The Importance Of Positioning When Testing New Business Ideas

The importance of positioning cannot be overstated. For startups, running businesses or ideas. The positioning statement is that snippet of internally defined text that addresses who your target audience is, their need, your solution and its main benefit, any competition or alternatives, and how you differ from them.

The formula

The best formula for generating a positioning statement comes from Arielle Jackson. I recall when a client once shared the above link with me and once I saw the breakdown, I knew it was the one. It has everything you need. I immediately started sharing the link out to all my other clients and marketing friends.

For (target customer) who (statement of need or opportunity), (Product name) is a (product category) that (statement of key benefit). Unlike (competing alternative) (Product name) (statement of primary differentiation).

For testing purposes and relevance

The main thing we’re trying to learn in testing business ideas is if the new concept is relevant. The first question we’re asking ourselves is “does anyone even give a damn?” Assuming that’s a “yes”, then the follow-up question would be, “OK, who are these people and how urgent is this for them?” You know good positioning when you see it. Or maybe you don’t even notice because it’s so seamless. But it’s that moment when the right messaging hit the right person at the right time and they responded with the right actions. It’s a measure of relevance.

Help from keyword research

Google search is a revelation. Never before have we had such power in our hands. The power of information. And we’ve adapted very quickly to its utility.

A lot can be gleaned from how we use search as a tool. For instance, have you ever notices when you’re trying to find something with Google, it can take a few tries to get it right? You need to find the right keywords to submit as a query to the all knowing machine. Google becoming a verb illustrates the universal appeal.

One of the main reasons we use Google Ads in our testing is because of this kind of search intent. People come to Google for answers. It’s different to when you’re scrolling on social media, likely just killing time or chilling out.

Between what people are typing into Google and what we’re offering through ads is this study of relevance. When we show the right messaging to the right people and they engage with our ads by clicking on them, then we know we’re on the right track to actually connect with them.

The sheet method of iterating on different options

It’s not easy developing a sound positioning statement. There are all the variables in the formula, plus you need to make them fit in a way that makes sense. One simple way I’ve developed to iterate through all the options is by mapping it all out in a spreadsheet.

I jot down the formula as the top row and lock that in place. Then I write the different options I’m considering in the columns for each variable of the formula. This works well since you have the chronology of each variable in the formula.

What often happens when I work through this process with clients is that they blaze through most of the variables but then get stuck on a specific one. It’s important to go with your gut when thinking through these, otherwise you’ll go down the rabbit hole on any particular item.

Test your positioning to validate

The beauty is that once you have a contender for your positioning statement, the next step is testing it. You can also test the variables. And this is the whole point of validation.

Positioning statements evolve over time

Don’t get married to any particular stance laid out in your positioning statement. It should be thought of as a working document (another bonus of the sheet method). As you refine your targeting and messaging, you’ll refine your overall positioning. Expect this to happen.

Especially in terms of segmentation

Your positioning will also expand to address segmentation in your target audience. This too is natural and essential. Segmentation is key in marketing. While we recommend trying to remain focussed in terms of an overall niche, you will likely still end up subdividing your positioning to address segmentation within your audience. These will be subtle tweaks to better address the needs of sub-targets.

Wrap up

I'm not kidding when I say I've spent the bulk of my time for a campaign or new client working on positioning. In a way, it's the whole focus of marketing. During our testing methodology we do our best to make use of the available tools (ad platforms, keyword research, competitor research) to make an educated guess on what it could be. It's up to the people, the target audience and real prospective customers to tell us if it's working. They do this with their actions and how much they engage with a test campaign. Luckily we learn quickly what's working and lean into that. Positioning evolves with ongoing input from your customers. After all, the thing we're creating should be done in concert with its intended recipients.

Validation.Run’s positioning statement

For savvy entrepreneurs who need to test their next business idea, Validation.Run offers lean market research to measure demand and identify the target audience. Instead of doing it yourself, wasting time on the wrong idea or risking becoming a statistic, Validation.Run gets you the right insights to help you decide how best to proceed.

How to Find a Good Business Idea

Solve your own problems

Look to your own problems with life, tasks, work, etc. Observe your own patters of behavior when it comes to tackling these issues in your life. If you can solve your own problems, you can package it to sell to other people like you.   

Work within your subject matter expertise

If you go through with starting a new project, you’re going to have to become the expert. A head start will be handy.

Ask your friends and family for biased feedback

Unless they are subject matter experts and/or the target audience, filter their input.

Ask the target audience for unbiased feedback

Identify and locate your ideal customer, in the real world, and online. Ask them open-ended questions about the problem/solution paradigm. Your aim is to get to the core of the problem, as they experience it.

After you speak to 50 people, who fit your ideal customer profile, your perspective on the matter will inevitably change. This will take a moment, but by the time you're through, you should understand the problem in a far more nuanced way, having aggregated the experiences and perceptions of your target audience. 

You'll gain the necessary perspective to either put this one aside or begin the epic journey of building a solution.

Stress test the idea to learn if its good or not

Validate. Set up a hypothesis and try to break it. If it survives under duress, you’ll know you’re onto something.

---

Photo by Bruno Scramgnon from Pexels.

The #1 Reason Startups Fail

It’s something I have witnessed first hand through my consulting experience, anecdotally by being in the startup ecosystem, and backed up with data from CB Insights (Crunch Base). It makes sense that this the biggest issue because it’s also the most overlooked part of starting a company. Don’t get me wrong, many nail it. But the problem is that the majority of would-be founders are oblivious to the real need for market validation. Testing is the answer.

Most startups fail due to “no market need”. Meaning not enough people are interested in your idea to begin with. See the full breakdown below.

It looks like a paradox at first: the audacity required to start a new company, paired with the humility to check your assumptions along the way. Most people just push their vision forward, without consulting anyone except maybe friends and family. Who although are well-meaning with their encouragement, are probably not subject matter experts in whatever realm their friend is looking to dive headfirst into. 

The reality is that you must build your new vision in concert with those who you hope to support - your audience. In business, we’re in the service of our customers. You need to, and should, make a healthy profit. But you won’t even get off to a good start unless you craft your offering to match your intended audience.

Feedback is the way we iterate to greatness. There’s a whole realm of Customer Development, which I equate to the Retention stage of the Pirate Metrics sales funnel. This retention stage might be the most important part of the customer journey because it’s where the dialogue between visionary and consumer takes place. Only together will they both make progress toward a truly viable solution. Win-win is the only way.

Through testing, we're able to validate our assumptions. It’s what one should do at the onset of any new business and during the initial phase of finding product-market fit. Realistically, during this early stage, you need to be spending 50% of your time on distribution efforts (listening to your customer) and 50% on product development (applying their feedback). Only once you find product-market fit can you relax this ratio to focus more on product development. But don’t ever completely cut off the conversation with your customers.