How should I differentiate myself from bigger players in my market?
July 19, 2022 Edwin Kooistra
In the early days of B2B software, it was common for companies to have functionality no one else had in their market. In today’s Software as a Service (Saas) world, differentiation via functionality isn’t likely to result in a unique position. Everyone in the same market has similar functionality for the segment they serve such as small, mid-market, and enterprise companies.
Next to this, as an emerging tech provider, you are competing with large vendors. When a buyer selects a large vendor over you, it is likely they perceive the risk of going for a smaller provider higher than the business value they would gain from your solution. Conversely, when they do buy from you, the buyer sees your service as the best way to solve their problem over the vendor risk.
The problem of not being able to differentiate with functionalities and losing to large competitors can in some measure be solved by a laser focussed segmentation strategy. Focussing on the audience that your differentiated value is more likely to overcome perceived vendor risk. In other words, addressing a pressing target audience problem.
Start to converge on a unique positioning
Segmentation on solely firmographic characteristics such as vertical industry or size will not cut it. We advise you to be much more rigorous in determining what the “ideal customer” is for your business at the current size and brand. But how do you identify a narrow range of customer types and use cases?
If you already have some customers, you can start the following process:
1 – Set all customers aside which you managed to win because of a connection, being at the right place at the right time, or just sheer luck
For these clients you had limited differentiation and they could just as well have gone for another provider.
2 – List all customers where your differentiation was truly seen as critical to their success
3 – Identify why your key differentiators mattered to the customer
What was it about the customers’ circumstances that made this so important that is caused to “risk” buying from you?
4 – Identify commonalities in those circumstances and build them into sample use cases
You will end up defining a set of indicators that you need to task both your sales and marketing to focus on.
5 – Define the persona’s for these use cases
There are clear differences in the enterprise personalities that are comfortable with emerging technology and providers, and ones that are not. Use an enterprise persona analysis to identify any red flags that might indicate an organizational bias against emerging providers. Chasm produced specific tools on segmentation, persona’s and the ideal customer profile.
6 – Once you’ve identified the ideal positioning statement, test it to determine if it is unique – only your company is making the claim.
You’ll find your competitors’ positions expressed prominently on the home pages of their websites.
Constantly focus on changing the buyer’s perception of “risk” from engaging with a new, starting vendor to the most valuable “solution” to their specific problem.
Won’t this limit my chances?
We strongly advise you to keep your marketing and sales focus narrow and laser focussed until you build out compelling references. You might feel like this is limiting your market. But the problem we are addressing is how to compete more effectively when your brand is not established. There is no bigger risk to your success than perceiving a busy sales or marketing team as a productive team. Don’t be busy for the sake of being busy, compete only in the deals that you have a realistic and much higher chance of winning.
When you have established proof points and customer references in your focus segment, your brand becomes better known. At this point you can compete in circumstances where your differentiation is not so great but your risk as a provider is reduced due to your brand development. Now you are able to expand your target segments.
An added benefit of being laser focussed is internal alignment, which allows your positioning, messaging, marketing and sales activities to be much more targeted and effective.