Overflowing Competitive Juices

In the previous Musing, I defined five competitive scenarios that also generally align with phases of a company or product life cycle:

1)      There is no direct competition.

2)      There is direct competition, but they are rarely seen at the sales level. 

3)      Competition is fierce and comes from many different angles.

4)      Competition is fierce but has narrowed down to one or two other players.

5)      Competition is unseen.

In the same Musing, I discussed the issues and strategies appropriate for (1) and (2) above.  Now I’d like to continue on to Scenario 3.

Scenario 3 –Competition is Fierce and Comes From Many Different Angles

This is the “nature hates a vacuum” stage of the development of a market.   This is the stage where a lot of people “get it” in terms of a problem that needs to be solved, but the world hasn’t sorted out exactly what the best form of the solution is and from what vendor.  As a result, you have a lot of aspirants to the throne.  Some solutions will be software based, others a generic appliance and others embedded software on purpose-built hardware.   Some solutions will be built as extensions of existing products; others will be brand spanking new products.   Some vendors will be established vendors expanding a large (and generally long-in-the-tooth) product line and an embarrassingly large list of others will be VC funded “one trick ponies.”  Some vendors will be West-coast based, some will be in New England, and a few may be in Nordic countries or India or China.  Some products will be based on emerging new technologies and others will overlay or tweak old technologies in a new way to give that technology new life.  Some will leverage open source, others will extol the virtues of code built to purpose from scratch.  All will have multiple features, but not all the same – the Venn diagrams of features supported by different solutions will be from an amazing kaleidoscope that shifts with every new release from every existing vendor and as new vendor entrants check in.   Some will focus on scale, others on features, others on manageability, and others on price.  Vendor claims will be outrageous (expect there to be 5-10 vendors claiming to be #1) and associated terminology will be inconsistent and confusing.  Even analysts won’t agree on exactly what to call the space or how to score who is winning. 

In other words, this phase is a marketer’s ultimate fantasy. 

In this phase much of the market conditioning process is already done.  Industry press attention is high, including bake-offs.  You don’t have to spend much time educating the market in a generic fashion and instead can focus your marketing energies on “it’s all about me” messages.   

Basically, it’s all ready for the taking.  You have lots of people with allocated budget asking about your product, but who are aware of many of the competitive choices and are simply asking  you “why you?”.  The market “pie” is rapidly getting larger (although it can be sliced pretty thin between all the competitors) which can lead to a large and rapid ROI if you can out-maneuver the others.

Fundamentally, there are two things you can do in this stage to improving your standing in the world, and they are not mutually exclusive:

1.       Simplify the decision criteria for prospects.

2.       Eliminate the decision criteria for prospects. 

Simplification is absolutely critical in this phase.  As confusing and multi-dimensional as the market seems to you – who live and breathe it 24 hours a day – imagine how confusing it is to prospective customers for whom this is just the issue-of-the-moment. The worst thing you can do at this stage is present to a customer a detailed spreadsheet or Venn diagram or Spider diagram showing your capability vs. others.  You don’t want to give them the slightest indication that the world is that complex.  It’s a sure way to ensure that they ask for the same from your competitors, an event that then leads either to brain freeze or a decision rooted in information overload. 

In this phase, customers are searching for the best solution.  So your challenge is to simplify the definition of “best.”  To achieve this, the best thing you can do for a customer is to generate a logical progression for them that enables them to comfortably simplify their thinking. To do that, you need to create a theme.  That theme needs to be derived from one or two things that clearly differentiate your product from all of the others - and matter (or it can be argued successfully that they matter, which is an entirely different thing).   Usually the conversation starts something like this, “Hey, when you get right down to it, we’re all about the same in terms of A, B, C, and D.  You can’t go wrong with any of your potential choices in those areas.  But, what really matters is <the theme> and to achieve that you really need to focus on Y and Z.  Here is our unique approach to those critical issues.”    

You then need to stay “on point” in all marketing-level communications to and interactions with customers.  Don’t deviate or vacillate.  Be compelling and self-consistent.  For small companies, the tag line of the company should reflect the theme.  Feature and product naming should play off the theme.  All of your marketing collateral and other communications should emphasize your approach to Y and Z as the core of your solution.   This is a hard thing to do because your engineers will have sweat bullets to put a lot of capability into the product(s) that goes well beyond dealing with Y and Z.  There will be internal pressures and perceived customer pressures to broaden the message.  But if you feel you are making progress – don’t do it. 

Of course, it’s OK if the theme evolves, changing every 9-15 months.  High tech is all about change.

People are prone to want to believe that the decision making process can be simplified.  But they probably aren’t going to take just your word for it.  So you’ll need a couple of the tried and true marketing tools as well – viable reference customers and analysts in your back pocket.  This is a situation where you are probably going to have to pay off the Gartner ransom.  It’s a big bite out of your budget - $50K-$100K per year to get access to their research and analysts, but you’ll need this to at least neutralize Gartner.  Ideally you can even do better – i.e. get them to promote that Y and Z are really what matters.  You don’t need them to promote you directly.  If they set the decision criteria in a manner that uniquely favors you, you are half way to winning.  In addition you should curry the favor of another (presumably more credible) industry analyst or two by having them “help” you with your strategy.  It’s funny how they defend things more aggressively that they feel they helped mold.   I know that works with me anyway. 

Good analyst relations then lead to better press.  Much technology reporting is written after a couple of phone calls with industry analysts to clarify issues and to ensure that the vendor isn’t totally blowing smoke up the reporter’s backside. 

The other advantage of industry analysts is that they can help ensure that your definition of the critical decision criteria is the first one that customers hear.  Ideally, you’d be the first one to go face-to-face with each and every prospective customer. That gives you a chance to educate them and set traps for other vendors they are sure to meet with.  Others may be able to re-educate them, but that’s a harder process than initially educating them.  You’ll win far more than you lose if you are the first in.  The converse of that is that if you are not first, you’ll spend a lot of time refuting some other vendor’s story on why it is really W and X that matter. 

But it’s not practical to be the first to meet directly with each customer.  Reading analyst reports or talking to analysts, on the other hand, is often the initial task a customer undertakes when researching a new space.  If those reports espouse your view of the world - your theme - then you have the edge.

All of this applies to channel partners as much as it does end customers.  And ultimately, gaining channel bandwidth early on probably has more of a long term impact on probability-of-success than rapid direct capture of customers.  While channel partners can handle a more complex story than end customers, they still have to perceive the sales process as being simple and efficient.  They also want to make sure they are engaged with a future market leader. As a result, potential channel partners are also influenced by analyst reports and press coverage. 

Therefore, the mantra in this phase is “Simplify… Stay On Point…. Evolve Slowly.”

The other technique of great value in this stage is to avoid questions of “why you?” by burying your product into a larger solution and going along for the ride when the larger solution is bought and deployed.  This can be achieved in a number of ways – working with systems integration partners who provide vertical or higher level solutions, OEMing to larger vendors who view your product as a component of an overall sale, getting on a government approved buying list before anyone else, or getting acquired by a bigger fish if the price is right.  The downside of these approaches is reduced branding with every unit sold.  So you’ll need to replace that by heavily promoting the industry relationships you’ve established and building a drumbeat that implies “all the cool people are working with us, why aren’t you?”

If all goes well in this phase, you’ll be one of the market leaders that emerge as the world starts to sort through the options and decides who the real players are.  Generally, the world likes a stage where there are many options, but fairly quickly, the world prefers to reduce the list to 2-3 viable players, if only to reduce the size of their internal comparison documents.  The goal is to emerge as one of those short-listed viable players. When that occurs, the marketing priorities change.  We’ll discuss that more in next month’s Musing.