Ralph Turfus of Acetech is the speaker for this seminar. He is discussing the Elements of a Positioning Statement.
“For”: Positioning your product for people: the specified customer you could sell to in a key segment? Your sandbox? Target customer is?
“Who need”: Who needs this product and why? What is their pain and how can you solve it? What value can you deliver, what benefits can you offer?
“Company is”: What is your company all about?
“Product provides”: What benefits can your product provide to your target customer?
“Unlike competitors”: How are you different than competitors. Not just different, but better? Who are your competitors? What differentiators do you have to trump these competitors?
“Company’s product”: What is it. What does it do?
“Also provides”: What else does your company provide? What extra value can it add?
CATEGORY AND POSITIONING: Where are you positioned? Do you own your niche on the web? Think of 5-10 words that people would Google to find your product or service. What would somebody type to find what you offer? It’s trickier than you think. Now, try typing what you believe would be commonly searched. Are you in the top 10?
VALUE: The quantity, quality, and timing of value gained by the target market /customer.
What is your value? The feature of what your product does. The gain that the buyer derives from your product feature. If it’s measurable and tangible, it’s logical (known as IQ). Otherwise, it’s emotional (called EQ).
Take your benefits and strengths, then deduct cost and weaknesses (including product price). This formula calculates your net value.
Examples of logical/tangible benefits for customers: Financial changes that lead to an increase in revenues, a decrease in costs, or an increase in profits. Operational efficiencies that lead to a productivity increase. Risk mitigation can lead to enhanced safety and reputation.
Examples of emotional benefits for customers: Customer and satisfaction increases, convenience and time saving, etc.
Neoteric and FitBrains are used as examples of good positioning statements. They have clearly defined “Fors” and “Who Needs.” What they do and what they offer are succinct, clear, and value-oritented.
An exercise begins at 7:04PM which has businesses fill out some questions: What is the category your product fits into? What are the value or benefits your product provides. A good category will be easily Googable by regular thinking people. A good benefit will be clearly and directly solve a customer’s “pain.”
DIFFERENTIATORS: Selling transaction fundamentals split the Buyer and his Needs, and the Seller and her Solution. In the cloud between this split are choices. In this cloud of choices are competitors. To beat competitors you must have a superior differentiator. Both you and your competitors offer value and benefits. So how does the buyer decide whose product to buy? Their decision is made based upon the differentiator, which must make you different and better as well. This increases your value. But competitors may have differentiators too. And in fact theirs may be better, therefore trumping your value.
In the digital media space, buyers determine differentiators in a matter of seconds.
The winning formula is when your value plus your differentiator factor is higher than the sum of your opponents two net factors.
Source of customer value: Product first (its features, then its benefits), company second, people last. Decision making process of buyer: Best differentiated value first, lowest price second, lowest risk last.
A crowd member asks, Can lowest price trump the differentiator? Yes, it can. But the best differentiator is the strongest X-factor. Value beats price every time (you must recognize that they are not the same). Price wars benefit no one; value wars create healthy competition and superior products.
Ralph uses smartphones as an example. He mentions RIM and its secure wireless communication. Who does this service benefit most? Enterprises that need secure servers. RIM’s differentiator relative to competitors is its superior security. People who see value in this factor choose RIM. But Apple also has a differentiator. Its differentiator is high level of usability. Google’s Android platform also has a differentiator – variety and ubiquity, because the OS runs on many different hardware. People who don’t like Apple’s control over consumers will choose Google.
At 7:28PM there is another exercise. This one focuses on identifying your top competitors, and then identifying your differentiators.
Ralph asks for volunteers to recite the lines they have been filling out throughout exercises during the seminar. One is an online and mobile fitness platform. The company wants to help trainers build websites and market their services, as well as to manage clients and track, monitor, and analyze workout regimes, and offers a brandable mobile app.
Ralph says it’s a crowded space, and to concentrate on the differentiator heavily. But Ralph says, he can tell a company what he thinks, but his words are simply an opinion, and worth nothing as he doesn’t cut any checks.
The next company caters to DCC companies (digital content creators). Their service aims to reduce human involvement through “computerated pipelines” that provide on-demand access and asset management through the internet.
CONNECTING: How to connect features, benefits, price, and value. You must engage in conversations with early adopters within your target market. Customer has a pain, you have a solution. So you take your benefits, less your price, to get value. What is your MVP: Minimum viable product. Don’t start by trying to create the perfect product; you don’t have the experience yet, you’ll get it wrong. Start with the minimum features possible to reach sufficient value. You need to do R&D, but as little as possible, and as little time as possible, so you can maximize your chance to close.
Why is a positioning statement important? Staff become involved, empowered, and aligned. Investors become confident, focused, business-like. Customers become involved. Risk mitigation; convert hypotheses to facts. You have looked at all your choices, selected the best, are confident, and have gained a communication tool – your 17-second pitch.
Ralph says potential investors will not give a company a second glance if their positioning statement doesn’t impress. A well crafted positioning statement will greatly improve your chances of reaching the next level.
INNOVATION: Is your market opportunity worthwhile? Estimate your source of innovation. Estimate your opportunity in dollar value. A box appears with four quadrants, Low and High market innovation, and Low and high Technology innovation. You can have high technology innovation but low market innovation and vise versa. You can also have low both, or high both. High market becomes “revolutionary” and “disruptive.”
Ralph asks people to raise their hand is their company has high-tech innovation. Few do. Ralph even says out of 17 companies he’s invested in, only three are high-tech innovators. High-tech innovators with low market innovation are very science based and extremely slow to market.
High market innovators disrupt existing behaviour or create new markets. The internet is an example of a high market innovator (and high tech innovator). Google is another example of high market and tech innovation. Online poker is a high market innovator but low innovator of tech. Low tech and low market innovation aren’t necessarily bad companies. Superior execution in this quadrant means companies can succeed but it is the most crowded space.
Those in the high tech innovation quadrant must perfect the usability and function of their product so it doesn’t flop when it hits market. High market innovators must prove their market is worthy of disrupting or creating a new market because it benefits customers. High tech and high market innovators are engaged in very risky businesses.
What is your innovation? Market or technology or both? What is the source of your innovation? What is your “unfair advantage”?
MARKET SIZE: What is your market size? Break it in two two sections: addressable and non-addressable. Your non-addressable market can potentially buy your product but not currently due to an impacting factor or condition such as size, geography, language issues, cost, etc. Focus initially on your addressable section – break it down into year 1, 2, and 3. Year 1 can be small in revenue, 2 must grow, and 3 must get bigger yet. Say your net market goal is $100. Your addressable market might be $50 million. In year 1 your revenue may be zero, if year 2 is $500k, and year 3 is one million. So how big is your opportunity? Total market: All buyers times all units. Addressable market: Revenue = likely price times likely units. Is this opportunity worthwhile?
At 8:12PM there is a final exercise. Companies have 10 minutes to calculate these numbers for their own business.
ENTREPRENEURIAL: Why are you an entrepreneur? Boss choices, risks and challenges, attitude, financial rewards, unfair advantage skills, sales skills. There are a number of factors that come together to make somebody want to become an entrepreneur but it is not for everybody. Ralph’s personal experiences include a need to control; when a company has 100-200 employees you can’t micromanage; you’re lost in the crowd. Another reason is that your salary is modest but your capital gains are much larger, and these are taxes below most incomes.
A good entrepreneur must be able to listen, learn, and do. You must be smart and savvy, but not arrogant. You must be rational and balanced. Your attitude must be high energy, competitive, good judgment and honesty. You must understand business, value, and be customer-oriented. And ideally you’ll have some skills and experiences that are applicable such as being a CEO or founder of past startup or organization or have strong expertise in your field via other means.
SUMMARY: FInd a big customer need. Solve the need with superior value and differentiate yourself from the competition. Do this in a worthwhile market. And do so with a focused, committed, and skilled entrepreneur.
“Without exception, all of my biggest mistakes occurred because I moved too slowly.” – John Chambers, CEO of Cisco.