STEP 3 - PRACTICAL GUIDE FOR FOUNDERS TO FIGURING OUT PRODUCT POSITIONING AND DISTRIBUTION STRATEGY AS AN EARLY STAGE STARTUP

Company and product positioning is a vital step in the formation of your sales and distribution strategy. While marketing and sales differ in many ways, they are really just two sides of the same coin. You can’t have one without having the other, although they fulfill different needs. While sales is based on relationships and 1-on-1 customized conversations with individuals at a company, marketing’s goal is to build awareness and educate your user base and potential customers.

Before jumping into company and product positioning and distribution, you first need to identify your target market so that you have a starting point. Once you have your target market, you then have to determine the right internal contacts for each target within your market (this is the person with the pain, the $ and the decision making power). To learn more about target markets and contacts, read our blog post titled “Building A Sales Strategy From Scratch - Step 1: Identifying Your Target Market.”

 What is Company and Product Positioning anyway?

Company and product positioning are just what they sounds like - positioning your company and product in the market you are targeting for distribution. This is important because it’s the path customers follow in order to learn about and engage with you. In order to position yourself successfully, you need to figure out a few things. Step 1 is to find out is how your target market learns about new companies and products. This is called channel identification. Once you know which channels to use, you’ll then have to figure out how to talk about your company and product for each target market and in each channel. What resonates with people? Do they connect with what you’re saying? Sound complicated? Not really but there are some important steps involved.

 Finding the Right Distribution Channels

After you’ve identified your target market, you’ll have to figure out how these markets learn about new products to use. Is it word-of-mouth, cold emails, Google, Twitter posts, conferences, content on industry trends, etc? This is important to know because if you’re not using the right channels, potential customers will never learn about your company or product in the first place, rendering your efforts somewhat useless. The goal here is to raise awareness by marketing your company and product in a place where the customer is most likely to be.

 Channels are going to differ based on target markets. A good starting points is to ask your current customers or target buyer personas how they found you and how they learned about other technologies they use.  For example, if you’re selling to enterprises, then referrals are key. Enterprise sales and marketing are more focussed on a 1-on-1 relationship.  As a result, when selling into an enterprise market, you’ll want to start by working your network for warm intros.

If your clients get their information in marketplaces, then you’ll want to build a presence in platform marketplaces where you have an integration. Examples of platform marketplaces are Salesforce, Quickbooks, Apple, Shopify, Github and Slack. Selling through a platform marketplace is an indirect strategy, meaning you’ll lean more on marketing to build awareness. In the case of the enterprise sales we mentioned earlier, you’re leaning more on sales to engage in 1-on-1 relationships to build awareness. Each target market you’re going after will have ways that they acquire information and learn about new companies and products. As a leader of a startup, it’s important to identify the channels that will provide you with the most leverage to build awareness.

How do you describe your company and product?

How do you determine how to describe your product and company once you’ve identified  the best channels to educate people about your product? You talk to your current customers, early adopters, or others that fall within your target buyer persona. Ask them about the problem your product solves and how they would describe your product to a friend with a similar problem. Have them explain your product and it’s benefits back to you, in their own words (this part is really important). Listen closely to everything they say - the words they use, feelings evoked, personal stories of pain points and benefits - this is how you should be describing your product and it’s benefits to your customers.

Catering Your Content Strategy to the Channels Where Your Customers Hang Out

You’ll need to adapt your content for each channel and audience you want to reach. If your target contacts are developers, then you’ll develop in-depth, highly technical content. If you want to reach CEO’s, create easy to digest, simple, visual reports backed by data for deep dives as needed. Targeting sales and marketing professionals? Create some videos and email drips. Are you going into a new market? Spend time constructing useful educational and thought leadership content to teach people about your product. Enterprise focused? PR might be a good route for you.

There are a lot of different channels out there and several different ways of delivering content on each one. From the written text, to video, to audio, to highly visual and interactive experiences, get creative, test and figure out what works best with your target market and channels.  The key is to get your customers to tell you what works for them and what they like about it. Your job is then to cater the content to what your customer likes best.

Real Life Example  

Let’s take Square as an example. They had to compete with large, well-established point of sale technology. Why would anyone use Square when they had a perfectly good credit card machine? Lots of reasons but Square had to figure out the specific pain points and value propositions for each market segment and how to reach them in the most efficient and meaningful way. Here’s how they did it:  

  1. Step 1: Define Target Market (Companies) = Small Businesses. Small business were losing money because they couldn’t take credit card payments due to the costly and lengthy merchant registration process. To narrow down this large market into a segment, Square initially targeted small businesses in Silicon Valley before expanding the to the rest of the US. By learning from early adopters, Square was able to optimize their strategy before tackling the larger market.

  2. Step 2: Identify Internal Contacts (Buyers/Decision Makers) = Owners of Small Businesses. The owners of the business have the pain point, the capital to make the investment and the authority to make the decision to purchase the product.

  3. Step 3: Product Positioning = Value Proposition. After conducting customer interviews, Square learned that almost all small business owners had a smart phone. Square’s product enabled them to take credit card payments anywhere, anytime so long as they had cell service enabling them to make more sales. Square also didn’t have a time consuming and expensive payment processing application requirement like the traditional point-of-sale machines, saving owners time, money and hastle.     

  4. Step 4: Determine Best Channels = Local & Niche Publications. Square found out that small business owners learn about new technologies and industry news through local newspapers and business specific websites and publications. Square used the most popular and influential of these publications as their marketing channels.  

  5. Step 5: Create Content = Educational Articles. After conducting many customer interviews, Square knew that their product helps small business owners make more money. In order to build trust and credibility for their product, they told the personal stories of business owners and educated their target audience on the benefits and value of Square. Small business owners could relate to the challenges of other small business owners. Their testimony was validation for the product.

  6. Step 6: Track & Optimize = Analyze What’s Working and What Isn’t. Make sure you’re tracking success and failures, who you’ve contacted, what messaging resonates on your channels. If one channel isn’t working, try another one or change up your content. Remember that this is a process and you likely won’t strike gold on your first try.  

If you’re looking for more information on sales channels and distribution models, we recommend reading a16z’s article “Distribution.”  Next week we’ll be blogging about pricing, another important piece of your sales strategy.