Measuring the Value of Good Positioning

Good positioning can seem like an ‘intangible’ in business. It’s not like revenue or number of employees, something that’s easy to put into a spreadsheet. In fact, some founders/CEOs find it hard to even say if they have good positioning or bad positioning.

I’ve been re-reading How to Measure Anything and thought I would apply some of the insights in the book around measuring things in business that many people consider impossible to measure.

Ranges, not exact numbers

One of the primary takeaways from the book is that just because you can not put a precise numerical value on an intangible does not mean it can not be measured at all. Instead, the best way to measure an intangible like positioning is to think about the value in terms of ranges.

In fact, I think this idea could also be applied even to metrics that are traditionally seen as ‘measureable.” For example, two startups that both get $1 million in funding in year one might grow into vastly different companies. The ‘value’ of that initial investment, even though both for the exact same amount, could be totally different.

Regardless, when we think about the value of good positioning, it’s important to note that while any company can get value out of solid positioning, the actual numbers — including the range of numbers you would get from using the estimating techniques in the book — will be different.

What are the benefits of good positioning?

To start to calculate the value of better positioning, let’s start by thinking about which business metrics positioning can generally solve. They include:

  • Shortening the sales cycle

  • Reducing customer churn

  • Improving conversion rates at all stages of your marketing / sales funnel

Those metrics are really basic ones to start with, because they are in fact relatively easy for most companies to slap a numerical value on. Good positioning should also improve all of those metrics, all the time — if those metrics don’t move, the positioning probably didn’t get any better. However, there are some other metrics better positioning can help with too:

  • Increasing coverage in the industry press

  • Decreasing price preasure and/or allowing the company to charge more without losing customers

  • Increasing referrals

  • Increase productivity, especially of contractors who work on marketing and sales projects

Those are slightly harder to measure — though not impossible. It’s also hard to know what impact a price increase would have on churn and conversion rates without trying it out, and not all companies are willing to give it a shot.

Then, there are some more intangibles that come from the ‘intangible’ of good positioning. Things like:

  • The founder/CEO/salesperson doesn’t feel like a moron when trying to explain the product

  • The leadership team stops worrying about the 2 startups with 4 employees between them that could theoretically be competitors someday

These are real benefits. We could use the How to Measure Anything process to measure their value — for example, if the CEO takes 1 minute instead of 15 to explain the product to a prospect, that difference in time can be measured in terms of the value of the CEO’s time and conversion rate of the sales conversations. However, it’s probably not useful to focus on these edge benefits of positioning, because we can easily see that good positioning is valuable based on the more easily measured metrics.

Emily Omier