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This week on How To Win: I'm taking the opportunity to dive deeper into something we've touched on in previous episodes, but never given the complete attention it deserves: how to get inside the limited consideration set of your ideal customers. I'll share how to create mental availability beyond your product, how to position yourself in the market, and unpack the B2B message layers framework. You'll also hear input from Drift's David Cancel, Andreessen Horowitz's Andrew Chen, and author of 'Obviously Awesome', April Dunford.
Hear how successful B2B SaaS companies and agencies compete - and win - in highly saturated categories. No fluff. No filler. Just strategies and tactics from founders, executives, and marketers. Learn about building moats, growing audiences, scaling businesses, and differentiating from the competition. New guests every week. Hosted by Peep Laja, founder at Wynter, Speero, CXL.
Getting inside your ideal customer's limited consideration set with Peep Laja
Peep Laja:
I'm Peep Laja. I don't do fluff, I don't do filler, I don't do emojis. What I do is study winners in B2B SaaS because I want to know, how much is strategy, how much is luck, and how do they win? This week, a topic of utmost importance in B2B marketing, how to get inside the very limited consideration set of your ideal customers. I'll share how to create mental availability beyond your product. How to position yourself in the market, and unpack the B2B message layers framework. Let's get into it.
There have never been as many brands as there are today. You read, Differentiate Or Die, written, I think, in 1981. It also said, "Oh, the people are bombasted with messages, and it's crazy out there." But today it's 1,000 times crazier. I'm sure you've all seen those MarTech slides, and how it used to be a few hundred tools just 10 years ago, and now there are more than 9,000 MarTech tools alone. Of course there are more than 100,000 B2B SaaS companies out there. Even crazier is that the stability of market positions is astonishing. Whoever manages to get biggest the fastest in a category, most likely stays there for a really long, long, long time, if not forever. You look at the Ketchup category, like Heinz was making billions already in the seventies, and is still the category king today.
If we look at tech, like Salesforce and CRM, of course Salesforce, the creator of the web based Cloud CRM category, was a leader essentially since the get go, is still the leader. If we look at the top five in this space, number one, two, three, four, five, they have not changed really over the last 10 years. Maybe the positions have moved up and down a little bit, but the top five are still the top five. If you go to G2 and look at how many Cloud CRMs are there, I mean there's more than 500, and the top five have not changed. If we study these categories, the takeaways that the category kings really cannot be beat, it rarely ever happens. When you talk about the Nokia story-
Speaker 2:
In other technology news, Nokia has announced a profit warning, as well as the loss of 10,000 jobs.
Peep Laja:
Talk about Kodak falling.
Speaker 3:
Now it seems the shutters are coming down for Eastman Kodak, which is filed for bankruptcy protection in the US.
Peep Laja:
But these are just juicy, beautiful examples, and of course, technological disruption can kick the giant off their current position. But how often does that happen? It rarely happens. Another interesting thing about the categories is that marketing seems to make very little difference to market dynamics. Yes, excess share voice can increase your market share, but it takes a long, long, long time. A lot of case studies there about the Japanese beer market, how massive ad campaigns have really not influenced market dynamics significantly. But what has is category creation, creating new subcategories, new types of beer like the super dry category in the Japanese beer market, and so on and so forth. Here's David Aaker, explaining this in more detail.
David Aaker:
What really is driving market dynamics is the emerging of new categories and subcategories, making some people less relevant and some people more relevant. Another observation is that it is really astounding how much of marketing expenditures have no impact. No impact, none. Most of those are probably wasted. Really it's an extraordinary thing. I look at category after category to support that assertion. I studied the beer market in Japan pretty extensively, and if you look at it, over 40, actually over 50 years, there's been no change in market share trajectory in 50 years, except three times when new subcategories were established, and a fourth time when a subcategory was repositioned.
Peep Laja:
So, it's like category creation and subcategory creation moves the market and changes marketplace dynamics more than marketing does. A key reason why category kings remain category kings is because of the double jeopardy law, which basically says that the larger the market share, the more users they have, and the more loyalty they have. Smaller brands have fewer users who are also less loyal. So, really, if you're a smaller brand trying to take on the giant, most likely they will just destroy you, because they have better retention, they have more money, more users, and you have less users and the churn is higher. The odds are against you. Another side effect of category kings is like, how do people buy? They buy based on mental availabilities. Who comes to mind in buying situations? Yes, physical availability also matters, especially in consumer products. If you're in supermarket, then your favorite brand is not available, you can't buy it.
But online, online, every brand is a few clicks away. So, mental availability is most of it. When people are asked for recommendations, "Hey, which CRM should I buy?" If you post this question on LinkedIn today, without fail, most of the people would say, "Oh, HubSpot. Salesforce." Brands that are the category kings, the top three, the top five. You would not get a recommendation by the CRM number 387. It would only happen if you have a very specific requirement that makes that a viable option, or it's recommended by somebody who works there. So, the category top three get the most mental availability. People recommend tools they have never used but have heard of. That's the reason they recommend it. I get a lot of word of mouth for Wynter and half the people who recommend Wynter have never used it. I'm very grateful for all endorsements and word of mouth, it just proves the point of how it's about mental availability, not personal experience.
So, your job as a marketer is to get inside that very limited consideration set, what CRMs are in their mind, or which productivity tools or HR tech or whatever it is, who is in your mind. Somebody asked me, "Hey, what's a payroll software?" Well, Gusto and ADP and Rippling, that's my top three in my head. It's my consideration set. So, your job is to get in there, into the top three in somebody's head, because the consideration sets are very small. It's only three to five tools. So, the old rational B2B buyer is a myth, because if somebody's shopping for a payroll software or a CRM or whatever, they're not going to G2 and then look at all the 500 tools and then create a big ass feature matrix and just compare every feature, and run extensive usability studies and whatnot. It never happens. It's like, okay, the top three of these guys and maybe they'll invite one interesting option and that's about it.
If they get a warm recommendation from a friend, they might only look into one like, "Oh, my friend says this is really good. I'll go with that." So, it's very, very hard as a marketer, especially if you're in a saturated, mature category with tens if not hundreds of direct competitors. If you simplify, there are three ways to get inside that consideration set and win. Number one is innovation. Innovation, which means that your product is actually objectively better than the alternative product. People want better products, so if you can provide an objectively better product, so it's not just like your opinion, man, you're going to win. The odds are that you're going to win. Now, think about objectively better products. What's out there that you think is actually objectively better than the alternative? I can think of Google Search, is better than Bing, it's better than DuckDuckGo. So, Google search is an objectively better product, hence most people use it. They're also the category king et cetera.
So, a search engine that can come and topple Google is one that builds an objectively better one, that finds better stuff. It's going to be hard to do. Most are huge. If you think back at the dating app world, when Tinder launched, this was already big, mature, very competitive category. They came with that innovative swiping UX. They brought innovation, they got eyeballs, they got market share, became very big. Even the companies that exactly copied them also became big. So, innovation brought them market share and they won through innovation. Tesla was a category of one, just the only one making electric cars, creating a new category for electric cars. If you want an electric car, there was no one else to choose, they were category king. Now, today, most every car maker is either making or about to make electric cars. So, my prediction is that three to five years from now, Tesla's innovation advantage will cease to exist, and they also will need to compete on brand just like every other car maker out there. Unless they can keep up their innovation effort.
So, every single innovation is a transient advantage. You ship something that nobody else is doing, they going to copy you, eventually. Might take a year, might take three years, but they're going to get there. So, the only way to keep winning on innovation is to be faster, to be two steps ahead of the competition. Very few companies are able to pull that off. The second way to grow and get inside consideration sets is excess share of voice. There's ample data out there how companies have grown their market share by spending more on advertising than their competitors, relative to their market share. So, if your market share is 10%, but the amount of ad spend you have is 20% of the market share, you will grow. Case study by case study. You can do that and it works. Very few companies have that much money. This requires a lot of VC money. So, monday.com is an example that comes to mind. When they entered a very competitive productivity, project management tool market in one of the most competitive categories of all time. They advertised like their life depended on it.
Speaker 5:
Before we were using monday.com, our team was drowning in work.
Speaker 6:
Seriously, if you manage a team, you need to use monday.com.
Speaker 7:
I wish I'd known about monday.com years ago.
Speaker 8:
We can't manage work like this. That's why I use monday.com.
Peep Laja:
If you look at their financial report, you would see that they spent more on advertising than the revenues, much more, sometimes even double. That's why VC monies is a nice thing to have if you can do that. So, Monday spent that money, seemingly bought up the whole YouTube ad inventory, and now it's firmly within our consideration sets. If you think about a project management tool, so there's ClickUp, Asana, monday.com and who else is in there? So, think of advertising as insurance. You're advertising just to stay top of mind, so when the time comes that they need you, this might be six months from now, might be 12 months from now, then you're top of mind. You're building mental availability, and that's why the 60/40 brand activation ad split advocated by Les Binet and friends, that's why it works. It's to build mental availability.
The third way to get into the consideration set is to wind on things beyond the product. So, you're not more innovative, although you cannot be objectively worse. You need to be as good as everybody else. Then you add your own story, your positioning, your messaging, your content marketing plays, all on top of that. So, you're at least as good as everybody else. Maybe you're having a couple of fringe features that are more nifty than other people's. This of course comes from your ICP selection, who you're after, and what do they care a lot about? Positioning. Based on that you can do actual product work that might make a difference and you need a hell of a story on top of it. In the productivity project management tools space, this would be like Basecamp. Basecamp taking on Asana and all these other tools is of course a much, much smaller company. I think it's like around 80 people, but their founders are great storytellers, great at content marketing, they have a strong point of view.
I think their brand is not as shiny as it used to be, after a certain scandal that went down maybe a year or two ago. But it's still there, and they're very vocal about the point of view, and it resonates with certain people. Would you now choose Basecamp because of it? What's monday.com's point of view? Actually I have no idea. Maybe they do have one. What kind of a play you play on the market, in terms of your story, and it also depends on the type of category you're in, or what kind of marketing you do depends on the category. Or specifically on the maturity level of the category. Because if you're in a category with a lot of competition, then you want to lead and sell your differentiated value. You lead with it how you're different. Because if you are yet another project management tool, just saying that, "Hey, do things on time and it's easy," never going to go anywhere. I'm always going to go with ClickUp or whoever the market leader is, because it's a brand I know and they do everything also.
It's like there's safety in the big brand. So, if you're in that category, you lead with your differentiated value. If you're in a category with nobody, like I am with Wynter, in the category of message testing, I'm the only one. In fact the category is still forming. Most companies are in the non-consumption territory, so they're doing nothing. So, the marketing play here would be selling the category, creating the demand from scratch really. Creating mental availability beyond the product consists of three parts as I see it. Number one is that you need to stand out, you need to stand out in the marketplace so they would even realize that you exist. Your target customer being aware that you exist, it's the foundation of everything. But if you look like everyone else, there's no chance in hell they're going to find out about you. So, you need to keep in mind this thing called, The Law of Shitty Clickthroughs. A term coined by Andrew Chen. Here he is to explain more.
Andrew Chen:
Just to kind of summarize the idea. When we go back and look at online, just like banner ads, the very first banner ad that was on at the time, hotwired.com, had a 70% plus clickthrough rate, and now 20 years later, you look at the average clickthrough rate and it's 0.05%. It's very low. Anyone that's worked in the industry long enough, has seen this also happen with email. They've seen this happen with SMS, they've seen this happen with all sorts of things, and there's a bunch of reasons. It's like you have competition, you have the platforms themselves being like, "Hey, we need to clamp down on this."
There's literally just habituation from end users, where they're like, "Oh, it used to be fun to get an invite from my friend, but now I'm getting it all the time." The reason why I call it The Law of Shitty Clickthroughs is that it is something that has been with us for a really long time, and will continue to be with us for a really long time. What that means is, for all of us that are in marketing and growth, is that we have to continually find what the fresh powder is, because inevitably whatever worked in the past will no longer work. But that means everyone also has to do it. But then you have to move beyond that.
Peep Laja:
Today, if you get over 1% conversion rate, you're doing phenomenally, because the average is way below 1%. That's a Law of Shitty Clickthroughs in action. So, to stand out, you need to do pattern interrupt, you need to do shit that others are not doing, so it's different. It stands out, it gets noticed. Hence you need marketing R&D, you need to, yes, when you do your marketing, you do the usual stuff also, you do your PPC campaigns and your SEO and you produce content, but then you also do this attempt at legendary stuff. You do the crazy psychological stuff, shit that maybe will work, maybe it will burn gloriously, but at least you tried something new and different. So, you need marketing R&D, you need to try invent and create new marketing playbooks. How to get somebody's attention.
You need to try new channels, new format. Everybody's doing webinars and podcasts the way everybody else is doing them. Well, what if you could have a totally different format for this? Would this stand out? Would this be cool, and would the market like it? So, pattern interrupt. My point of view is that the marketing should be really split into exploit, so this is demand harvesting. There's certain demand for what we are offering. So, you do the SEO campaigns, PPC and Google Ad. But you do the proven stuff, the proven stuff that builds pipeline, and then you have the explorer side of marketing. Explore, where there's high uncertainty. So, you're searching for a breakthrough. It's a lot of experiments, it's build, measure, learn loops. It's bringing innovative ideas to the market. These can't be the same people. The exploit people, explore people, have to be separate talent, separate people, separate way of rewarding.
Because if you think about positioning where we want to be with our positioning in the market, so what we want to also avoid as a challenger brand, so if we're taking on a category leader or one of the top three, we don't want to overlap with them entirely. So, there's Apple and there's Samsung, they're both makers of smartphones, they overlap very little. Very few people sometimes buy an Apple phone, sometimes buying a Samsung Galaxy, very few people. But when LG entered the smartphone market a few years ago, they decided to go for the exact same target market as Samsung. High end Android phones, and by taking Samsung on directly, Samsung just kicked their ass, eviscerated them. So, they made the mistake of taking the giant on head-on instead of nibbling at their least profitable customers, which is typically the much smarter way to go if you go after the giants. This is how Hyundai and Kia became what they are today, because when they launched in the nineties, they went after Toyotas and Hondas least profitable customer segments.
The subcompact cars and low margin, and Toyota was, "You can have those customers." They didn't fight them, and now Kia and Hyundai, their market share has been just steadily growing over the years. Now they're making all kinds of cars, not just cheap subcompact cars. Now, if I would be a CRM, there's HubSpot, there's Salesforce, there's some overlap between the two. If I were a new CRM startup, I would either go for a total different customer segment, or I would go for HubSpot and Salesforce's least profitable customer segment, to start, and have some sort of an objective, reason to switch over. So, have some innovation for that customer segment and also tell a better story. Telling a better story in an existing market, my favorite example is Drift. Because when they launched with their chat bots and live chat, I mean live chat had been around for 20 years, but they never talked about the product being in that category. They talked about conversational marketing, and things like that. So, calling it something different, because languaging, languaging matters. Here's David to explain more.
David:
When we created conversational marketing, the concepts and ideas were ones that probably have been kicked around for a little while. But the reason that I knew that we could create a category, was that we were looking at human changes in behavior around messaging, texting and chat, and Slack and Discord and all these things that we use today. We were looking at the adoption rates, and we were looking at the adoption rates globally. Again, not of our software, just of messaging as a category. We saw, wow. We had gone past the tipping point because we had crossed a point where now, no matter your age range or your global location, people were choosing messaging as their primary communication method over phone calls, and emails, and other traditional forms. So, then the timing was perfect. But all those things have to line up perfectly, and in terms of starting companies, you usually can't wait around to get timing just perfect, or spend tons of money just sitting there hoping it's right.
Peep Laja:
If you think about every subcategory, or if you think about consideration sets in people's heads, those are all tied to really a job to be done. So, if you want to get inside a consideration set, we need to invent a new job to be done. Because if you think about, okay. Consideration sets, job to be done boxes, in our head, this is all mental constructs. So, Hotjar is heat maps for small businesses. That's the position, that's the job to be done. If I'm like, heat maps for the enterprise, I'm thinking FullStory, Contentsquare, total different category of tools, very specific positioning. What is positioning? Here's April Dunford, the author of, Obviously Awesome, explaining it.
April Dunford:
I might say, "Hey, I'm interested in live chat," or, "I'm interested in account based marketing." I would narrow it down to social and relationships. Then I would say, "Hey, I'm looking for a live chat solution. Let's just look in the live chat box." This is good. I've now narrowed it down from 7,000 solutions to, I don't know, a couple of dozen there. So, that's great. But that's not all that market categories do. So, it helps us narrow the choices down, but when we declare that our product exists in a certain market category, it actually triggers a bunch of really powerful assumptions, that helps tell customers what it is that you are all about.
Peep Laja:
So, prerequisites for crisp positioning, to win in positioning are, one, you're very clear what category of tool it is, and if somebody lands on your website or comes across your marketing, they need to know, what is it? Second, it needs to be clear who this is for, who's the ICP. Third, use cases, what problems do you solve? What are you for? So, those are the ingredients for crisp positioning. If you look at even B companies today, like Klaviyo, Klaviyo entered email marketing category when it was already big, Mailchimp was already a giant. Klaviyo said, "Oh, we're email marketing for eCommerce or marketing automation for eCommerce," and today when you go to the website they say they're an eCommerce marketing automation platform. They start with the category, still today. Then they have the value proposition.
Gorgias, same story. They entered the help desk category. Zendesk was already huge, they picked a subcategory there, help desk for eCommerce, and became the king of that. Even today, when you go to the website, it's very crisp and clear who they are for, what is it for. Wynter, B2B message testing platform, we're always leading with category, always explaining what it is, so it's crisp positioning. Fuzzy positioning, when you do it wrong, it's like somebody reads the above the fold area of your website, or tries to read, what is this, and you don't say, or you are being vague about it. If you're being vague about it, "Oh, it's about better teamwork and fewer meetings," then it's like, what? Is this replacing Slack or is this a Zoom alternative? What is this? People want to put you in a box and you should let them. One of the big mistake companies make is that on their websites they have the rotating value proposition, rotating headlines. "We're for this and also this, and for this use case and for that use case, and this company is using it." Then it's like we do everything for everyone.
That's a giveaway sign that you just even don't know. Once you get their attention, you do a pattern interrupt, you're clear positioning and it's not like the others. Now, you want to stay top of mind. The find out all about you, now you want to stay top of mind. So, the name of the game is building mental availability. You want to be everywhere. Once they're interested in your space, you just want to be top of mind. It as basic as sending a weekly newsletter. Just another reason to be top of mind. You want to of course be super active on social media, so you create a surround sound effect. You're everywhere. Whatever podcast they're on, whatever newsletters they're reading, you want to be on those podcasts, you want to be in the newsletters that they're reading. You also want to create your own media. So, if you look at everybody's favorite media company, Profitwell. For each of their products or ICPs, they have a different show, they have an e-commerce subscription show, and they have a sash pricing page tear down show, and so on, so forth.
So, they're creating original cool content to get your attention. Like I'm doing, Do You Even Resonate Show weekly on LinkedIn. I'm doing the Wynter Games Show with LinkedIn. It's really a reason to engage with the customer, to have something interesting to say, to add value to my target customers. That's why I'm doing the Wynter Workshops, that's why I'm doing this podcast. That's also how you want to do your advertising. You want advertise broadly to all category buyers, and when you decide on your annual budget, you want to take your annual budget, divide by 12, and divide that by 30, and spend that every single day. So, instead of having one big advertising spike, do steady constantly. Just stay top of mind at all times. Then, so you're staying top of mind and one day they have the need, they have the budget, they have the whatever, they think of you.
Now you want to out convert the competition. If you can acquire customers cheaper than your competition, I mean that's how you dominate. But the thing about conversion is that conversion is the effect. Something else is the cause. You cannot affect conversions directly, you can affect the cause, you can't impact the conversion directly. Very important distinction. If we analyze what is the most important part of the cause, what makes somebody convert? It's their motivation to take action. The best way to get somebody to do something, is to make them want to do it. You do that through words. The fact is, you can't make people buy by using some magic copywriting formula. There are no power words. Your messaging needs to resonate with the intended recipient. It needs to be aligned with their pains and desired gains. Here's copywriting expert, Ror Furr talking about this.
Roy Furr:
Despite what you have been told and sold by countless marketing, sales, copywriting, business teachers, there are no magic words that are going to manipulate prospects into just buying from you. It's not about magic words, it's about the underlying message. It's about what you're saying underneath those words that matters. So, you can't just steal somebody else's words and suddenly have some magical persuasive power. You actually have to be able to have a conversation that's about something that your prospect cares about, and show them that you have something that they should desire, that they can desire, that they naturally have a desire for. When you do that, that's when the persuasive power comes out.
Peep Laja:
Hence, copy and messaging are the most important part of the copywriting equation. Yes, your best friend's warm referral that you should use these, that creates strong intrinsic motivation and you can do very little to take it any further. But if somebody comes in without strong intrinsic motivation to sign up with you specifically, then your website messaging is 80% of whether they're going to do it or not. Provided that your tool also does what it needs to do. Increasing user motivation is far more important than decreasing friction, meaning making it easier to sign up. But the problem with that is that the symptoms of ineffective messaging aren't easy to spot. In fact, they're very difficult. If you could just look at somebody's messaging or your own, especially difficult, and it's like, "I wonder, is this good? Do they like it?" No, you can wonder to death, does not matter at all.
So, what you need to do is you need to break your messaging into specific categories. There's an order to these things. In order to make your messaging convert better, to make it more effective, you need to work on four layers of that messaging. I call it the B2B Message Layers Framework. But essentially, number one thing, make it absolutely clear, what is it? The product and the page, and use simple language and clarity is key. If they don't get it, they don't care about anything else. They need to get it. Once they get it, the second question is, is this for me in my situation? Does it help me with my priorities, with my challenges? So, your messaging needs to make it clear who this is for, in what circumstances, in what situation, who needs this? Next of the relevance comes value. Like, sell me, tease the promise lens, paint the picture of the beautiful life if I go with you.
You increase the user motivation. In the end, the fourth layer is differentiation, because they're like, "Wait, but how is this different from category leader?" If you did not be specific about your differentiated value, they're just going to go with the market leader you. It's just what happens 95% of times. So, clarity, relevance, differentiation, value, four layers. Knowing which messages your buyers need to hear, knowing that will dramatically improve the effectiveness of your marketing, it will dramatically increase your conversion rate. So, to get into the consideration set, one, stand out, be different. Pattern interrupt. Two, stay top of mind through content, social, all these ways, email. Three, out convert everyone else. David Cancel, the CEO founder of Drift said in 2017 already that, "Product-based differentiation is going away. Act accordingly." It's never been more true.
So, what are the three key concepts you can use to get inside the limited consideration set of your ICP? One, focus on creating mental availability. Online every brand is a few clicks away. So, mental availability is most of it. When people are asked for recommendations, the category top three get the most mental availability. People recommend tools they have never used, but have heard of. Two, be strategic about how you position yourself in the market. If I were a new CRM startup, I would either go for a total different customer segment, or I would go for HubSpot and SalesForce's least profitable customer segment, and have some sort of an objective, reason to switch over.
Three, use the B2B Message Layers Framework to optimize your messaging. To make your messaging convert better, to make it more effective, you need to work on four layers of that messaging. One last takeaway, you need to stand out in the marketplace, so they would even realize that you exist. Your target customer being aware that you exist, that's the foundation of everything. But if you look like everyone else, there's no chance in hell they're going to find out about you, and that's how you win. I'm Peep Laja. For more tips on how to win, follow me on LinkedIn or Twitter. Thanks for listening.