Let's face it -- most early and growth stage companies consider themselves to be defining or redefining a market category. Investors hear it in every fundraising pitch, and certainly acknowledge that achieving this is no small feat. So, what does it take to create and lead a category?
I was recently asked this question by one of our investment candidates, which prompted me to reflect back on a presentation I made a couple of years ago to a peer group of venture and growth-stage executives. And because these marketing-related topics can sometimes be a snoozer for CEOs and CFOs, I tapped into my alter ego -- a musical savant -- to drive home 10 realities in category creation and leadership, divvied up between: Fundamentals, Challenges and Investments.
1. One is the loneliest number -Three Dog Night
Accept that you, as a trailblazer, may be the only one for a short while, but that, of course, a category cannot be a group of one. Successful category creation relies on others joining. These joiners will adopt your nomenclature and market their products using the criteria you set for the category, and when this happens, press and analysts will acknowledge the existence of the category, too.
2. Who are you? -The Who
Awareness is key -- both from a technology and a business impact perspective. Being a cool, new innovation only takes you so far; business impact is what creates the necessary market momentum. So, it’s important that the market understands your uniqueness and value proposition. In early years, it is common for this sort of awareness to be largely created in the field throughout early stages of sales cycle. Building awareness at scale will ultimately create velocity in lead generation and selling efforts.
3. Walk this way -Aerosmith
Pioneers need to be thought leaders, defining norms and expectations, and behaving as educators -- experts -- in everything they do. Those who execute this well have heavy content marketing and educational blogs with tips adopted not only by customers, but by the market at large. A few companies I admire in this regard: Hubspot with Inbound Marketing; Marketo with Marketing Automation; Cvent with Event Management; Docusign with Digital Transaction Management; and Outbrain with Content Syndication/Discovery.
The Challenges & Trade-offs
4. You can’t always get what you want – The Rolling Stones
This is about prioritization relative to goals and stage of business maturity. It's the old adage, just because you can, does not mean you should. A couple of examples:
- If you're an early stage business and there is broad application for your product (which, of course, is goodness in furthering the category and accelerating growth), there likely also exists the risk of being pulled in too many different directions. The key is to focus on solutions and markets that generate highest possible value for the customer and your company in the shortest period of time.
- Timing of marketing investments. A focus on generating awareness will ensure a greater level of market education and readiness, which should, in turn, accelerate sales cycles. For early stage businesses, it is not uncommon to spend six months focused on building awareness while lead generation machinery is developed and scaled up to most effectively leverage that awareness. Investing in lead generation or hiring too many sales reps without laying this groundwork is a risky proposition.
5. Third rate romance, low rent rendezvous - Amazing Rhythm Aces
Category leadership is not about the quick win. If faced with the choice of working smart vs. fast, opt for smart (and of course, smart and fast when possible). This comes down to making decisions that ensure repeatability, scale and long-term value. For example, however tempting it can be to build sales momentum by selling short-term projects/contracts (with hopes of expanding later), this practice drives low-quality revenue. Annual or - better yet - multi-year recurring relationships ensure maximum long-term value for the customer and the company.
6. How will I know? – Whitney Houston
How will you know if you are truly creating a category and how will you know you are performing in the category? It’s obviously important to measure the return on any investments made to further your position as a category leader, e.g., market share, share of voice, growth rate, etc. That said, the larger question is, when do you know that you have successfully established the category? And that answer is more qualitative. Some leading indicators are:
- Others have joined
- Your language is being widely adopted in public domain by competitors, press and analysts
- Prospects are actually performing vendor selection processes (onset of the RFP)
- (And the coup-de-gras) When the product category you created makes its way into certain folks’ titles within your buyer organizations
The Investments to Make
7. Make some noise – Beastie Boys
As mentioned previously, building market awareness is critical. Use compelling content (be a source), earned media (other sources), and/or other appropriate initiatives and channels to effectively educate your buyers and key influencers. Contract a PR agency because you cannot afford to have a dedicated PR person in-house (<$30M revenue). Leverage your internal SMEs and your customers to make bold claims and tell stories that back them up.
8. If I had a hammer – The Weavers (perhaps better-known, the Peter, Paul & Mary rendition)
In parallel with awareness-building activities, spare no effort ensuring you are building a predictable, scalable, customer-centric go-to-market machine. Is the entire organization aligned around your Ideal Customer Profile? Are the value proposition and competitive differentitors permeating consistently across all sales and marketing activities? Are marketing funnel processes and systems interlocking with a well-defined and adopted sales process? Are instruments in place to determine what is and what is not working?
9. I’m winning – Stevie Winwood
The most productive, winningest customer-facing teams tend to be the beneficiaries of a systematic approach to sales enablement. Are your Product, Marketing and Sales functions working together to enable customer-facing teams? Is regular training conducted on the competencies and skills necessary to meet prospect and customer needs? Who is responsible for developing sales tools for sales reps (and for sales reps to use with buyers), and making them easily accessible? A discipline for delivering the right research, coaching, content and cadence is critical to developing a winning sales organization.
10. Come together – The Beatles
Turn every possible employee into an extension of the Marketing department. For example, tap into the rich set of expertise and perspective that resides in the company for your blog. Some are more likely to contribute than others, but having at least 50% of blog content reflecting the POV of the extended team can go a long way toward rounding out your thought leadership position. Another example... do you have an account-based marketing strategy? Identify a "most wanted" list of accounts each quarter and enlist the employee base to share intel on the company, buyers and influencers, and/or tap their network for warm introductions. It takes a village!
What is your business doing to achieve or maintain category leadership? I would love to hear from you.