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How to Develop a Product Positioning Strategy for Your SaaS Startup

Updated: May 9

The goal of every business is to ensure it has maximum visibility both in the marketplace and in the minds of its ideal customers. Developing an effective product positioning strategy is one of the methods that can be used to achieve this.

Product Positioning Strategy

If your company’s growth is slow or you’re sensing a shift in your market or customers, it could be time to improve your positioning and redefine your product positioning strategy.

Let’s take a look at what product positioning is and why it’s so important for SaaS startups.

What is product positioning?

Product positioning is a marketing term referring to the placement that a brand (product) takes up in the minds of its target customers and how it differentiates from the products of its competitors.

Your product positioning takes into account:

  1. Your target market

  2. How you solve the problems of customers in that market

  3. Your unique advantage in that market

  4. How you can prove that your product delivers results

Product positioning is the customer-facing side of your product-market fit. It looks at how your customers and the market see your product – which may be completely different from the way you and your internal team sees it.

Does your startup have a strategy?

Companies fall into two camps with their product positioning: accidental or intentional. Both methods can have measures of success, but there’s equally as much of a chance they can be throttling your growth.

Do you currently have a product positioning strategy?

Accidental product positioning

This occurs when companies enter the market without any product positioning strategy and without giving much thought to their product-market fit or the needs of customers within that market. It’s rare for a business to find success with this method.

If you’re a SaaS startup, there’s a lot to think about to get your product off the ground.

Developing a clear product positioning strategy can often get pushed down the list, rushed, or overlooked altogether. When this happens, accidental product positioning occurs and it’s rarely effective.

In a perfect world, your product positioning should be mapped out carefully before you go to market. It should go hand in hand with your company values, messaging, and brand promise. A product positioning strategy that is out of alignment with these core aspects of your business means it won’t align with the expectations of either your market or your customers – and your brand will suffer as a result.

Intentional product positioning

Intentional product positioning is exactly as it sounds, occurring when a company has put the time and effort into deliberately differentiating itself in a strategic way. The best way to do this is to begin developing a product positioning strategy early to ensure it demonstrates the unique value of your product and aligns with the needs of your target market.

Take Starbucks, for example. They carefully positioned themselves to appeal to customers who demanded a different and premium experience when the need for coffee struck. In a caffeine-saturated market, Starbucks dominated quickly (and globally) with its menu variety, store environment, and customer service that immediately attracted this share of the market.

By keeping a close eye on market trends, Starbucks continually adapts its product positioning to ensure it keeps up with market trends (e.g. the specialized or preferred dietary needs of its customers).

If your company has carried out intentional product positioning but it’s not working (or just plain wrong), then this needs to be revisited and you should focus focus on positioning your product more effectively.

How to Develop an Effective SaaS Product Positioning Strategy

Companies that focus on generalized overviews of their target market can often fall into the trap of thinking their product is to blame when they’re struggling with revenue. Maybe it needs more features? Or fewer features? Shall we change the entire interface and see if that helps? Let’s see what our competitors are doing…

If it’s your positioning that’s a problem and not your product, you can waste hours and dollars on trying to fix a product that isn’t broken.

In your content, your campaigns, and your wider marketing efforts, targeting the wrong people (or targeting the right people with the wrong message) means your business won’t be experiencing the amount of success that it could be.

It’s important that you have a strong product positioning strategy in place, which involves figuring out what your customers need, and why you’re the right company to give it to them.

Step 1

Talk to your customers.

Step 2

Talk to your customers!

You need to be on the ground listening to what your actual customers are saying about your product, how they’re using it, and the real problems it’s solving for them.

Collecting this data requires a basic understanding of what consumer research is and how to perform it. Some useful research methods you might consider using to assist in the development of your product positioning strategy include:

  1. Interviews with potential, current, and past customers

  2. Surveys

  3. On-site polls

  4. Seeing what people are saying about you online (forums, social media)

  5. Reviewing customer support/chat logs

  6. Reviewing sales calls

Gathering this information can turn up surprising insights into how customers are experiencing your product.

By looking for overarching themes in this data, you can adjust and clarify your messaging to better position your product to attract new and ideal customers. This is especially important if you’re in a crowded space in the market.

When to change the positioning of a product

When to change the positioning of your product

It goes without saying that if the positioning of a product is weak or indifferent, it should be changed. And there are other reasons a company might consider a shift to be a strategic move. These could include:

  1. Changes in your market

  2. Your company or product has evolved over time

  3. Strong new competitors have entered your space

  4. Your customers’ needs have changed

  5. Your company is undergoing a bigger change, such as rebranding or launching new products that no longer align with your current positioning

  6. You’re trying to get funding or get acquired

In all of these instances, the positioning of a product needs to shift to ensure it is clear, distinct, and has a unique place in the market.

For instance, if your revenue and customer acquisition rate is falling, it might be time to revisit your original product positioning strategy to see how you might change or strengthen it in order to ensure sustainable growth in your business.

Effective Product Positioning Requires a Strategy

Product positioning is one of the most important things to consider when launching your business. If you’ve got a great product, but customers don’t seem interested, your positioning might be the core problem.

Successful product positioning is rarely an accident. It requires time and effort, and understanding what both your customers and the greater market want. With that in hand, you can reach a reasonable conclusion about your product-market fit and how best to approach it in terms of your messaging and marketing.

Understanding the value of an effective product positioning strategy, and how to develop one, is a crucial component to ensuring your SaaS product achieves maximum visibility in the marketplace and is given the required consideration necessary to effectively solve the problems of your target market.

Before you go: If you found this article interesting, also check out April Dunford’s book on developing better positioning for your business.


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