THE STORY
Imagine this conversation with an entertainment promoter. We’ll call him Bob.
Bob: I’m so excited! I just booked
a night to use the stage at Carnegie Hall. This is such a great venue to
perform in. Some of the greatest performers in the world have had some of their
greatest performances at Carnegie Hall. This is the place where winners
perform. Success is mine.
Me: So who will you have performing
at Carnegie Hall? What will they perform?
Bob: I have no idea. That’s just a
minor detail. The important thing is that whatever it is, it will be on that
successful stage.
Me: If you don’t know what the act
is, how do you plan to sell tickets?
Bob: I’ll just say that great stuff
happens at Carnegie Hall. Come see the greatness.
Somehow, I don’t think Bob has this thing fully figured out.
THE
ANALOGY
In my long line of strategy blogs, one of my favorite topics to talk about is positioning. Dozens of times, I have talked about the necessity for businesses to choose a position if they want to succeed. They need to find a place where they can win.
In my long line of strategy blogs, one of my favorite topics to talk about is positioning. Dozens of times, I have talked about the necessity for businesses to choose a position if they want to succeed. They need to find a place where they can win.
Perhaps I have focused so much on the importance of
positioning that people think that strategy is little more than choosing a position.
But strategy is far more than just finding a position in the marketplace. In
fact, if all you have is a position, you are likely to fail.
Consider the story above. Bob the promoter found the ideal
position—a place where he could win. That place was Carnegie Hall. A lot of
performers have won at that position.
But just because Bob had found the ideal place to play does
not mean he would automatically succeed. To succeed, he needs to sell tickets.
And to do that, Bob needs to figure out what to perform and how to convince people
to pay to see it. Owning an empty stage will not draw crowds. Just saying “come
see the greatness” won’t work.
In the same way, businesses only succeed if they convert
their positioning into preference—a proposition that causes consumers to
actually give their money to you (rather than someone else). Being on the right
stage only matters if people pay to see it. Therefore, strategy needs to not
only find they place where you can win, but a reason for customers to choose to
support it.
The principle here is that positioning is mostly an internal strategy. It tells a company where to play. It talks about the solution it will own and how to structure the company to achieve it. A second strategy, which we will call “the compelling reason”, is needed to get customers as excited about the position as the company is—enough to spend their money with the company. That is the external strategy. Both are needed to win, just as Bob needed both the stage (the position of Carnegie Hall) and the compelling performance for that stage (a reason to come to Carnegie Hall).
It is easy to get confused and think that the position and
the compelling reason are the same. After all, a position must be desirable to
a consumer if it is to be successful, right? Yes, but in reality, what it takes
to win internally is not the same as what it takes to win externally.
Trust Issue
Positions tend to rest on owning some idealized superiority,
such as highest quality, most luxurious, easiest to use, coolest, cheapest, “ultimate
driving machine”, and so on. This type of positioning is what Les Wexner of
LBrands refers to as answering the question “What are you Best At?”
Yes, customers like things that are the best. The problem is
that customers are jaded. They’ve been hearing claims of superiority their
whole lives. After all, how many brands try to claim a position of mediocrity?
No, everyone shouts about their superiority. They can’t all be best. Hence,
there is a trust issue. You cannot just claim a position of superiority. Nobody
will believe it merely because you claim it. No, you have to prove it in order
to overcome their lack of trust.
There’s a reason why user and expert opinions/ratings are so
sought after on the internet. It’s because consumers don’t blindly trust claims
made by the brand. They want them verified by others. They want proof.
So “positioning” determines the claim to be made (what am I
best at) and “the compelling reason” determines how to prove to the customer
that the claim is true. The two are not the same.
Two Components of
Proof
There are two components to the compelling reason. Without
them, there is not enough proof to make the claim of the position believable.
The first component is difference. You have to prove that
you are different from the alternatives. The logic is simple: If are seen as
doing the same thing as others, then you cannot be seen as superior…only the
same. You must do something different in order to be perceive as different from
the others.
And to make the difference believable, it needs to be easily
understood and verifiable.
The second component to the compelling reason is linkage.
You need a way to link the difference to the position of superiority. Just
saying we’re different because we wear green shirts won’t work, because there
is no linkage between wearing green shirts and producing a superior product.
The difference needs a direct link to the superiority—proof that the difference
causes the superiority.
For example, Dove soap has the position of being “the best
beauty soap.” Their point of difference is in saying that their soap is one-fourth
moisturizing lotion (and the others aren’t). The linkage is that moisturizing
lotion is associated with beauty, so soap with moisturizing lotion can be the
superior beauty soap.
Back when Oxydol was the #1 laundry detergent, the position
claimed was superiority in cleaning. The difference was putting little green
crystals inside the detergent (which others didn’t do). The linkage was that the
little green crystals supposedly added bleach to the detergent. And customers could
believe that combining bleach to detergent would cause superior cleaning.
Linkedin’s position is to be the best place for
professionals to connect. The difference is that they have far more active professional
people in their network than anyone else. The linkage is that you are more
likely to make the professional connections you need in the place where the
most connections with professionals are possible.
Uber’s position is to provide transportation as reliable as running
water, everywhere for everyone. Their point of difference is that their
business model abandons all of the conventions of taxis and public
transportation. All the rules have been reinvented, including the mobile
interface. The linkage is that these changes have dramatically increased the
numbers of people providing transportation and improved the interaction with
them, making transportation more reliable and more everywhere.
Two Messages
So, as you can see, the positioning message and the compelling
reason messages are not the same. In fact, they move in different directions. The
positioning message moves towards the broader, more generalized, more universal
concepts and solutions. The compelling reason is more specific to a particular
company and the “unique ingredients” in its offering.
The position lets you know if the company is relevant to
your needs. The compelling reason lets you know if this particular brand is the
best alternative in that space (compared to others claiming the same relevancy).
Positioning is about ideals. The compelling reason is about
proof.
Both messages are essential. Both need to be a part of the
strategy process.
Although positioning is a key component of strategy, it is not the only key component of strategy. Another key component is the compelling reason. A position is merely a claim that is made concerning where you have chosen to play to win. A compelling reason is the proof as to why customers should believe your claim. Although they are similar concepts, they are not identical. Therefore, if you have only created the position, you are not yet finished with the strategy process.
The problem with claiming a stage like Carnegie Hall is that it is not the only stage. Consumers have other alternatives. So even if Carnegie Hall is the best stage, consumers will go to another stage it they think they will enjoy a better performance. Therefore, you need to work on two fronts: finding your platform/stage AND making sure you are perceived as having the preferred performance.
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