Sharpen Your Positioning: What Your Business Wants to Be Known For

Why fuzzy positioning costs money in sales

Many small and mid-sized businesses have grown for years by accepting almost every inquiry. That makes sense at the start. Over time, however, it produces an offering that can do a bit of everything and is clearly the first choice for no one. Sales notices first: quotes are compared, renegotiated, and frequently rejected with the words “too expensive.”

The question this article sets out to answer: how does an owner decide what the business should be known for, and how can they tell whether the decision holds? To answer it, we first clarify the term and the best-known model for it, then examine what studies say about clear and mixed strategies, and finally set out a procedure for deriving your positioning from your own data.

If you are there for everyone, nobody looks for you.

What does positioning mean, and what is it not?

In the article seven growth brakes, positioning is defined as follows: for whom are you the obvious choice for which problem? This definition applies here as well. It contains three elements: a specific group of customers, a specific problem, and a reason why your business in particular is the natural choice for it.

Positioning is therefore neither a slogan nor a logo. A slogan can express a positioning but does not replace it. Nor is it a list of all services. The list of services describes what you can do. Positioning describes what a customer should choose you for.

The mental model: Porter’s competitive strategies and the danger of the middle

The best-known model of positioning comes from Michael Porter (1980). He distinguishes three basic forms through which a company can achieve a competitive advantage. Cost leadership means producing a comparable service more cheaply than others. Differentiation means offering something customers perceive as better or different and for which they pay more. Focus means pursuing one of the two forms only in a narrowly defined market, such as an industry or region.

Porter’s warning is the part that matters most for small businesses. Anyone who does not decide is “stuck in the middle”: neither cheap enough for price buyers nor special enough for customers who would pay more. For a business with twenty employees, true cost leadership is rarely achievable because larger providers have more volume. Differentiation and focus remain realistic, often in combination.

What research shows about clear and mixed strategies

There are two readings of Porter’s warning. The strict reading says: any mix of cost and quality advantage is a mistake. The softer reading says: the danger is not the mix but the absence of a deliberate choice. Both readings find support in studies.

The strict reading is supported by a survey by Nandakumar, Ghobadian, and O’Regan (2011) of 124 British manufacturers in electrical and mechanical engineering. Businesses with a clear orientation toward cost or differentiation performed better than those without a dominant orientation. The group with a deliberately mixed strategy lagged pure cost leaders and differentiators on financial measures. The authors themselves stress, however, that the choice of strategy explains differences in performance only in part.

The softer reading is supported by a long-term study by Leitner and Güldenberg (2010). They surveyed 100 Austrian manufacturing firms with 20 to 500 employees from seven industries twice, in 1995 and 2003, and analyzed performance data for 1992 to 2002. They counted not only stated intentions but also whether a business had actually acted accordingly. The result: firms that deliberately combined cost and quality advantages were more profitable and grew faster than firms without a recognizable strategy, and they were even more profitable than pure differentiators. Firms that changed strategy during the period did no worse than consistent ones. A survey of 1,842 Spanish businesses with fewer than 250 employees by Gutiérrez-Broncano and colleagues (2024) points in the same direction: a hybrid strategy was positively related to performance, especially where firms improved their processes and were adaptable.

I consider the softer reading the more useful one, for a simple reason: all three studies agree that businesses without a recognizable strategy perform worst. They disagree only on whether a deliberate combination does harm. For a small business, it follows that the first task is not to choose between price and quality. The first task is to make a choice at all and make it visible in action. The studies mainly concern manufacturers and measure strategy through self-reports; whether the findings hold equally for trades and services cannot be derived from them with certainty.

The four-part positioning statement

The tool of this guide is the four-part positioning statement. It translates Porter’s logic into a form that sales can use. Each part answers one question, and each part must be supported by data or examples.

1. Target customer

   For which customers do you work most successfully? Describe them by features visible from outside: industry, size, region, occasion.

2. Problem

   Which concrete problem do these customers solve with you? Phrase it in their words, not yours. “Equipment failure in winter” is better than “technical service.”

3. Difference

   Why are you the obvious choice for this problem? Good answers can be verified: response time, specialist knowledge, certifications, references in the same industry.

4. Proof

   How do you prove the difference? Figures, case examples, certificates, customer testimonials. A difference without proof is a claim.

Put together, a sentence like this emerges: “For property managers with more than 500 residential units within 50 kilometers, we are the contact when heating systems fail, because we are on site within four hours and document this in service logs.” The sentence is long. That is not a flaw. It is for internal use, not for advertising. Website copy, quote introductions, and conversation guides are later derived from it.

How to derive positioning from your own figures

The most common weakness of a positioning is that it is invented at a desk. It is better to first look at where the business already wins today. The quotes of the last twelve to twenty-four months contain this information. How to then capture target customers in a profile is described in the guide defining target customers.

In the example, the business wins almost every second quote with property managers and only every ninth with private customers. That is a clear indication of where the difference already works today. It is not yet proof, however. Also check the contribution margin per group, because a high win rate at a low margin can also mean you are too cheap. And read the reasons for losses. How to analyze them systematically is set out in the guide analyzing lost deals.

• The quotes of the last twelve months are sorted by customer group.
• Win rate and contribution margin are known for each group.
• The three most common reasons for losses are noted for each group.
• Three customers from the strongest group have been asked why they chose you.
• The main competitors in this group are known.

The last point matters because a difference is always relative. Being faster than a slow competitor does not make you fast. How to find out with little effort how other providers present themselves is shown in the guide competitor analysis with little effort.

How to tell that the positioning works

A positioning is an assumption about the market. It has to prove itself in sales. So decide in advance which figures you will use to check its effect after six to twelve months. Three signals work well as test measures because any business can collect them without much effort.

• Share of fitting inquiries: how many new inquiries come from the target group? If the share rises, the positioning is perceived from outside.
• Win rate in the target group: it should stay stable or rise. If it falls, customers cannot see the claimed difference.
• Discount requests and price-based losses: if they become less frequent, the customer no longer compares on price alone.

Sharper positioning also makes price conversations easier. If you are the obvious choice for a group, you can adjust prices with good reason without defending every customer individually. More on this in the guide raising prices without losing customers.

Limits: when narrow positioning becomes a risk

The opposing view deserves a fair hearing. Very narrow positioning creates dependence on one market. If the industry shrinks, subsidies change, or a large provider enters the niche, the specialized business is hit harder than the broadly positioned one. When specialization brings growth and when it limits it is analyzed in the article specialization instead of a catch-all offering.

This does not lead to a recommendation against sharp positioning but to one for reviewing it regularly. The study by Leitner and Güldenberg (2010) shows that a deliberate change of strategy does no harm. What does harm is drift, where the business gradually goes back to accepting every inquiry without having decided to. A fixed date each year on which the positioning statement is checked against the figures prevents this. It fits well into the meeting in which the five basic decisions from the guide developing a sales strategy are reviewed anyway.

Conclusion and next step

How does an owner decide what the business should be known for? By first looking at where the business already wins today, formulating from this a sentence with target customer, problem, difference, and proof, and testing that sentence against a few sales figures. Research does not demand a pure doctrine. It does show clearly, however, that businesses without a recognizable strategy perform weakest.

1. This week: Sort the quotes of the last twelve months by customer group and calculate the win rate per group.
2. Next week: Talk to three customers from the strongest group and ask why they chose you.
3. In two weeks: Write the four-part positioning statement and set three test measures with target values.

Positioning is thus less a creative task than an analytical one. The sentence that results is rarely surprising. It has simply been said out loud for the first time.