This was written in collaboration with Christine Yang, the first salesperson at Amplitude and now a sales consultant for technical founders of SaaS companies. She's also my wife :D
The SaaS market has never been more competitive. Positioning your product vs the competition is hard, push too strong and it rubs people the wrong way, not strong enough and you risk allowing your competitors to own your narrative.
Competitive positioning should be a high priority in your early company strategy - every choice your target customer picks which is not your product, including ‘doing nothing’, is a competitor.
Great competitive positioning will help to:
Win more deals vs your competitors (including internal build vs buy)
Make the decision process easier for your future customers
Validate your Product/Market fit quickly
In this article, we’ll cover the following key topics:
Define your competitive messaging
Own the narrative early and set traps for your competition
Don't bash the competition, bucket them
Evolve your customer stack don’t replace it
1. Define your messaging
A mantra to maintain when doing this - customers in the windshield, competitors in the rearview.
Your competitive differentiation and value proposition should be built on the challenges your customers have and how your product solves them. Keep your customers firmly in your windshield.
It’s very easy to obsess over the competition - features they build, marketing campaigns they run, execs they hire etc. You do not know how well these things are working for your competition. You should be racing towards your customer and adjusting for the competitors in your rearview.
See in the below examples how the companies articulate pain points their customer experiences which their product is uniquely positioned to solve.
Snowflake:
Slack:
This simple table can help you define what your customer’s primary challenges are and where you solve them uniquely or better than the competition:
List your customers’ biggest pain points in the first column. Next list what your company offers broken into 3 buckets:
Unique - Only you offer this thing
Advantage - Other people offer this thing, but yours is the best
Parity - Your thing is as good as others
Your competitive messaging should be built up of Unique and Advantage offerings which solve your customers’ biggest pain points and cannot be solved as well by your competition.
2. Own the narrative and set traps for your competition
Trap setting, also referred to as ‘laying land mines’, is a great proactive tactic to help box your competition out of your target customer’s final solution assessment.
The objective is to ask the right questions to help highlight your unique or advantaged functionality and capabilities to your target customer and assess how they rank on their priorities. You can then build your solution proposal, and hopefully their assessment criteria, around functionality which your competition can’t deliver on as well as you.
At Optimizely, one of our closest competitors was a company called VWO based out of India. They had a ton of similar functionality on the surface, and plenty we didn’t have, and although we strongly believed in our solution being best of breed, VWO was offered at a much lower price point and was a great product. VWO was much more SMB focussed but we’d often run into them in Enterprise deals which is where we focussed - so what traps could we set for them to box them out of our Enterprise deals early?
One example of a trap we always easily beat VWO with was our customer support - Optimizely had offices in all of our core markets (no timezone and language issues), online 24/, willing to travel, and were incredibly smart and over-qualified people. If a company cared about customer support we were pretty sure to win.
You can’t just say ‘we have great customer support - check out our slide, this is important to you’, that’s putting words in the customer’s mouth and isn’t going to find its way onto their priority list. They need to come up with it as a requirement themselves.
Here’s how a fictitious trap setting question flow might work for highlighting customer support -
Jane from Optimizely:
‘Tell me about one of the most successful software tools you’ve brought on board at Walmart’
Alisha from Walmart:
‘It was probably Tableau, we were able to get their solution implemented quickly and the adoption has been great among both the analyst and executive leadership teams’
J: ‘How did you get set up so successfully and what did your interactions with Tableau look like?’
A: ‘Our team was pretty well aligned around the need which was great. We also had regular check-in calls with our Tableau CSM throughout the implementation and they even came to our offices in Bentonville to run a training session for the executive team.’
J: ‘That’s awesome. It sounds like great customer support was really instrumental in getting set up so successfully, especially having the team onsite to get your execs on board. We do something similar at Optimizely. What would be your expectations of great support for this initiative?’
A: *describes what great support means to them - likely to be local, hands-on, onsite visits etc.*
And just like that, the trap is set.
Three things will likely happen after this conversation:
If local Enterprise-level Customer Support wasn’t already on their decision-making criteria, it will be now
Optimizely’s ability to satisfy this requirement will be top of mind for them
You can bet they’re going to ask VWO about their customer support, if they speak to them, and hold them to the standard we set.
Now you can see why it is important to own this narrative early since it’s likely you’ll be up against equally prepared competition who will be looking to set traps for you if they get there first. If you get a bunch of questions from a prospect which are all of your shortcomings vs your competitor, they've already set the traps.
Owning the narrative early
Effective trap setting questions should be weaved into the conversation as early as possible - including the Qualification and Discovery phases before you start ‘pitching’. Even better, if you can frame your marketing activities to proactively set these traps you might be able to get a head start.
Adobe has built buyers guides which rank highly in google for the search term ‘How to select the right…’ followed by a tool they offer. When someone is doing early research, way before they speak to a salesperson, they’ll read Adobe’s materials and start building their solution criteria based on what they learn.
3. Don’t bash your competitors, bucket them
Humans love to gossip, it’s one of the things which helped us find common ground and founded communal tribes which turned into the societies we live in today. In order to gossip, you have to share a ‘common enemy’ - this can be a person, group, philosophy etc. Think sports fans, political groups, religious groups etc. Having a common enemy is fundamental for uniting groups and can be seen all the way through time - it is described in Tribal Leadership as the "We are great, they are not" phase of tribe evolution.
Simple enough, your competitor should be you and your target customer’s common enemy. Right? Not quite. Have you ever met someone who talks trash about people all the time when they’re not in the room? It’s likely you made a mental note that a person is not to be trusted, even if you went along with them at the time. The brain says - ‘if they talk trash about other people, they’d probably do the same about me’.
So how do you create a common enemy with your customer without talking trash, and potentially even being nice, about your competitor? Enter competitive bucketing.
Competitive bucketing seeks to find a common understanding with your customer and then group your competitors into buck are not aligned with that.
Here is an example from my days at Amplitude:
Amplitude is a Product Intelligence solution which provides all of the analytical tools a product team needs to operate at the highest level.
In the analytics world, Google Analytics is the 500lb gorilla. Free for anyone and a premium version for the Enterprise. Backed up by the household brand name of Google. Ubiquitously used around the world.
So how did we consistently convince companies using Google Analytics to try out Amplitude or win in head to head deals vs Google Analytics in an assessment?
Here’s the talk track when someone mentions Google Analytics -
“Google Analytics is a fantastic product for marketing teams, lots of our best customers use it for tracking ad performance or website traffic. We have found the best Product teams like X, Y, and Z needed a solution built for product teams which allows them to quickly understand user retention, engagement, and the growth of the most important user cohorts within their product. That’s why they use Amplitude for their product and Google Analytics is considered a complementary marketing tool.”
No good Product team can disagree with that. Why should they be stuck using something which isn’t built for them and their needs?
Bucket = Marketing analytics tools
Common enemy = Product teams having to make-do with analytics solutions built for Marketing
Google Analytics = Solution built for Marketing
We didn’t say anything bad about Google Analytics, we said they were fantastic for what they were built for, they’re just not the right fit for what the customer needs.
Create similar buckets for all of your competitors and get really comfortable with the talk track that you will use when they are mentioned.
4. Evolve don’t replace
Your product is going to be replacing an existing product or process that other people have invested time to scope, implement and use. Lots of people were likely involved in that decision - including senior leadership.
The sunken cost fallacy is a real thing. You will encounter defenders of the status quo with arguments like ‘We spent X$ implementing this already’, ‘It took us 6 months to get set up on Incumbent Product’ etc. So how do you overcome this objection? Your solution has to be considered a natural evolution of their strategy, not a zero-sum replacement or change of course.
What this means in practice is that rather than framing their existing solution as a bad decision, acknowledge the good work which went into that project, how it likely made a ton of sense at the time and how your product is the logical evolution of that motivation.
In 2002 Seibel had 45% of CRM market share, 3 years after Salesforce was founded. So how did Salesforce turn that into <6% by 2018?
Salesforce's anti-software campaign
Salesforce has built a >$180BN market cap company with their Customer Relationship Management focussed products. Salesforce is so dominant in the space you could be forgiven for thinking they created it. But Siebel Systems, Oracle, and SAP had been offering CRM products for over a decade before Salesforce.
So how did Salesforce upend the market? They focussed on evolving the standard the products were held to.
Siebel customers bought a CRM because they wanted:
A centralised database for sales and customer data.
Ability to automate manual sales processes.
Better predictability and forecasting of future sales.
Salesforce customers bought their product for all the same reasons! So how did Salesforce evolve the market? Salesforce was built in the cloud, which meant no longer needing to buy, download, and update software locally. They focussed on the move to the Cloud as a necessary evolution of how software is delivered and less on replacing Siebel as a CRM.
Salesforce championed the reasons people bought and used legacy CRMs, after all, Marc Benioff worked at Oracle for more than a decade, and strongly focussed on how cloud delivery was the natural progression needed in the market (which Salesforce was uniquely positioned to provide). Instead of customers seeing the work they had done to implement Oracle or Siebel as sunken costs, it looked like necessary progress to take this next step of progress towards an ideal state.
In summary
We've seen how companies have employed these simple tactics in SaaS to fundamentally shift the mindset of their customers and the market they are operating in.
Take a shot at the following:
Define your competitive messaging
Own the narrative early and set traps for your competition
Don't bash the competition, bucket them
Evolve your customer stack don’t replace it
Let me know how you get on or if you have any questions!
Comments