion and a half revenue. We were 2 million with an M revenue. They had hundreds and hundreds of customers. I think 400, 500 customers. I think we had six customers maybe. And if you look down to features that we had, we did have one feature that they didn't have. They had tons of features we didn't have because they'd been around for ages. We were brand new. But we had one thing that they didn't have. It. Not only that they couldn't copy it. And it was this thing, we called it De Jana hierarchy. And so what this thing did was it gave you the ability to model relationships in a different way. And so specifically what it did was it allowed you to model many to many relationship between people. Most CRMs on the market, in fact, all of them even today, the way they model relationships is there's a company and people are associated with a company. With this one you could do people to people, which was cool. And so the feature looked good as well. Like it demoed really well. And so whenever we got a meeting with a customer, they'd say, how are you better than Siebel? And we'd say, well, we got this thing, you know. So we would bring out the thing and we would show it to people and people liked looking at it. Like they would say, oh yeah, that's so cool, that thing. And then they would ask us this question like, so what do you do with that thing? And our answer was anything you want. Then they would sort of get squinty eyed and look at us in a confused way. And then they would say, what else have you got? And they'd be like, well, maybe we're going to give you a discount. But anyway, so needless to say, sales is not going so good. And how we got out of this in this case is, you know, a little bit of good luck, good execution, happy accident stuff. We actually hired a new sales rep and the sales rep was funny. Like he came in for his interview and you know, he came in, he was sort of a New York guy and my founder CEO was interviewing him and he was like, give us one good reason why we should hire you to work at our company. And you know, the sales rep was from New York and he had a little bit of attitude. He leaned over and he said, I'll give you one good reason. Because my buddy is the head of investment banking at Goldman Sachs. I'm going to get you a meeting. We were like, can you start Monday? So we hired the guy. I tagged along in the meeting just to see like, you know, what does the head of investment banking, Goldman Sachs like, what does that office look like? I thought to myself, and let me tell you, that is a very impressive thing. There was a helicopter pad outside in fact, which I had never seen before. Anyways, we go in to do the meeting. Rep's doing a great job. He's doing the demo, he gets to the thing, he's going to demo the thing. And the, the head of investment banking is super excited. He's like, wait a second, wait a second, back up. Like, are you saying that if two people used to work together but they don't work together anymore, you guys can manage model that? And we said yes we can. And he said, oh, like if somebody sits on two people, like sit on a board together but they actually work at different companies, you would know that. We said yes. And he said, well, what if they're, they both belong to a golf club? We're like yeah, yeah man, we can do all that stuff. He says whoa, hold up, gotta get the vice president runs down hall, comes back with a couple of vice presidents. Show them the thing, show them the thing. So we show the thing, everybody gets all excited. They're jumping up and down, they're talking their banker language together and, and, and we get a deal. So this is very exciting to us. And because this never really happened before, we're like, maybe investment bankers dig our stuff. So we get a meeting with another investment bank, we go in, same thing happens, everybody gets excited. Bankers are talking their banker language, we get a deal. So business is going good. But importantly, it kind of sparked this conversation inside about what are we all about now the big thing here in terms of value is we understood what our differentiated feature was. We were showing the feature to everybody. What we didn't understand was the value of that feature. What we learned from working with investment banks is that investment banking is, is a really, really relationship driven sale. And so being able to understand who knows who and who has a relationship with who is actually extremely valuable in the sales process for an investment bank. They could go have lunch with a person, come back, look in this system and say, ah, this person actually knows this person because they used to sit on a board together or they used to work together and you could have a call and call up and drop the other person's name and say, hey, I just had lunch with John and he's really excited about this thing I'm pitching him. You know, he suggested you might be a good person to talk to or however you're going to spin that. But the value of that thing was not clear to us before. But once we started working with investment bankers, it was very, very clear to us. It kind of triggered this, what are we conversation inside the company. Like, are we really enterprise CRM? Maybe we're CRM for investment banks. We shifted the positioning and narrowed it down just to investment banks, and that's when sales really started to pick up. So we actually went from less than a couple million revenue to a little under 80 million revenue in around 18 months. And the end of this story is that CBO got so tired of us kicking their butt all up and down Wall street, and we were starting to branch out into other geographies, and they eventually came and acquired us for $1.3 billion. But the point of this is that unlocking the value of that differentiated feature really was the thing that unlocked this spectacular growth and our ability to do a billion plus exit. So point one, customers don't care about your features. They, they care about the value that the features can deliver to their business. You can't always rely on a customer understanding how to do that translation. Now, sometimes they can, and this is why this is so confusing. So if you think about consumer tech and the way we talk about consumer tech, often in consumer tech, if you're looking at an ad, it'll list a bunch of features. But we have been trained to do the translation. We understand why the features matter because we're familiar with them. So if I'm a phone manufacturer and I got a camera on the phone, that's 8 billion megapixels, we as a customer know 8 billion megapixels is way better than 10. And we know why. We know that. You know, I can zoom in and the picture will be really clear and all that stuff. We did not understand that before. We were taught that by phone companies. Now we understand it. Sometimes you'll get the situation where you're selling to a very technical buyer. Like, for example, you're in the developer tool space. You're selling a very technical buyer that is quite savvy. They'll come with a list of features and say, you need to. You need to have all this stuff. And for the most part, they'll understand why your features matter because they've used features like that before and they know it. But if you show up with Something really new, something really innovative. You cannot just expect that that customer is going to be able to do the translation from features to value on their own. Often they cannot. And it is our job to help them understand why these features matter. How does that impact our day? How does that impact our business? And why should you care? We need to do that. That's our job as vendors. That's point one. Customers don't care about features, they care about value. Here's point 2. In a sales situation, particularly B2B, and particularly where we have what I would call a considered purchase, meaning this is something that is, it matters a lot to the business. We're going to take our time making this decision. We're going to make a short list, we're going to look at our options. In these cases, it is actually not value that matters, it is differentiated value. So what really matters, what's really going to get you the deal, is the value that your product delivers that no other product can. This is super, super important. So if I look at the way a lot of SaaS companies are selling, if you go look at their sales pitch and what's going on in sales, even a lot of their marketing, one, it's super features oriented. It assumes that customers can do the translation between features to value and it doesn't take into account the competitive landscape at all. So they're treating all features as equal often. Or they'll say, hey, this is the value you can get. You use our stuff and you're going to save time, or you use your stuff and you're going to be able to make more revenue. But the reality is the customer's coming and looking at your stuff. And guess what, everybody else has that stuff too. So why pick you over everyone else? The answer to that question is your differentiated value. That is the reason customers pick you. So here's the question then. If differentiated value is the thing that really matters, how do we actually figure out what our differentiated value is? So in my mind, it starts with understanding what we get compared to. So if you go back and listen to my episode on competition, the first thing we need to understand is in the customer's perspective, if we didn't exist, what would they do? Put another way, it's what do I have to beat in order to win a deal? So I start there. I need a stake in the ground. What am I positioning against? Like, what am I differentiating against? I need to figure that out. And then once I have that, then I can say, well, what capabilities do I have that the Other folks don't. And these capabilities can be features, but they can also be capabilities of the company. It can be your pricing structure, it can be maybe the way you do support, maybe it's you have professional services and the other folks don't. And there's some value in that. It could be a lot of things that actually aren't features, but it also in tech usually includes a bunch of things that are capabilities of the product that look like features. So I can write those down and there's million bazillion of these things that are differentiated from the other folks. And then what I need to do is I'm going to go down that list, I'm going to say so what? Have the advanced AI, whatever do dad thing. So what? Why does a customer care? What is the value that that feature delivers for customers? And as you go down that list, that list is naturally going to theme out into value buckets or value themes, which is good because we don't want 9,000 points of value. A customer could never remember that. What we want to do is orient around 2, 3 value buckets or value themes when we get there. That's our differentiated value because it came from our differentiated capabilities which are differentiated from what the alternatives in the market. That's how we do it. Now here's the thing we need to think about. Value is really hard. And part of the reason it's really hard is because there is kind of a continuum between the features and the value. It's not usually just a switch. So let's take my megapixels on the camera thing. So you can say okay, I got bajillion megapixels. So what say well that means you can take a really clear picture even if you zoom in. Now if I'm selling that to a business, not a consumer, a business, a business might say well so what? I don't. Why, how does that impact my business? Like what am I going to do with these super clear pictures zoomed in like so what? And you might have a case where the, where you would have to take it another step and you able to say well actually that means that right now you hire a photographer to come in because they have a special camera that can do that. They it can take a picture that is high enough quality for you to use in a print advertisement. But now you have this camera on your phone that could actually do that because that's going to save you a bunch of money. You don't have to outsource that stuff. Ah, saving me money. That's the value. Now here's why this is tricky. There's this continuum. So if I go from my feature all the way out to pure, pure, pure, pure value, like pure value. I'm actually in trouble here because here's how this works. In B2B, I really only got two points of value. Like I'm either helping you make money or I'm helping you save money. And that's it, that's all we got. Like, we also have a third one which is kind of like reducing risk, but we'll leave that one out for a second. But you know, I'm either helping you make money or save money. Like that's it. I don't have anything else. And so if I go all the way out and just say, hey, you should buy this product because it's going to help you make money, you usually sound like everybody else. You sound like everybody else. The customer is going to be like, well, how much money? How? Where? Why? Like you got to give more than that. So what we're actually trying to do is we got the capability and we're trying to go, so what? So what? So what? Right up until the spot where the customer can do their own translation to value. Now that's tricky. You need to know a lot about customers need to know a lot about their situation. You need to really understand what they know and what they don't know. So if your customer is highly sophisticated, technical buyer, you might actually be able to get away with just feature or you might have to just nudge a little bit at a feature and say, well actually the reason this is important is because this task that used to take you three hours now only takes you one hour. And the customers knows, oh, I know why that's valuable now. That frees up a bunch of my developers time or somebody's time to go do something that's way higher value stuff. So I'm not so resource constrained. And so our job is to find that balance in between features and value. And that's actually really hard. Like you see it all over the place where people have gone too far on the value and they've kind of left everything in the dust. Like the, the example I always use is I live in Toronto and in the, in the Toronto airport. For a while, the entire airport was dominated by billboards for hsbc. And so they had these build big billboards and you'd be walking down the airport and there'd be this big billboard and it would say, you know, together, apart. And I'm like, Are you a bank? Like, what is this thing? So we have to be careful here. We want to orient on value, but that value, we need to go right up to the point where the customer can do the translation to value, but it retains our differentiation. And we don't just fuzz out into this fuzzy value that sounds just like everybody else. That's why this is so tricky. It's not gonna be easy when you go to do this. Like, you're often gonna have to take several runs at it and play around with it a little bit. And you may need to test it on customers to find out are we going close enough or do we need to back it up a little bit? So, again, that's what you're trying to do. You're trying to find this sweet spot. So that's the first thing. You need to find this kind of sweet spot on the continuum between features and value. The second thing, and this is, I think, really important, particularly for tech companies, is when we're doing this translation from features to value, what we're actually doing is we're categorizing the features. So what we've got is here's the value, and the features are all tucked in underneath. This is how we do it. So in our marketing and our sales material, we generally cannot just say, this is the value, and have people believe us. We actually need to say, this is the value and here's how we do it. So the big problem I see, for example, in product walkthrough demos in a sales situation for SaaS companies, is they're often just talking about features and they're not talking about the value. So ideally, what a product walkthrough should be is it should be showing you features within the context of the value or why the features matter. So let's say you have three points of value and you say, okay, the first one is we're going to make it really easy to do xyz. So you come in with that, you say, look, we make it really easy to do xyz. Let me show you how we do that. We have a feature. It's called this. No one else has it. No, that's why we can do this and no one else can, because we've taken a different approach. Number two, we have this other point of value. Here are the three, four features that enable that. Number three, here's our value. Here are the features that enable it. That's the way we want to do a demo. Ideally, if we're in a sales situation for SaaS, it's the same thing with our marketing on the homepage. We can't just talk about the value. In order to be credible, we need to say, here's the value, here's how we deliver it. The features are, are what make the value real to a certain extent. Now, the third piece we need, because we can't just leave it there, is proof. So customers unfortunately have been trained to be super, super skeptical about what vendors say about themselves because they've been lied to. And vendors will exaggerate and some will just say things that are just plain not true. So we can't just say, hey, we're going to save you time. We're going to actually have to prove that. So there's a lot of different ways that we can prove a claim of value. So the one that we wish we had in every situation is metrics. Like if we said, oh, we're going to save you time, the natural question is, well, how much time are we talking? Five minutes or five hours? Because that's a real difference in value here. And so ideally we would have some kind of metric that would prove that. Now, a lot of times we don't either because we don't have enough customers or we don't actually know what it is, or it's just kind of, you know, it's different for every customer. And so, you know, sometimes we can get away with giving a range that might work, but a lot of times we don't actually have a metric. And so in these cases, we're going to have to rely on customer stories and customer quotes and case studies to prove that value. We could say, well, look, we don't know exactly how much time we're going to save you, but let me show you a customer that looks an awful lot like you, and I'll walk you through how they save time. And that's going to make you more comfortable that we can do what we say we can do. So we need to find the sweet spot, continuum between features and value. We need to tell you how we're going to deliver that value. And we need to give you some form of proof in the form of no metrics or customer stories or however else we're going to prove it. And those three things all got to get bundled together. So lastly, I want to give you a few things to think about when it comes to value. So the first one is that value and target customer segments go hand in hand. And generally our product does not deliver value for everybody. Like, like that value is very specific to a certain segment of the market. So like my example of this many to many relationship thing, being able to model that and model those relationships and have that improve your sales process is really only valuable to a company that does a really relationship driven sell. So that's not universal value, it's value for these kinds of customers. So it's really important, once you do understand what is the differentiated value that you've got, you got to get really clear on not only so what, but for whom. So the best way to figure that out is you could say, look, I've got my differentiated value and so maybe I've got three points of value. And I could say, look, we are the only company on the planet that can deliver you this combination of this plan plus this, plus this. The next question we want to ask ourselves is, well, who cares a lot about that? Because the reality is, you know, we could sell to anybody that needs what we do, but not everybody cares about the value that only you can deliver the same amount. And so the question we're trying to ask ourselves is what are the characteristics of a target account that make them really, really, really care a lot about your value? 1, 2, 3, that only you can deliver? This is literally the definition of a best fit customer. If we can figure that out, then now we really got something. So we don't have just differentiated value, we have differentiated value and we have, if the customer ticks these five boxes, we know they really care a lot about this. And that's where we should focus our marketing and sales efforts. When people do a segmentation like this, they make a mistake in a, in a couple of different ways. So one is we assume that that segmentation has to be vertical industry. And I'm actually contributing that problem by using an example where we narrow down on vertical industry. But the reality is like I've done hundreds of positioning sessions and generally when we get down to this, this definition of a best fit customer or who cares a lot about our value, it's often we're not segmenting on vertical industry. It's usually a combination of other things. So sometimes it can be the size of the company or the industry they're in, but often it's other things. It's like, what's the tech stack they're using? Oh, this is really valuable if you're on a Microsoft stack. If you're not on Microsoft stack, you actually don't care that much about it. Sometimes it has to do with the maturity of the team that you're selling to or the size of the team that you're selling to. Sometimes it has to do with the business model of the target company, and sometimes it's a combination of a bunch of things. So I think you need to really sit down and think about, like, this is our differentiated value. What is it about certain target customers that make them really, really, really care a lot about the value that only you can deliver? The next thing to think about is differentiated value is important for a lot of reasons. But one of the reasons it's important is because differentiated value is how we assess the goodness of our chosen market category. So a lot of companies will come to me and they'll say, look, we've decided this is the category that we need to be in, and so we're going to back that up and then talk about, you know, who we compete against and what makes us different and what our differentiated value is. And in my opinion, that's tail wagging the dog right there. Like, you can't actually do that because you don't have anything to assess the market category on other than your feelings, which are usually not good. So what we actually want to do is figure out, okay, here's the value that only we can deliver. These are the people that really care a lot about that value. And then we can back up and say, okay, market category. What is the job of a market category? The job of a market category is to take a customer that doesn't know too much about our stuff and point them in the direction of our value. So put another way, market category is really the context we position our product in, such that our differentiated value is kind of obvious to the customers we're trying to sell to. So I actually need differentiated value before I can assess is the market category we're using right now good or not? So you come up with, say, your three points of differentiated value, and then you've got this market category. So let's say you've got an existing market category you're positioned in, and you could say, okay, does this work? So let me go back to my Jana example. We're enterprise CRM. Does that contextualize our value of being able to model a many to many relationship? No. In fact, no CRMs on the planet right now do it. And particularly not enterprise CRM. Like, there's nothing there that gives me a clue as to why we're different and better than anyone else. If I say we're CRM for investment banks, well, the natural assumption there is I do something kind of jazzy for investment banks, which is exactly what I do. So we need to understand the differentiated value in order to understand the goodness of our market category. So that's another reason why it's important. Lastly, differentiated value forms the core of our messaging and our sales narrative. The messaging part is kind of obvious. If you look at most companies homepages, you'll see there'll be, you know, a tagline that sort of attempts to orient you around, what is this thing? Why should I care? And then immediately after that you'll be like, here's our value props. 1, 2, 3. You'll see those underneath. And usually if you're doing a good job, you'll be able to see, here are the features that enable that and go a little deeper on it. If you've got good marketing people on your team, good marketers know this, they know that value propositions are a thing. They know that's the core of our messaging. That stuff's kind of obvious. Where I see the wheels come off the bus a little bit is over on the sales side of town. So again, if, if we understand differentiated value, we're marketing around differentiated value, wouldn't it make sense that a customer comes into a sales meeting and we're orienting them around that as well? And often that's not what I see. What I see is the lead gets flipped over to sales, and sales is giving customers a product walkthrough, which is what? Just a bunch of uncontextualized features. Here's a feature, Here's a feature. Let me walk you in. Drop down number one does this. Drop down number two does this, this, this, does this. And then we get to the end and we're like, so you want to buy or not? And it's not answering any of the customer's questions. As in, like, does everybody have these features? Is there anything different about these features? And why do these features matter? Instead, what we should be doing is orienting our entire sales narrative around differentiated value. If we want to give a demo, what we should be doing is we start with the value and then we dip into here's how we do it, here's the value, here's how we do it. The opening of a good sales pitch should be contextualizing that value. Put another way, the opening of a good sales pitch is a little bit of a setup where we talk about why should the customer even care about that value? Because they may not understand why. This is something I'm going to get deep into in my second book, which is called Sales Pitch is coming out in October. But in there, I'm going to get deep into how exactly we do that. And we'll touch on some of this in some of the future episodes of the PO Podcast as well. But that's it for today. So value, super important. Differentiated value. That's actually the key to everything. It's the key to your messaging. It's the keto good sales pitch. If we're going to talk about differentiated value, we got to get into the how we do it. We also have to get into the proof that we can actually do what we say we can do. That's it. Thanks so much for joining me. You know, subscribe and all that stuff that podcast listeners do. You know, it's new here. This, this podcast is new. So I would love it if you went and gave me a review or left me some feedback because I'm trying to know what's working and isn't working over here. And thanks so much for coming. I will see you next week. Hey, thanks so much for listening. If you're listening to this podcast and you're thinking to yourself, hey, 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 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.