Marketers are used to employing the technique of segmentation: identifying the shared characteristics and interests that distinguish one group of customers from another, selecting and targeting key segments, and positioning their offer to underline points of desirable difference.
Yet they rarely stop to assess the effects of this process – what messages customers are taking on board and how their business may be pigeonholed as a result. Consequently, they are missing an important opportunity to understand their competitive situation and improve their standing in their customers’ eyes.
Some years ago, I was working for a plastic packaging manufacturer. One FMCG company was launching a new product with nine separate components, but we were only invited to tender for one. When we asked the customer to give us all the work, their response was, “Oh, but we thought you would be too expensive.” In the end, we persuaded the customer that we could do the whole job at a reasonable price – but the decision could easily have gone the other way. Had we understood from the beginning how the customer perceived us, the conversation might have been both easier and more to the point.
It is critical, particularly for B2B companies, to understand how customers regard their suppliers. Once you understand this, you can develop a clear view of the market in which you operate, assess your competitive position, and devise a strategy from there. A technique that I call reverse positioning can reveal the answers.
In simple terms, reverse positioning looks at the result of the familiar segmentation, targeting, and positioning marketing processes conducted by your firm – and its competitors – on a specific customer. After all, your customer has been the target of multiple marketing messages. But when the dust has settled, what has stuck in their mind? What impression has been left by each supplier, and how have those impressions informed the customer’s purchasing strategy?
Reverse positioning is about trying to stand in the customer’s shoes to understand what they have heard and understood, and the resulting consequences for your business. It involves asking searching questions about how customers perceive their suppliers and being open enough to listen to and process the answers.
As a tool, there are three main benefits of reverse positioning:
The first point to recognize is that the customer’s perception of your business may not match your own – and sometimes the disparity will be disappointing. Your reputation may be influenced by the history of the business. Perhaps you started out taking only simple contracts, so they overlook the capacity the business has developed to take on more challenging work.
Equally, the client’s perception could be formed by individual experience. Perhaps a colleague once grumbled to the purchasing manager about a difficult project, leaving the impression that you were unresponsive, not able to manage more demanding contracts, or ill-suited to particular work. You may discover you are being perceived in ways you might not expect, or welcome. Even more important is getting insight into the results of your competitors’ efforts to market and sell to the same client, which you do not normally see. They may be more convincing than you, undermining your positioning.
These perceptions are played out by customers assigning roles and rankings to their suppliers. This may or may not be explicit – they might only be perceptions held by members of the customer’s decision-making unit – but they provide a convenient way of framing how the customer thinks about its suppliers. Common roles might include Key Technology or Information Provider, which would be assigned to suppliers who are seen as capable of developing solutions to complex challenges. Another might be Capacity Provider, which the customer knows they can rely on for large-volume orders. In many cases, the role of a Relational Supplier may also exist: one that has been used for many years and has developed a level of familiarity and trust. These roles are only indicative, though: they inevitably vary by business context. And there may be numerous roles to identify, especially in complex environments where roles vary for specific technologies.
When discovering your customer’s supplier roles, you may discover that several suppliers play a similar role. Where this is the case, customers may be thinking about ranks within these roles: the customer will have a main supplier, with one or more back-up or ancillary suppliers. This information is hugely important from a competitive perspective: the most significant head-to-head competition is with other suppliers who have been allocated similar roles, rather than those allocated other roles.
There are three essential steps for developing a better understanding of how your customer thinks about its suppliers.
The first task is to understand and map the roles and ranks that your customer assigns to its suppliers (including yourself). You should have a clear view of your competition and your status in relation to it. But understanding how the customer perceives those competitors requires close engagement and an ability to listen. The roles and ranks must be supplemented by another vital piece of information: an estimate of the share of the customer’s “wallet” (or budget) that currently goes to each supplier.
The next step involves analysis of the role and rank matrix to understand how the competitive environment could be evolving and how the customer’s purchasing strategy is likely to impact their future spend. The goal is to make the best-educated guess possible about what these numbers could be.
Purchasing teams often have a target share of wallet, formal or informal, for each supplier, adding up to an ideal way they would choose to allocate their spend. The purchasing manager may want to increase the share of spending with the main technology provider from 35% to 45%, for example. Or they may be concerned about becoming over-reliant on a single provider and intend to reduce that supplier’s share by 10%. In a way, each purchase moves the customer closer or further away from their ideal allocation. Understanding their aims is essential.
Armed with a detailed picture of the competitive situation and your best educated guess about the target share of wallet, the third step is to develop your sales strategy and market positioning accordingly. There are three generic approaches.
The first is simply to fulfil your current role. If the customer sees potential to increase your wallet share by 10%, that might be your goal – in which case, focus on what you do well and accelerate that contribution. This is a typical short-to-medium-term goal.
The second generic strategy is to improve your rank. If you are ranked as a back-up provider for a given role, aim to become the main supplier. Typically, this means competing directly with the existing main supplier. This is usually a medium- to long-term strategy.
The third option is to switch roles. If you are currently perceived as the Price Leader and the customer’s purchasing strategy points to a reduced share of spending for that role, you might aim to become the preferred Technology Provider, for example. This requires that you reposition your offering. This is necessarily complicated and resource-intensive and can only be part of a long–term strategy, which must be evaluated and justified financially.
For organizations to undertake reverse positioning successfully, there are three vital aspects to consider:
For organizations to undertake reverse positioning successfully, there are three vital aspects to consider:
Learn to be ‘learn-it-alls’. Customers are not going to simply hand over the information you need in a neat package. Gleaning the necessary information required for reverse positioning demands skillful, attentive engagement from salespeople. Every sales engagement is also a (potentially even more valuable) learning opportunity. You have to learn faster than your competitors – and, in the process, ensure that your customer learns only positive things about you.
Develop a mindset of understanding. While reverse segmentation can be supported by sophisticated CRM systems, at its core, it is not about technology. Rather, it is a mindset or culture – one that prioritizes and values the work needed to understand your customers. Ensure that salespeople, as well as stakeholders across the business, recognize and understand the importance of this.
Bring the right people together. You are likely to be trying to glue together snippets of information gleaned from a range of customer interactions into a coherent picture. Consequently, it is helpful to bring together internal stakeholders who offer different perspectives. Marketing, IT, logistics, quality – all may have a part to play in modeling the customer’s perspective. Game strategic scenarios using the different internal viewpoints to anticipate how competitors might respond to changes in your approach. External contributors can help too, challenging assumptions, pushing for clarity, and helping to avoid groupthink or excessive deference to leadership.
As the old saying goes, you can’t understand someone until you’ve walked a mile in their shoes. Reverse positioning is a powerful technique for putting your organization in your customer’s shoes. Once you know what this feels like, you can set about laying a path they will want to follow.
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