How Your Market Positioning Can Make Or Break Your SaaS

What is market positioning? Have you actually considered what yours is? Do you know what your customers perceive about your brand or what your future customers will perceive about your brand? Do you think this is important? YOU BET IT IS!

Market positioning will either get you the clients that you want, the ones that stick for years and years and give you that high LTV (life time value), or it will get you customers that try you for a few days and bounce. Which would you rather have?

By definition marketing positioning refers to a process of establishing a brand identity so that customers perceive a company a certain way.

Or better yet, Seth Godin says, “It’s really difficult for the human brain to make space for a new idea. It’s much easier to compare something new to something familiar.  Positioning provides a shorthand way to do this for people you seek to change. We make an assertion about something they already know or care about, and we then build a true story – a product – that fills a slot in their needs and desires.”

How are you approaching your customers needs and desires?

Let’s take Apple as an example. When the personal computer world took off almost all the competitors (Dell, Gateway, NEC, HP) were all positioned in the same way. Price and speed. Consumer looking for the cheapest but fastest computer could always seek out a PC, which got so competitive, most of them didn’t survive.

Where did Apple fit? Was it cheap? NO. Was it the fastest? HELL NO! Apple wasn’t positioning itself the same way that everyone else was, which highly differentiated them. Apple instead positioned itself on two factors; design and simplicity. They weren’t even on the same spectrum as all the rest of the PCs were. Who won in the long run? It was no contest.

Now let’s talk about two softwares that were near and dear to my heart and many others. Gmail and Outlook. Which one do you use? I am betting 90% of you say Gmail. Why? Because of how it was positioned.

The whole Microsoft Office suite was built on complexity and features. 80% of those features were never used (by myself at least). It was complicated to set up and was daunting to look at and manage. Since it was one of the early leaders in email software and email managers could still be monetized, they were positioning with features. As they grew, they added more functionality, more windows, more gadgets, more complexity. They were also priced the highest.

In comes Gmail, a FREE and SIMPLE email tool. Many business people were concerned that a free email tool couldn’t have all the “features” they would need, but many quickly found out that they didn’t need most of the features and that Gmail was clean and simple.

You can see in the VERY SIMPLE positioning graph above where Gmail and Outlook lie. BTW I tried to draw this is Word but I couldn’t figure it out so I went into Google Docs and did it in a minute. Simplicity rules!!

So Microsoft has since released a free web version and has cut away most of the features it had before because no one was using them. Gmail has such a big head start that I don’t see Outlook gaining any ground but you can see how positioning is so important here. Gmail is building a real sticky user base while Outlook is loosing users to a more simple software. They lost me years ago!

What should your be positioning your SaaS?

One thing I will emphatically say to you is that you SHOULD NOT position yourself on features and pricing. This is a dead end road, one which you do not want to venture down. It will be a constant race to zero where your profit margins will be eaten alive! DON’T DO IT!!

You need to think about the change you are trying to make in your customer. Ultimately what will they get from working with you? Will you give them amazing customer support? Will you service a very narrow audience and specialize in that? Will you offer education and more hand holding than your competitors? Remember, technology is RARELY a factor that your customer will care about so don’t get into features!

You may be creating a new CRM, scheduling tool, or webinar software. You KNOW there is tons of competition but what can you do better than them? If you are creating a CRM DON’T think like Salesforce because you don’t want to compete with those marketing dollars and sales team. Think like a smaller CRM, that solves a specific problem for a specific customer. If you get enough traction, maybe Salesforce will buy you!

It’s great to think BIG with your goals but one mistake I see over and over again is a startup SaaS company comparing themselves to a billion dollar publicly traded venture. You need to rethink your positioning to be different than the competitors in your space. Price will never be a problem if you truly solve a challenge for a group that needs it solved.

Lastly, take our company as an example. Most early stage SaaS companies are focused on raising money rather than selling and so most services out there reflect this. In addition, most SaaS founders don’t want to learn something new (selling) but rather have someone do it for them. Outsourcing is great and I am all for it BUT NOT when it comes to selling your own product.

Therefore our positioning is to move away from helping SaaS companies raise money and do it for them (consulting) to helping SaaS founders learn how to sell, so they can generate revenue to sustain a business, and IF they need to raise money they’d give away MUCH less because they would have a revenue generating business.

If you are interested in learning more about what we do, we have daily free training online about how to build replicable sales systems for SaaS companies. Here is the linkif you are interested. Enjoy!