Customer-centric Growth by Lincoln Murphy

SaaS Market Positioning: How to Compete in Crowded Markets

Welcome to 2013 2014 2015 (still applies!)… it’s now time to figure out why your SaaS company even exists and what your market positioning is!

If you’re a SaaS or Cloud provider in the Email Marketing, CRM, Project Management, File Sharing, Collaboration, Marketing Automation, Analytics,… or frankly most horizontal product categories… it’s time to do some deep soul searching, market analysis, and customer development to figure out why you exist and what your market positioning is.

Not just why YOU want to be in the market you’re in, but why do you exist in the eyes of your potential – and current – customers. What position do you hold in the mind of your target market? If you haven’t, I highly suggest you read the books Positioning: The Battle For Your Mind and All Marketers Are Liars Tell Stories by Seth Godin. Both of those books help you look at things from your customer’s Point of View so you can know why you really exist!

Why is it so important to know why you exist? Well, things have changed… this isn’t 2008 where SaaS was novel and unique and maybe even cool. In 2013 SaaS just is. It’s the norm. It’s the expected model. Cloud is mainstream.

Being a SaaS company in 2013 does not give you a competitive advantage; it allows you to be in the game. It’s just the starting point… now you have to do the work to cut through the noise, get in your customer’s head, and differentiate.

If we’re honest, there are probably 19 other companies in your category JUST LIKE YOURS (with feature parity, the same value proposition, similar pricing, etc.)… now you have to figure out why you’re unique so you can get – and keep – more market share.

So you have to ask yourself the tough question… why would your customer choose you when there are 19 other options out there?

And just as important… why would they stay with you?

If you say they’ll stay “because it’s hard to take their data with them” – while I commend your attempt at vendor lock-in – that’s the wrong answer.

Lock-in doesn’t make you unique… it makes you frustrating to deal with. Frustrating situations often inspire determined creativity to resolve… and that resolution is your pissed off customer leaving you for your competitor who put themselves in a better position in your customer’s brain than you…. and has a nice little import tool for your hard-to-get data.

Get real on this if you want to grow… customer retention isn’t about lock-in. It’s about getting your customers to continually realize value from your service. If you fail to do that, your customers will leave… and they’ll go to one of the other 19 options in your market. You might as well serve ’em up to your competitors on a silver platter.

Speaking of your competitors…

Of the 19 other vendors in your category, 17 are probably just “me too” products that do nothing but make noise and fragment the market. Many of these could be ripe for acquisition. Do some analysis and see if you can acquire one or more of your competitors simply for their customers.

Often, smaller SaaS providers are either a side project for a dev shop or aren’t making the progress they’d like. And while they have some customers, they’re stagnating due to it being a side project, bad or no marketing, a focus on features rather than the customer, etc.

See if you can buy ’em and you’ll get new customers, eliminate some of the noise in the category, create PR and buzz, intimidate other providers, generate new acquisition deal flow, generate new lead flow (customers want to be with successful companies, right?) and eliminate a competitor all in one fell swoop. Nice. Rinse and repeat.

Now, in most established horizontal categories – like CRM – you’ll also have 1 of the 19 other competitors as the incumbent leader, the first to market, the big dog, the 800lb gorilla… like in the CRM category.

This market leader is like the sun, the category is the solar system, and you and your competitors are planets that just revolve around that market leader.

Sometimes a customer comes your way from the market leader – thrown off like a solar flare – and sometimes you lose a customer to the behemoth’s gravity (plus their strong brand, momentum, and proactive sales force; you didn’t lose ’em BTW… they probably actively stole your customer!)

Within your category, right now, at least one company – hopefully your’s – is making big plans, raising money, etc. not to acquire some of those 19 other competitors (though that could be part of the plan)… but to full-on steal the customers out from under the competition!

Think of this competitor – or yourself – as the rogue planet about to disrupt things in the solar system!

Now, to be super-disruptive, you need to go back to the top and answer the big question… why do you exist? Much of the answer, by the way, will come from the market segment you target… your position in the mind of one segment will be different from the position you hold in another segment, so go where the best chance of massive success is.

Once you have that figured out, you need a plan and… well…  that plan varies so much based on your category, competitive landscape, why you exist, the target market segment, etc. that I don’t even know how to touch on that in a meaningful way.

But I’ll throw some ideas out there to get your brain spinning…

Enter: Growth Hacking

Of course you could leverage a disruptive model like Freemium, but that’s unlikely to be as disruptive as you might hope for in most categories in 2013.

Aside from a disruptive business model, if all I had were the answers to those big questions above, and I wanted to help you steal your competitor’s customers, I’d just pull some tricks out of my hat like these…

Depending upon how your competitor is setup, I might do some research to see who’s using their product via BuiltWith or I’d spy on your competitor’s subdomains to find a list of their customers with Alexa (pictured), or do a quick “powered by…” Google search if they include that as part of their “viral expansion loop.”

Then I’d direct my marketing magic at those newly discovered customers of your competitors and suck ’em in like a tractor beam.

Barring that… maybe I’d just straight-up buy a list of my competitors’ customers if it’s available, do some data cleansing, add some context through primary and secondary research, and then throw some marketing magic directly at ’em.

Oh… I might use GMail AdWords targeting, email Retargeting to take over 3rd party support sites… the list goes on and on, just not here (I share all of my marketing secrets with my clients, including how to use those research and ‘bought list’ methods to do cold outreach… the right way!).

Look, it’s time to realize that the days of one big happy SaaS family are over. No longer are “we” trying to displace legacy Enterprise software products in the market or to disrupt the status quo (what we commonly think of as home-grown solutions, Excel spreadsheets, etc.).

Nope, the reality on the ground today is that when your customers leave, they go to your competitor, not back to the way it was.

The way it was is gone… they went to the CRM startup down the road… or back to the Big Dog market leader.

That should hurt – twice – since not only did you lose a customer – and dropped your average customer Lifetime Value (LTV), your Monthly and Annual Recurring Revenue (MRR & ARR), and hurt your company valuation – but your competitor gained a customer, gained MRR & ARR, and bumped their valuation a bit. That’s not cool.

So, are you ready to compete in this new reality of SaaS? You should be… and I can help you.

I help SaaS providers like yours Acquire and Retain customers… two things you REALLY need to get right if you want to thrive now and in the future.

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