How can you beat the big companies in marketplaces they dominate?
Glenn Gow, President and CEO of Crimson Consulting Group, helps both start-ups and billion-dollar players pick market niches and positioning to compete successfully no matter what size they are. "Most of our clients are technology clients, and most have a build-it-and-they-will-come mentality," he says. "It's exciting to think you can be another Google by just building something. But people forget that Google is one in a thousand. Everybody desires a market leader position, but in most cases, you're not going to be."
So, what do you do as a marketer when you're working for a typical tech CEO who blithely assumes the world will leap to buy the new offering? Gow says, "You have to have courage." Here are a few examples of marketing courage in action.Best practice #1. Clearly define your market (and embrace being a niche player)
Gow notes successful companies look at who they're competing with and accept that they may not be able to compete in the same space. So they create a niche within the market where they can win.
Example: Sybase, competes with Oracle, IBM and Microsoft. They say, "We're not going to become the dominant player in database management." Instead, the company has decided to go after customers that don't want a single vendor solution.
Some companies may think, "I don't want to be dependent on Oracle exclusively. What if I don't like their products in the future?" Those are the companies Sybase pursues, vigorously exploring companies at the front end of the sales cycle, asking:
What would make you adopt another database vendor, when we know you're probably already using Oracle?
"If they hear, 'We're going to standardize Oracle,' or, 'We want a single vendor solution,' they're not going after that prospect," says Gow. But, "If they hear that the prospect wants multiple vendors, they'll tear that place apart."
He adds, "They're smart enough to walk away from that business if they don't have an advantage."Best practice #2. Choose a niche your competitor's can't -- or won't -- service
"I sat down with a CEO yesterday who's starting up a company, and he told me about his exciting technology ... targeted to 'everybody who does marketing.'"
Gow explained the segment was far too wide and varied for any one offering to succeed, especially from a start-up with limited R&D resources. "CPG companies have different systems requirements than a company selling robotic equipment or memory for semi-conductors. Think of that before you write a bit of code."
So, Gow strongly advised the CEO to pick a far tighter slice of the marketplace. This is brutally difficult because, in essence, it's a matter of deciding what markets you are *not* going to pursue.
Example #1. Quest Software has a product that they believe helps the Oracle database run better. They looked for gaps related to Oracle's management of the database software and, by making the management of the software run more smoothly, picked an opening that Oracle had chosen to not go after because it was "too small."
Example #2. Due to stiff competition, palmOne decided not to pursue the tempting MP3 player business as a whole. Instead they exploited one slice to the max -- offering MP3 expansion cards to current palmOne device owners. Then, after market research, the company went for simplicity over functionality, actually *removing* some functionality to be able to offer a more reasonably priced product. "And they've been very successful with that." Best practice #3. Have the courage to say no to off-target deals
Does the sales team ever bring in a big potential account that's not in your carefully chosen target market? Happens to everyone.
In those instances, it's the marketer's place to ask, "Does this opportunity represent a new market opportunity, or is it just one deal?"
If it's a single deal, and you'll have to change the product offering to fulfill it, you need to pass. "That's a very difficult decision," Gow acknowledges. A common CEO reaction, "They want to pay us a million dollars here, and nope, sorry, we're not going to take it?!"
That's right. Any deal requiring you to make a change to your product offering means an investment of development dollars, so ROI could be low or even negative.
"Contrast that with an opportunity that comes in from a market you're already focused on," Gow says. The development investment is "hugely" returned by pleasing the rest of your customers and prospects. Plus, your resulting customer name brag-rights helps you land more clients in your chosen niche rather than dragging the company further astray into a vertical no one researched and carefully decided to pursue as a formal line of business. However, it may make sense to take the single deal if marketing's research shows a viable new market -- not just one client -- will be open to you. "We're evaluating the entire market segment when looking at the request from a single lead." Your quick but intense research should include:
-> Total size of potential marketplace (but never assume you'll get "a fraction of it")
-> Number, type and entrenchment of competitors
-> Length of sales cycle in that marketplace (may be very different from your regular market)
-> Roughly estimated marketing costs should you decide to launch branding and lead generation campaigns into that market to gain additional clients. (Tack on extra to your current cost per lead to cover lack of brand awareness in this new niche.)
-> Internal marketing, inside sales and sales department costs to land this additional business, taking into account the fact that you may need new hires to run campaigns in both verticals, and the fact that additional sales may require hiring industry insiders with pre-existing personal relationships.
In any event, "the job of the CMO is to be the strategic voice in the room where the executive team is meeting, when you know the VP of sales is going to say, I want to do this deal [no matter what],'" says Gow.
You must prove the need for more market research before accepting a deal or that "by turning down this business we can pursue opportunities in a market where we think there's a better fit and can earn more money not this quarter but next quarter."
As always, the more metrics your presentation has, including sales cycle flow charts showing resulting estimated income (or losses) in future quarters, the better. You'll need to back your opinion with courage and a powerful presentation. You're essentially marketing a voice of reason in the face of the lure of a giant cash deal. If you can do that, you're a great marketer indeed.