the overlooked importance of market share
DESCRIPTION
“In emerging market segments, the war has always been won by companies that have attacked the market with a compelling visual brand and effective message framework.” — The Overlooked Importance of Market Share Download “The Overlooked Importance of Market Share” and learn why the art of gaining and holding market share demands that you understand and invest in four strategies: — Use a polarizing visual brand and message to inspire the radical buyer — Be realistic about market share — Understand the radical buyer — Find your niche, attract your high-value radical buyer From The Starr Conspiracy, this paper succinctly explains why, in emerging market segments, the war has always been won by companies that have attacked the market with a compelling visual brand and effective message framework.TRANSCRIPT
The Overlooked Importance
of Market Share
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
2
A sustainable marketing strategy absolutely demands a compelling visual brand and an effective message framework. But most enterprise software and services companies fail to produce either. Why? They’re afraid to take risks. Worse, they’re afraid to be afraid.
The sad result is that the fear of alienating someone drives many
of these companies to disregard bold and wonderful brands and
messages. At The Starr Conspiracy, we believe that if you’re not
alienating someone, you’re doing something wrong. But we’ll get to
that later in this paper.
Compelling visual brands are important because they help build
awareness for your business. Awareness is not a fuzzy concept that
is difficult to measure (like love is, for example). Brand awareness is
the extent to which your brand is recognized by potential customers
and drives market share. And market share, over all else, is the most
important goal for any company in any emerging or young market
segment. Period.
This paper from The Starr Conspiracy makes the case not only for
why your brand should alienate most of the market (or, conversely,
unequivocally appeal to a small but high-value segment of the
market) but also why it should scare you at least a little. Oh, and why
most companies get it wrong and how you can get it right.
The Icebreaker: Why We’re havIng ThIs ParTy, The kool-aId We’re servIng
“If you’re not alienating someone, you’re doing something wrong.” – Bret Starr, Founder, PreSident and Partner, the Starr ConSPiraCy
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
3
The Starr Conspiracy works with a similar theory. It’s based on
the Hierarchy of Effects, and we call it the active Path.
The Active Path is made up of four quadrants:
» Suspects — All of the people in the universe you could possibly
do business with. They don’t know you or receive regular
communications from you.
» Prospects — Suspects who have agreed to receive regular
communications from you. This is often referred to as your
“house list.”
» Opportunities — Suspects who have moved into your company’s
sales process. While this quadrant looks different from one
company to the other, the opportunity zone typically refers
to prospects who have agreed to a face-to-face meeting or
presentation.
» Customers — Opportunities who have purchased your product
or service.
No matter what you call it — Hierarchy of Effects, Purchase
Funnel, The Active Path — two things are undeniable:
1. Your sales infrastructure follows some version of this
winnowing process
2. The core foundation of this process is brand awareness
1. brand aWareness: Use PolarIzIng vIsUal brands and Messages To InsPIre The radIcal bUyerBrand awareness is part of an established marketing theory in the Hierarchy of Effects.
The Hierarchy of Effects is a simple marketing theory model that has been around since the 1930s. You may also know it as the Purchase Funnel. As you can imagine, it’s called a funnel or a hierarchy because you lose potential customers as they move through the process; you have a boatload more potential customers at the Awareness level than you’ll end up with at the Purchase stage.
MarkeTIng Theory’s hIerarchy of effecTs
+ KNOWLEDGE+ aWarENEss
+ PrEFErENCE+ LIKING
+ PUrCHasE+ CONVICTION
ThInkfeeldo
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
4 So, let’s move on to that brand awareness thing. Your
company’s brand awareness can be quantified by measuring brand
recognition and recall. Here’s why and how:
» Brand recognition measures the ability of a relevant and
statistically significant group to recognize your brand when they
see it (especially your name and logo).
You get bonus points if the group can also make accurate
functional associations with your brand after they recognize
it. For example, it’d be nice if 75 percent of the participants in
an online survey recognized your company name when they
saw it. It’d be killer if 91 percent associated your name with a
specific product or service that you actually deliver.
» Brand recall, on the other hand, measures the ability of a
relevant and statistically significant group to remember your
name with minimal cues. Imagine a survey question such as,
“Name all the companies you can think of that provide employee
performance management software.” If you score well on recall,
your brand has arrived.
Effective message frameworks are extremely important in
helping you develop your brand and drive brand awareness. An
effective message framework clearly positions your solution in
the mind of the prospect and starkly differentiates you from your
competitions’ solutions and approaches. Again, most companies
get this wrong. That’s because most of us operate under the
assumption that our message should appeal to everyone, instead
of a subgroup of buyers with deeply held and passionate beliefs.
Messages that seek to appeal to everyone don’t inspire
anyone. And if your company can’t inspire a buyer, you’ll continue
to lose out to better brands.
2. be realIsTIc aboUT MarkeT share Take a moment to get real about your aspirations for
market share.
» Do you know what your current market share is?
» Have you ever thought about your market share goal?
You don’t necessarily need to know the answer to either of
those questions to build a successful brand or message. But you
do need to understand basic market share philosophy to give
yourself permission to be bold with your brand and message.
In most enterprise-solution market segments, 30 percent of
market share would be considered total market dominance. That’s
right — 30 percent. Not 100 percent. Not 80 percent. Not even
50 percent. And to tell you the truth, very few companies are able
to achieve 30 percent of market share in any particular segment,
except for the most mature companies in the most mature
segments.
The takeaway is this: If your aspiration is to be the market
leader, you only need to appeal to one-third of the total available
market. One-third.
To get one in three potential customers in your pocket,
you’d be much better served by forging a passionate bond with
a smaller segment of the market than by trying to create a
lukewarm relationship with most of the market.
This brings us back to the huge value of having a polarizing
brand and message: It’s a proven way to build brand awareness,
clearly differentiate yourself in the mind of your prospect and
attract a smaller — but more loyal and far more passionate —
segment of the market. Don’t worry. You’ll still hit your most
aspirational business goals.
Let’s use an example we’re all familiar with in the space. In late
2011, SuccessFactors, the market-leading provider of performance
management solutions, was purchased by SAP for $3.4 billion.
That’s a lot of coin. Would you be satisfied with that outcome for
your business? Even without knowing more than what we just
mentioned, $3.4 billion sounds like a very successful payday for
SuccessFactors.
30% market share iS ConSidered total market dominanCe in moSt enterPriSe-Solution market SegmentS.
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
5
“i’ve worked with enough of these Silicon Valley frauds. they care more about investors than customers. i want a solid midwest vendor that still cares about great service!”
The bUyer Who’s radIcal aboUT
cUlTUre:
However, here are a few interesting facts about SuccessFactors
and the acquisition that might surprise you and be even more
meaningful than the purchase price:
» At the time of the acquisition, the 2011 total worldwide market
for performance management was estimated to be $924
million.
» SuccessFactors was second in market share in the space, with
only 13.7 percent of the market (Oracle/PeopleSoft was No. 1,
with 17.7 percent).
» SAP boasted the third-largest slice of the pie, with
11.8 percent.
» If the combined SuccessFactors/SAP entity can hold on to
its merged market share, it will have captured 25.5 percent
of the total worldwide talent management market. The next
closest competitor will be Oracle/PeopleSoft, the previous top
dog, now 7.8 points behind the merged SuccessFactors/SAP
market share.
SuccessFactors’ aggressive and polarizing approach to brand
and message helped the company clearly differentiate itself in a
fragmented market segment that was, and continues to be, largely
devoid of inspiring differentiation. They succeeded because they
took clear action to appeal to a defined segment of the total
available market rather than the entire market.
For example, SuccessFactors took risks with its brand and
message by consistently pursuing C-level executives rather than
HR professionals (a fact that is obvious in the company’s tagline,
“business execution software”). Yes, SuccessFactors certainly
alienated many HR professionals and lost deals when it went rogue
and targeted a smaller audience.
But SuccessFactors focused its marketing message and dollars
on a higher-value target audience, a radical buyer. For what were
then considered radical buyers of HR talent management systems
— prospects who really cared about the connection between
performance management and business performance, and had the
final say in the purchase decision — SuccessFactors was perceived
as the only business-savvy vendor in the industry. The strategy
paid off.
3. UndersTand The radIcal bUyerEvery buyer is a radical buyer in some way. But not every buyer is radical in the same way.
Contrary to popular belief, it is not our job as marketers to
identify and appeal to every flavor of radicalism in your market
segment. It’s only our job to determine which radical buyer we
have the best chance of appealing to. Then we ask if that group
is large enough to meet your immediate and long-term market-
share goals. If it is, let’s consolidate your base (and maybe even
pick up a few independents along the way).
Stop pretending to be someone you’re not. Find your ilk and
let your freak flag fly. Your marketing will be more effective and
efficient. Your sales cycles will be shorter. Your client retention
rate will be higher.
“it’s completely ridiculous that my analytics system is not as easy to use as an iPad!”
The bUyer Who’s radIcal aboUT
UsabIlITy:“in the modern economy, software should be cheap, if not free!”
The bUyer Who’s radIcal aboUT
PrIce:
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
6
Before you send us an angry email, understand that many of
these are false dichotomies. That’s not the point. The point is to
get you thinking about the true personality of your company.
It’s time to be very honest; birds of a feather flock together. If you
feel that most of your company doesn’t share a dominant set of
attitudes, behaviors and beliefs … maybe you are the outlier. It’s
kind of like the old adage, “If you didn’t have a weird roommate in
college, you were the weird roommate.”
It’s critical that you capture the true personality attributes of
your company. They are fundamental to creating an honest brand
and message. It may seem trite, but people buy from people they
like. And most people like people who are similar to them. If you’re
offended by any of these statements, let’s hope you’re not in
marketing, because this is the substance of our work.
What are the most important cultural issues
relevant to your solution?
Life is bigger than the typical enterprise solution’s value
proposition statement. Sure, your customer relationship
management (CRM) system probably increases your company’s Net
Lifetime Value (NLTV) by 10 percent. But really, that’s the sort of
message someone forgets as soon as they leave the office.
The point? NLTV is an important work issue but a totally
unimportant cultural issue. The New York Times is not filled with
articles about NLTV. NLTV is not casually referenced in movies.
You’ve never heard NLTV discussed on the radio. NLTV is boring;
it’s a work thing. No one talks to their spouse or cat about NLTV.
Those three observations are:
1. What are the dominant attitudes, behaviors and beliefs
of your company?
2. What are the most important cultural issues relevant
to your solution?
3. How can your solution change the world?
If you take the time to answer these three questions, and do it
without pulling any punches, you are well on your way to creating
a polarizing brand and message. Let’s take a look at each one.
What are the dominant attitudes, behaviors and
beliefs of your company?
The key word in here is “dominant.” Outliers and exceptions are
not only irrelevant, they are damaging. We’ll deal with why that
is in a moment. For now, think about how you would describe your
company culture. Here are a few dichotomies to consider:
» Conservative or Liberal
» Young or Mature
» Analytical or Intuitive
» Professional or Unconventional
» Pragmatic or Visionary
» Religious or Secular
» Diverse or Homogenous
4. fInd yoUr nIche, aTTracT yoUr hIgh-valUe radIcal bUyerWithout going into the intricacies of market research, we’re going to lay out an over-simplified process for finding your niche. It really comes down to three observations, each of which is deeply grounded in attitudes, behaviors and beliefs. (For you marketing wonks out there, this is a psychographic approach to discovering your brand personality.)
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
7
You know something that’s both an important cultural
issue and relevant to CRM? This is: Customer service has
totally deteriorated in the United States. No one cares about
delivering great service anymore. After screaming “agent!” at our
smartphones five times before reaching a live person (or finally
hanging up in surrender), we are almost always disappointed by
the treatment we receive at the hands of one more disenchanted
customer service rep who is working for yet another bankrupt
company. Let’s take this concept even further. It’s not just about
service; it’s about loyalty … and gaining or losing it. If customers
don’t feel that the companies they choose to do business with
are loyal to them (if companies fail to at least act like a decent
neighbor), why should customers be loyal to them?
Now, some people will tell you that business has entered
the era of customer self-service. They say that great customer
service is no longer practical, profitable or even relevant. Or they
spin techno-social theses about great customer service now being
a function of how good a company’s software systems are and
about the ease of use of mobile apps. These are folks who do all
their shopping online, have an app for everything and generally
accept the fact that service delivery is an impersonal act, so the
customers shouldn’t expect too much. These people argue that it’s
fine if the product ships late, is the wrong color or doesn’t quite
match the online description — as long as the item does what it is
supposed to do.
But others believe the continual degradation of customer
service in America is a symptom of something more
substantial and even sinister. Our country is going to hell in a
handbasket. China is going to take over the world. People need to
buy guns and bar their doors. And it’s all because America has lost
its passion for boundless, caring, effective customer service.
See the difference? NLTV is a boring business concept. It has
its place. But that place is not in your brand or your message. The
decay of customer service is a polarizing issue that causes
people to project their own biases on a complex chain of
circumstances.
If you want to create a brand and message that people notice
and react to, stop reading business books and start reading the
newspaper (especially the op-ed section). Tying your brand to an
important cultural issue will get people thinking about your brand
outside of the boundaries of their workday … and may even trigger
an epiphany that what they do for a living really matters in a way
they had not considered before.
How can your solution change the world?
Ask yourself this question: “How can our solution change the
world?”
Got no answer? You may know how your solution can change a
business, but not the world. Keep digging. Keep peeling away the
layers of answer after answer until you unearth your true passion
(or discover that you don’t have one).
What follows is a story from our own experience, told by Bret
Starr, co-founder, president and partner of The Starr Conspiracy.
It illustrates how crucial it is to go deep into this stuff, to be
able to state the reason your company exists. It also shows the
importance of finding alignment among the answers when you ask
what identifies your niche in your market — if you want to create a
polarizing brand and message.
“Sure your company’s net lifetime value is important. So is having a firm grasp
of Reichheld’s cost-and-revenue elements as they relate to your NLTV. But
does any of that stir the hearts of the people you’re selling to or who are
selling for you? Does it matter at the core of who they are or what they care
about? Is any of it culturally relevant to them … or to you?”
– Bret Starr, Co-Founder, PreSident and Partner, the Starr ConSPiraCy
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
8
The CEO was coming off a bad year. Sales were down and customer retention was slipping.
All year they had been losing bake-offs to the same upstart competitor. The executive
team came to the anecdotal conclusion that they were losing because the American
workforce had fundamentally changed, and that their combined brand and
message was no longer appealing. To be more specific, they believed that the
world was now ruled by Generation X and Y employees, and their company
was simply not hip enough to win deals anymore. They asked The Starr
Conspiracy to sex up their brand and message.
We met with them on a cold morning in December. The
meeting took place at an off-site conference center; the
organizer was afraid we wouldn’t dress nice enough for
his offices. About 20 of the company’s top executives
were there. Guess what. They were all rich old white guys
(ROWGs), all wearing suits (for an informal, off-site retreat).
And they were really nice suits, too.
Before we started the meeting, I milled around the room
eavesdropping on as many conversations as I could. It was a presidential
election year, so many of the conversations were about politics. It didn’t take
long to realize we were in a room full of hard-core conservatives. Then we all sat
down to get to the real meeting.
We always start big meetings by “going around the room,” as they say. That’s what we
did here. Each person introduced himself, described his role in the company and talked about
what he hoped to achieve that day.
hoW To save aMerIcaFrom #shitbretsays:
I got a call once from
the CEO of a medium-size
software company (about
$300 million in annual
revenue). This company
provides software and
services to manage corporate
incentive programs. These
are the guys you hire when
you want a sustainable
process for recognizing
and rewarding employees.
Think “membership rewards”
but for workers instead of
customers.
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
9Everyone said the same things: » The market has changed because Gen X and Gen Y now
comprise most of the U.S. workforce.
» Alphabet generation workers aren’t like baby boomers —
they don’t stick around as long and really have to be coaxed
into delivering their best effort.
» It’s more about what the company can do for them than
what they can do for the company.
» Our incentive solutions are perceived as old-school compared
with the new management philosophies.
» We keep trying to make ourselves relevant to the new generation
of managers, but we haven’t quite nailed the message.
» We need to let companies know that we understand this
generational shift that’s occurring and that our incentive
solution is just as good at increasing performance for Gen Y
as it is for the old guard.
Every one of the conservative ROWGs in the room talked about
changing the company’s image to become more relevant, but it
was incredibly obvious their heart wasn’t in it. They were in the
room talking about things they didn’t believe in and considering
changes they didn’t really want to make.
So I took the meeting in a different direction. I asked them
whom they were going to vote for.
Folks were stunned that I had asked such an impolite question.
There was a long and uncomfortable silence. Then the vice
president of sales said he was voting Republican. I then asked for
a show of hands of everyone who was going to vote Republican.
Every hand got raised. Everyone was a Republican.
So I turned the session into a town hall meeting. I asked
why they identify with the Republican Party. I’ll summarize
the consensus here by saying they all viewed themselves as
conservatives. To them, conservatism was a way of life that
harkened back to better, simpler days. After more questioning, it
became clear that the entire executive and senior management
levels of the company shared similar attitudes, behaviors and
beliefs about America, conservatism and character. And not only
was the company’s executive culture incredibly aligned around
these attitudes, behaviors and beliefs, it turned out that the
employees apparently were, too; no one apparently ever left the
company. It had practically zero voluntary turnover.
And this was a company that wanted to change its image to
sync up with newfangled management trends and generational
shifts in social behavior? Really?
This was — and still is — a conservative company that values
loyalty. They don’t now and didn’t then believe it’s OK for kids
to jump from job to job. On the contrary, they believe in the old
declaration that a kid could come out of college, start a new job
and work at that company the rest of his life (as many of them at
this company had done, in fact). Further, they believed that all of
the pandering to this flaky new alphabet-generation workforce was
hurting America.
The belief system at the heart of that company is what this
client needed to pitch to the market. Based on the three-pronged
attack to identifying your market niche:
» Attitudes, Behaviors and Beliefs: Values-based conservatism
» Relevant Cultural Issue: Baby boomers replaced by the
alphabet generation
» How Their Solution Can Change the World: Rebuilding loyalty
between companies and employees
It was all about “loyalty” and “traditional American business
values, like hard work, integrity and service.” But mostly, it was
about connecting with a group of radical buyers who believe that
the new generation of workers is getting away with murder.
This was a polarizing brand. People either loved it or hated
it. But the people who loved it bought it. And when they bought
it, they were happy to find themselves working with a group of
people who shared their own values. And it turned out that plenty
of people out there believe that companies should be loyal to
employees and employees should be loyal to companies. For these
people, it’s not about what one can do for the other; it’s about
what they can achieve together.
Do I even need to mention that the company increased sales
and that customer satisfaction went through the roof? Of course
they did. For once, people got what they were promised. And that,
dear reader, is how we can save America … from itself.
For this company, we created a brand and message that would have made ronald reagan weep tears oF joy.
the starr conspiracy Th
e O
ve
rlO
Ok
ed
Imp
Or
Tan
ce
Of
ma
rk
eT
Sh
ar
e
10
conclUsIonIn emerging market segments, the war has always been won by companies that have attacked the market with a compelling visual brand and effective message framework. By definition, that means their brand and message shook things up, keenly differentiated them from their competitors, and clearly and undeniably announced the buyer they were targeting.
The Starr Conspiracy knows that the battle to get early control of market share, in any emerging-market war, can be distilled to
three truths:
1. Marketing is more important than product or customer support.
2. Brand recognition is more important than lead generation.
3. Industry media sources don’t provide sufficient access to market.
To put those three truths into practice, your brand should alienate most of the market (or, conversely, unequivocally appeal to a
small but high-value segment of the market) and scare you at least a little. The proof is there, yet most companies get it wrong. In a
nutshell, you can get it right, through:
» Brand awareness — using polarizing visual brands and messages to inspire the radical buyer
» Being realistic about market share
» Understanding the radical buyer
» Finding your niche and attracting your high-value radical buyer
It’s a proven method for building brand awareness, clearly differentiating yourself and attracting a smaller — but more loyal, far
more passionate and more valuable — segment of the market (while also achieving your most aspirational business goals).
About The Starr ConspiracyYou shouldn’t have to pay an agency for the privilege of learning about your
industry. The Starr Conspiracy already knows your market segment, who you
are and where you fit in. We are a strategic marketing and advertising agency
devoted exclusively to enterprise software and services. When you partner
with us, it’s to build market share, multiply brand awareness and drive sales
leads – not to bone up on the basics. We’ve been “out there” for more than a
decade so that you can hit the ground running. Founded in 1999 and located
in Fort Worth, The Starr Conspiracy has won eight best places to work awards,
countless creative awards and maintains a net promoter score of 90% (higher
than Apple). On the web at www.thestarrconspiracy.com.
conTacT Us Today: [email protected] or 817-204-0400.