Positioning Your HR Tech Product
Proactively thinking about how you want to position your product in the HR technology marketplace is one of the most important activities that you as an HR Tech founder need to do.
HR technology buyers are actively looking for tools to solve their problems. They are out their scouring the market to see if the procurement of a new tool will enable them to improve HR operations, improve employee efficiency and engagement, recruit and retain better staff, or make better business decisions.
The position of your product in the market will directly determine how easily you will be found by the right prospective purchasers for the right reasons. Correct positioning will mean their needs and wants are aligned with your ability to deliver and solve their problems.
The default for many is to not think about positioning but to let your product and company identity “find its place” naturally as a result of the activities you are doing and the prospects you are stumbling upon.
But there are at least three reasons why this reactive approach is a fundamental mistake.
Firstly, without a clearly understood and articulated position, you will be making it very difficult for potential customers to find you. Think about it in the context of supermarket shopping. If you want to find the mayonnaise, then you’ll go to the aisle with sauces, dressings and other condiments. It’s the same for your product. You need to find your position to occupy within the panoply of HR technologies that allow your prospects to easily find you. And it is so much more important now than a few years ago as new products are being developed and launched all the time. It’s confusing for buyers so make it easy for them.
Secondly, it makes it very difficult for those in your company tasked with developing, marketing and selling the product if they don’t know how the product is positioned. Back to my supermarket example. If I am positioning my product as a mayonnaise, then I will develop, and market myself as if I am mayonnaise, within the context of being a sauce, dressing, or other condiment. I won’t get confused about whether we are a table sauce or seasoning, and it will be clear to my team that I won’t be competing against a pack of pork chipolatas, but other mayonnaises.
Thirdly, by proactively determining your market position you avoid unintentional misalignment between the external market and your internal organisation. It means your team are thinking in the same way as your potential customers about how to solve their mutually understood problem.
Defining your product’s position is not an intuitively easy thing to do and will involve you in making some quite difficult decisions, normally about what you are not! As you think about positioning your software here are some other things to consider.
Don’t try to position yourself as everything to everyone. Be focused and define yourselves in a way that attracts your key target market. Forget everyone else – they are not your potential customers!
Think about whether you are first to market with your approach and technology or are you a better version of what is already out there?
- If you are the former (market making), then you will be carving out your own position. The opportunity is for you to become the market leader with a unique position and first mover advantage. The downside is that takes time, effort and resource as you have to build attraction mechanisms to get prospects to realise there is something new out there.
- If you are the latter (market taking) directly competing against existing HR Tech tools then your challenge is to create a sub-position within the overall position of your competitors software segment that is different and of specific benefit to your clearly defined target market. The downside is that there is competition – the upside is that employers are spending money on solutions within the overall software segment.
Lastly, your positioning should describe the extremes of (positive) difference between your product and competing tools. Are you easier to use, more secure? Do you generate more productivity gains? Are you the best at engaging employees? Can you articulate a few specific features, advantages and benefits that appeal to your target market and position your product a different and better than alternatives.
About the Author
Howard Flint (firstname.lastname@example.org) leads HG Solutions, an advisory firm to HR Technology founders and senior executives. The company provides no nonsense business growth and commercial advice to HR Tech companies looking to transition to the next level in their development.