Successful startup entrepreneurs almost always have impressive skills in two areas: product creation and sales. They find problems in the marketplace and create products or services that satisfy those needs with teams that can deliver the solution with meager resources. Then the entrepreneurs use their savvy sales skills to find initial customers and sell their new solutions to make money to grow the company.
This is great, but guerrilla sales efforts can only take the company so far. At some point, these companies have to create awareness and demand beyond the prospects their small sales teams can reach through networking and cold calls.
Startup entrepreneurs have to do great marketing to continue to grow.
Surprisingly, this is a much-misunderstood concept with most startup entrepreneurs. To many of them, marketing means, “I need to spend time and money for something that doesn’t drive immediate revenue.” To others, it’s “just create a website and a nice presentation for our salespeople.”
This is the Marketing Trap. From my experience, misunderstanding the strategic marketing challenge is the biggest reason entrepreneurs are prevented from reaching their big startup dreams. “Hockey stick” growth, market leadership and a successful payoff for investors almost never happen through sales efforts alone.
The Secret — You Need to Create Your Category
If you have 1) a valuable product or service that is generating sales, and 2) a unique benefit that makes you different from competitors, then you are really creating a new category (or sub-category) in the market. An established category is a type of product or service that people know and understand.
For example, a sub-category of mobile phones is “smartphones” — you know, the phones that do email, calendars, contacts, and web browsing. Five or ten years ago, this category didn’t even exist in the minds of the market. The early pioneers had to create compelling new smartphone products and explain this new type of phone concept to the market. Now we just say, “I want a smartphone,” while years ago this category didn’t exist and people didn’t know they wanted one.
Everything fits within a category in minds of your target customers. Big, successful markets are filled with categories that are clear and compelling. If you’re really, really good, your product name is the category, like BlackBerry (in the early smartphone days) or iPod.
To achieve your growth goals, you need to be known as the leader of that important category. But who will establish that category in the market? If you don’t do the things that will establish the importance of this new type of solution and position yourself as a leader, someone else do it for you and take the prize. Remember, market leaders always get disproportionate market share, recognition and profits.
If you are a leader and you want to grow your new category, you have to sell your products and your category.
Your Strategic Challenge
Stop thinking that marketing is something you “do later when we have time and money.” You don’t need big money to get started. Really. But establishing a category and a defensible leadership position takes years, so you have to start now.
Start thinking, “How do we start now to establish our category of product/service in the market and position ourselves as the leader?” This is more a challenge of your mindset than your budget. It’s your biggest business challenge in the long run and only the CEO can really drive this effort. It’s that important.
If you aren’t thinking this way about your strategic business challenge, then you should not be telling your investors and employees how huge your company is going to be. You can have a nice business, but you won’t have a big, valuable success story that will change the world.
What are you waiting for?
Great post Greg. I’d personally would rather create a category than try to compete in an existing category any day of the week.
You’re a serious marketer and you are obviously going for the big prize – change the world and build a big, defensible company.
Maybe it’s so rare because it sounds crazy or risky to go out and “create a category.” Having done it several times and seen it happen for hundreds of successful entrepreneurs, it’s hard for me to imagine any other way. Why would you put it in all that effort just be a 2nd or 3rd player and let someone else have all the glory?
I’m familiar with the law that “first in category” is usually who is first remembered (e.g., Who was the first person to fly solo across the Atlantic? Who was the second?) … but creating a new category for the sake of being first can cause Category Proliferation and saturate a vertical. So (and this might be too much for a blog comment) what advice do you give to those who are not first in a category, but have a significant value proposition over their competitors in that category?
Good question. Remember, first is not just the first to try (“first mover”), but first to be recognized as a leader by the market. The first one to be recognized as the leader has the top position and will get disproportionate attention and market share. If you are not the leader in your category, you can “draft” off the exposure the leader builds, but you have to clearly communicate your unique benefit compared to the leader. You also should be realistic about your market position.
Too many startups declare they are leaders of a new category before they have proven a new market exists. It’s important to know that the vendors do not validate a category — the market does. It’s as if the crowd says, “OK, enough people are doing it that it isn’t going away. So let’s call it “smartphones,” for example.
Lastly, if you have a significant difference from competition in an existing category, it may in fact be a new subcategory, as in “smartphones with QWERTY keyboards” vs “smartpones with touchscreens.” Categories subdivide when in makes sense. Entrepreneurs can do a lot to help this along.