#2 Subscriber Q & A

I've been asked questions which acted as the perfect writing prompts. This issue includes my answers to these questions (special thanks to Brooks Lockett, Kamil Rextin, and Sebastian Cuervo).

At what point does a B2B SaaS company’s main competitive advantage become existing market penetration over differentiation?

In SaaS, once you’re among the incumbents, market penetration is more important than differentiation and distinctiveness. People choose you because you’re big and known (shout out to Benyamin Elias and his recommendation of 'How Brands Grow' by Byron Sharp).

For example, MailChimp doesn't need to talk about how they’re different or better. Their size (~60% of the market), reach, and the salience that comes with it trumps anything else they might do.

Talking about the competition may actually do more harm than good for a company like MailChimp — it will introduce alternatives their prospects weren't even aware of.

For many, email marketing = MailChimp until shown otherwise.

This is why I say,

In other words, email marketing's Category Story is MailChimp's "why us" product story. This is the story most prospects know.

You can't erase the incumbent's contribution to the Category Story, but you can add to it. You must add to it.

Use the incumbent's contribution as your launching off point — like we did with Snappa vs. Canva (here's a link to the 🧵 in case you missed it).

What's it mean to use the incumbent's contribution to the Category Story as your launching off point?

It means:

1. Giving the prospect a lay of the land — how your space has changed, your category's incumbent(s), broken promises, dirty laundry...

2. Acknowledging you aren't the incumbent or part of the default set of options (i.e. top 1-5 brands in a category)

3. Acknowledging the incumbent's legitimate strengths and advantages...

4. ...But then shining a light on the tradeoffs that come with these strengths and advantages — tradeoffs that aren't worth it for your ideal customer.

5. Positioning your solution as a reaction to all of the above. Your solution must exist because all of the above has created a void that must be filled for your ideal customer. A useful exercise is to imagine every prospect is about to click the incumbent's "buy" button — now what can you say to your ideal buyer to make them hit pause and choose you?

A Category Story can start as a deck or document that is then used to infuse your core web pages, vs. competitor pages, email campaigns, sales deck, and content strategy.

The above is an example of how to think about a Category Story when you're competing in a mature category with a clear leader (most common). Your approach will differ when a category is newer and you have smaller companies competing against each other and/or the current way of doing things. A topic for a future issue perhaps.

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How do you see Category Story applied to emerging, less-saturated markets such as blockchain & crypto?

I think it’s less important... for now.

The idea of telling a Category Story becomes more important the further away your product is from a rocketship and the closer it is to toilet paper on a scale of "Not a Commodity to Commodity."

The blockchain and crypto space is fairly fresh and the existence of a workable solution where there is appetite might be enough for it to stand out.

This and the way builders of web3 projects are rewarded for their contributions is why some web3 proponents claim marketing and advertising won't be needed in web3.

I partially agree, for now.

But when there is an abundance of choice — a number of coins, NFTs, wallets, DAOs etc. that all kind of look the same — this idea of telling your Category Story will become more important, not less.

If this space continues as it has, it won't be long before customers are paralyzed by choice and crave guidance.

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Do you still see VOC-driven messaging working for the “long tail” of businesses who’ve been slow to adopt technology (even in 2021)?

Voice-of-customer messaging should still form the foundation. I am not trying to suggest that VOC is dead. It isn’t.

Instead, I’m suggesting it might not be enough in crowded categories loaded with astute marketers.

If you are selling a similar product to similar customers, and you and your competitors are getting their messaging straight from the customer, you may all end up sounding similar despite doing it “right.”

So, two layers we might consider adding on top of our usual VOC:

1. Category Story — a story that addresses the landscape your prospect is trying to make a decision within and doing so in a way that grants your solution the starring role for a customer like them. All competitors have the opportunity to do this, but most aren't. This is an advantage that is there for the taking, just like VOC was in 2016.

2. Moonshot Messaging — messaging that synthesizes the sentiment of your customers and presents it in a way that is shocking, different, memorable. For example, I imagine Coda, a spreadsheet alternative, heard their customers complain about spreadsheets over and over again. I would be very surprised if anyone uttered the phrase which is now Coda’s headline, “Enough of this Sheet.” This is VOC + Moonshot Messaging (i.e. messaging that is jarring, memorable, and somewhat risky in that it may or may not work as intended).

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Is the concept of "Category" even useful? Is this the right way to think about this?

This question paraphrased from an impromptu podcast episode with Sebastian and Kamil from fourtytwo.agency.

Some preliminary thoughts I shared in the summer...

A more thoughtful response...

Product categories as we know them are useful in three ways:

1. It helps in-house teams keep track of solutions with a similar feature set, solving a similar problem, for a similar customer. The "CRM" category makes it easy for SalesFlare to see what other CRMs are offering and how customers are responding. The sub-category of "SMB CRMs" will help SalesFlare track CRMs a lot like theirs.

2. It helps analysts and review sites compare apples to apples.

3. It helps customers focus their search in a mature category. For example, if you're looking for a way to manage your books online, you're looking at the accounting software category. You know this exists and you probably know 3-5 big players in the space. You will compare solutions from this category only.

But product categories can create a blind spot and cause you to make a critical error...

If you're competing in a relatively new category, there is a very good chance you aren't competing against products like yours at all. Instead, you're competing against what you hope will become the "old way" of doing things.

For example, AI copywriting software is rarely in competition with other AI copywriting software. Instead, they need to make their case vs. freelancers, agencies, consultants, and in-house staff.

If an AI copywriting company made the mistake of positioning themselves vs. solutions like theirs, it would introduce prospects to competitors they probably hadn't heard of yet. This is not what you want to do.

In other words...

A smaller player in a mature category is likely competing with top-of-mind category incumbents.

Smaller players in newer categories are competing with alternative ways of solving the same problem.

And in the middle of these two are smaller players competing with similar solutions, incumbents in adjacent mature categories, and the the "old way" of doing things for the odd laggard.

This is why I think it's also worth considering the idea of Jobs To Be Done categories.

For example, AI Copywriting software competes in the newer "AI Copywriting" product category, and in the "I need copy to sell my products and services" Jobs To Be Done category. I may explore this idea in more depth in a future issue.

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Everyone is talking about creating a category... should I create my own?

No. You shouldn't.

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Have questions of your own? Want my take? Ask a question (or several) and I'll make a point of getting to them in future issues if I think the answer will be useful for others.

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This is it for today.

If this idea of crafting a Category Story that can then infuse your messaging across your website, emails, and sales calls is of interest, hit reply and we'll talk about it.

If you believe SaaS has reached a point where what we're talking about is important to compete, please forward this email or share the newsletter on social or connect me with anyone who might want to hear from me.

Wishing everyone a happy Omicron-free holiday season.