Few things are as far-reaching in their implications as a well-crafted positioning statement. Despite what you may have heard, a positioning statement is not (just) the basis for your communications. Your positioning statement is at the heart of how you create value as an organization. Without the clarity of a positioning statement, your ability to grow and capture a market is crippled.

Why is that? Because a positioning statement answers the most fundamental questions a business has to answer:

“What am I selling to whom, and why should they buy my offering over the competition’s?”

"To know what to build, you have to know who you’re building for."

How can you possibly succeed without answering that question? It’s astounding how many businesses (particularly startups) move forward without answering that crucial question. Let’s look at some of the primary reasons you need to have a positioning statement:

1. You can’t make good decisions if you don’t know your target audience

To know what to build, you have to know who you’re building for. Without that clarity, your business won’t be focusing on the most important thing: adding superior value to a market segment. You must become intimately familiar with their pain points, their attitudes, their behaviors.

2. It’s the foundation for your pricing

Clarifying exactly what value your provide is the first step towards crafting your value-based pricing model (which, by the way, is the only pricing model that has any merit to it). It lets you directly align your pricing with the value your target audience gets by choosing you, which is the only thing your audience cares about.

3. It enables you to create and maintain a competitive advantage

It’s only when you’re clear about how you add superior value that you can choose how to allocate resources wisely. Are you the preferred CRM for your target audience because you’re the most integrated with other offerings? You’re probably best served by hiring savvy business development professionals to forge new relationships that further your integrations and enough engineers and UX designers to craft a seamless user experience.

Your strategic choices would be quite different if you were the preferred CRM because you were the lowest priced in the market. In that instance, you likely have to build a CRM with a certain degree of simplicity. And to maintain your low price point you need to optimize for organizational efficiency.

I could list another twenty reasons you need a positioning statement, but those three should make plain enough the importance of positioning. An elegant positioning statement enables you to organize and aim your core assets—ideas, resources and language—in the direction of business growth.

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