Beyond Competitive Advantage

We’ve discussed the term ‘competitive advantage’ more than once, as described in the book ‘Competitive Advantage’ by Michael Porter. However, competitive advantage is merely one way of gaining strategic advantage.

Once we incorporate the ROUNDMAP™ Full Stack in our strategic thinking, there appear to be four strategic advantage orientations in what we call the Strategic Advantage Matrix™:

• Competitive Advantage (product-centric)
• Comparative Advantage (customer-centric)
• Compositive Advantage (resource-centric)
• Collaborative Advantage (network-centric)

Competitive Advantage

Michael Porter focused on competitive strategy and competitive advantages. He mentioned three directions in which a business could develop its corporate strategy:

1. Cost leadership (compare to value discipline: Operational Excellence, Treacy & Wiersema)
2. Differentiation (compare to value discipline: Product Leadership, Treacy & Wiersema)
3. Focus (compare to value discipline: Customer Intimacy, Treacy & Wiersema)

However, each of these three directions has to be seen in the context of the only known business model in his time: Product Centricity. As such, competitive advantages aim to increase product value (equity) through growing market share and economies of scale, which are typical for a product-centric business.

Comparative Advantage

A customer-centric business has no intention to differentiate on product-level. Instead, it differentiates on customer-level by focusing on a select group of customers for which it can fulfill more of their needs over the course of the customer relationship, or customer lifetime. What the business should, therefore, look for is a comparative advantage:

1. What group of customers with similar needs can we identify?
2. To grow our business, we need to increase customer value by having these selected customers spend more, more often, and over a longer period of time (RFM).
3. And finally: Can we find more customers like them?

Compositive Advantage

In a resource-centric business, it is mostly about service differentiation, based on a composition of resources, syndicated from multiple sources. What package of resources and services will be most valued by your customers?

Collaborative Advantage

Finally, a network-centric business depends on the value exchange between participants. How can it create a marketspace in which each participant can collaborate, by adding and/or subtracting value from other participants?

One final note: similar to the value disciplines and the experience design, you’ll have to keep a threshold on all four advantages.

---

Schematic representation, as part of the ROUNDMAP™ Full Stack (with an accent on the yellow horizontal bar):

Blue Ocean versus Red Ocean

In a blue ocean, innovation flourishes while competition is absend or low. Contrary, in a red ocean, competition is often fierce, while most innovation is limited to maintaining one’s position relative to the competition.

Product-centric operations are almost without exception part of a highly competitive landscape, therefore, it is vital to have a competitive advantage. Obviously, in a red ocean supply and demand are often known factors, the only variable is market share. To obtain market share, firm’s need to focus on a market segment, differentiate from the competition, be cost-effective, offer relevant value, design exceptional experiences, engage customers, etc.

However, in a blue ocean things are much brighter. Although supply and demand are yet unknown, it allows a firm to focus on creating and delivering value that is truly appreciated by its customers, while higher margins per sale often compensate for the size of the market.

While Resource Centricity and Network Centricity aren’t new (I’ve described them as such, however, they are in fact as old as commerce), the internet has given both business models an incredible edge over their product-centric counterparts by taking away physical barriers. This allowed companies like Facebook, Amazon, Alibaba, Uber, Google, and TakeAway to flourish, often claiming 80% of more of market share.

Example of product-centricity differentiation

While fashion brand A might be perceived as operational-excellent (also known as cost leadership), because of its high level of automation that is driving down cost, fashion brand B is perceived as a product leader, because of its ability to offer a wide range of colors for its products. Both are product-centric, yet they are perceived differently. Besides, brand A’s competitive advantage is based on crossing data-silos, while brand B derives most of its competitive advantage from its highly flexible fabric-dyeing production line.

https://roundmap.com/ 

The Significance of Market Share

 

Written by B2B International

---

The ultimate proof of a successful marketing strategy is a high market share: the higher, the better. This should not be at the expense of profits; any fool can give their products away—but more on this later. Once attained, market dominance brings many advantages—volume production brings economies of scale, a grip can be exerted on distribution, premium prices can be charged, etc.

Companies with market shares in excess of 40% have twice the profitability of those with only a 10% market share. It is estimated that for every 10% increase in market share, the return on investment rises by 5%.

Three factors are important in building market share:

1. The continuous and frequent launch of new products. Rick Goings, CEO of Tupperware, said in a recent interview with the Financial Times “You’ve got to look for new product opportunities. Our benchmark is that 25 per cent of sales have to come from new products”. New products bring new sales and new sales increase market share.

2. The maintenance and continuous improvement of quality products. Companies that consistently build market share in the automotive industry, in telecommunications, and in any business to business market are more usually those that demonstrate that their products are of the highest quality. Witness Apple, Audi, BMW, JCB, Caterpillar, Boeing, Deere, Nike, Coca-Cola, Disney and the like.

3. A high level of activity by the sales force. Marketers know that high levels of promotional expenditure build market share. In business to business markets, the efforts of the sales force are critically important here and any financial stringency that results in cutbacks of this important activity will threaten the market share.

Market shares are an indicator of the relative strength of a supplier to a market. It is vital intelligence for any company developing its marketing strategy. It is also surprising how ignorant managers can be of their market share. A VP of Marketing whose gut feel tells him that he has a 20% market share may be making incorrect decisions if in fact his market share is nearer 10% and the market is two thirds larger than he thought. Interestingly, most people lacking perfect knowledge exaggerate or are over-optimistic about their market share rather than thinking that it is smaller than it actually is.

Market share also needs to be seen in the context of the definition of the market. Has Kellogg’s got a 90% share of the cornflake market, or a 50% share of the breakfast cereal market or a 5% share of the breakfast market? Depending on how you define your market determines the strategy you will adopt.

Companies can assess their market share in different ways. The lucky ones are part of a trade association or group that contributes data enabling them to determine their market share over time. Even here there can be errors in the calculation as not everyone will be part of the trade association and thus supplying figures.

Estimates of market share can also be made by assessing the size of the market and expressing a company’s revenue as a proportion of that total. This assumes that an accurate assessment can be made of the market size which is in itself a difficult calculation to make. In business to business markets the assessment of market size can often be + or-20%. Furthermore, this doesn’t give market share data on the competition. To achieve this it is necessary to have a good fix on the competitors’ revenues within that market and to express these out of the total market size. Sometimes financial reports provide revenue data on the competition but, more usually, there is obfuscation in that product revenue is not separated out in any detail.

This leaves us with the most tried and trusted way of assessing market share, which is to carry out an industry survey over a representative sample of companies buying the products in question. In order to calculate the market share, it is not just a question of asking respondents which companies are used as suppliers, but to get them to provide a breakdown of their purchases from each supplier. Inevitably, there will be some estimates but over a reasonable sample size the results can be expected to be accurate. Such surveys are not cheap and provide a snapshot at just one point in time. If surveys of this kind are repeated every six months or every year to track the market share, it is an expensive process.

Market share is important but at what price? This is a difficult and contentious question to answer and it was raised at the beginning of the note. In 2013 Amazon adopted an aggressive strategy to build market share. Over the first nine months of 2013 it reported quarterly operating profit margins of 1.9%, then 1.1%, and latterly 0.5%. Prices have been sharpened to build revenue and share. The result so far has been losses and an operating margin in October 2013 which was -0.1%. It is significant that investors have faith in this strategy because, despite the decline in profitability, Amazon’s share price has risen 57% during the year. The market is betting (and it probably is right) that this search for increased market share will bring with it profitability in the long run.

https://cutt.ly/G5GVwx4

Market Share: The Most Important Metric for Business Success

Market share is the most important metric companies can use to judge the effectiveness of any possible revenue generating effort, such as marketing campaigns, branding initiatives, or CRM programs.

The reason for this is simple – market share shows you how you are doing compared to your competition, allows you to quantify the impact your strategies and tactical execution have had on business results, and ask questions of your performance that were previously unapparent to ask.

Yet, despite its importance, many companies ignore market share and instead focus on internal metrics such as satisfaction, awareness, loyalty, leads, revenue growth, etc.

The problem with these internally focused metrics is that they can be deceiving in that while the internally focused company may be happy with its results, this satisfaction could be misleading if the company’s performing below par relative to the competition.

But, it’s not just internally focused companies that don’t calculate market share.

Most companies don’t have the competitive data necessary to measure market share, which is why it has been mainly restricted to academia, as theory taught in classrooms.

The attempts that have been made to calculate market share have been at best a complex guessing game relying on partial and inaccurate data derived from publicly reported figures or from the participating members of industry consortiums.

But, even then, the information was never comprehensive and never available at the levels of granularity needed to make actionable business decisions.

In fact, because most companies don’t engage in comprehensive competitor monitoring or are excessively optimistic, they overestimate their market shares by a factor of two.

The companies without the will or interest to accurately calculate their true market share need to understand the importance of this metric and the peril they place on themselves when they operate without this guide post.

Why is a true, unbiased calculation of your market share so important?

Because market share is a key indicator of market competitiveness, it enables executives to judge total market growth or decline, identify key trends in consumer behavior and see their market potential and market opportunity.

Furthermore, by understanding market share, companies can objectively measure pricing strategies, consumer perception of new products/services, promotions, management personnel, real estate decisions and other key business initiatives.

You may be thinking, this is all well and good, but now what? There is no standard way to measure it.

Well, that’s where you’re mistaken.

Now, for the first time, there’s a way to accurately and objectively calculate your market share – Buxton’s Market Share Solution.

Through a relationship with a credit card provider, Buxton is able to access both you and your aggregated competitors’ de-identified credit and debit card transactions, which enables us to accurately and objectively quantify your market share at all levels of your organization – from the very top down to individual locations.

This market share report supports your ability to understand the impact your business strategies and their execution have had on your revenue and allows you to evaluate both your short and long-term trends in market share and competitive presence.

It gives you the ability to differentiate and quantify the revenue growth and loss you have impacted and to understand the growth and loss which has resulted from changes in the market that were beyond your control.

By understanding your true market share, you can filter out market noise with a metric that is not impacted by macro-environmental variables and measure your impact to revenue across your organization using a consistent, unbiased metric for each location, market and in summary for your entire business.

https://cutt.ly/g5GVujE

Economic objectives of firms

 The main objectives of firms are:

1. Profit maximisation
2. Sales maximisation
3. Increased market share/market dominance
4. Social/environmental concerns
5. Profit satisficing
6. Co-operatives

Sometimes there is an overlap of objectives. For example, seeking to increase market share, may lead to lower profits in the short-term, but enable profit maximisation in the long run.

Profit maximisation

Usually, in economics, we assume firms are concerned with maximising profit. Higher profit means:

• Higher dividends for shareholders.
• More profit can be used to finance research and development.
• Higher profit makes the firm less vulnerable to takeover.
• Higher profit enables higher salaries for workers

Alternative aims of firms

However, in the real world, firms may pursue other objectives apart from profit maximisation.

1. Profit Satisficing

• In many firms, there is a separation of ownership and control. Those who own the company (shareholders) often do not get involved in the day to day running of the company.
• This is a problem because although the owners may want to maximise profits, the managers have much less incentive to maximise profits because they do not get the same rewards, (share dividends)
• Therefore managers may create a minimum level of profit to keep the shareholders happy, but then maximise other objectives, such as enjoying work, getting on with other workers. (e.g. not sacking them) This is the problem of separation between owners and managers.
• This ‘principal-agent‘ problem can be overcome, to some extent, by giving managers share options and performance related pay although in some industries it is difficult to measure performance.
• More on profit-satisficing.

2. Sales maximisation

Firms often seek to increase their market share – even if it means less profit. This could occur for various reasons:

• Increased market share increases monopoly power and may enable the firm to put up prices and make more profit in the long run.
• Managers prefer to work for bigger companies as it leads to greater prestige and higher salaries.
• Increasing market share may force rivals out of business. E.g. the growth of supermarkets have lead to the demise of many local shops. Some firms may actually engage in predatory pricing which involves making a loss to force a rival out of business.

3. Growth maximisation

This is similar to sales maximisation and may involve mergers and takeovers. With this objective, the firm may be willing to make lower levels of profit in order to increase in size and gain more market share. More market share increases its monopoly power and ability to be a price setter.

4. Long run profit maximisation

In some cases, firms may sacrifice profits in the short term to increase profits in the long run. For example, by investing heavily in new capacity, firms may make a loss in the short run but enable higher profits in the future.

5. Social/environmental concerns

A firm may incur extra expense to choose products which don’t harm the environment or products not tested on animals. Alternatively, firms may be concerned about local community / charitable concerns.

• Some firms may adopt social/environmental concerns as part of their branding. This can ultimately help profitability as the brand becomes more attractive to consumers.
• Some firms may adopt social/environmental concerns on principal alone – even if it does little to improve sales/brand image.

6. Co-operatives

Co-operatives may have completely different objectives to a typical PLC. A co-operative is run to maximise the welfare of all stakeholders – especially workers. Any profit the co-operative makes will be shared amongst all members.

Diagram showing different objectives of firms

• Q1 = Profit maximisation (MR=MC)
• Q2 = Revenue Maximisation (MR=0)
• Q3 = Marginal cost pricing (P=MC) – allocative efficiency
• Q4 = Sales maximisation – maximum sales while still making normal profit (AR=ATC)

https://cutt.ly/N2dfO0C

Mobile phone market over 30 years

 

The Rules to increase market share

The Rules to Increase Market Share and Mistakes to Avoid

Every successful company or organization must be driven in a constant quest to increase market share. And there are rules to increasing market share. However, most companies fall far short of all the projections and annual planning.

When the chips are finally counted and the level of success is finally evaluated on a spreadsheet, expectations rarely meet reality. Even if the expectations are met, the real measure of success is not just in the percentage of growth in your market share. But in your measure of growth compared to competitors in your category.

Who Wins?

The REAL winner is the one whose growth comes at the expense of another competitor in the market. When individual revenues increase but lags the category, you are losing. You must win at someone else’s expense because, whether you want to admit it or not, most categories are mature. The only way to grow is to steal market share from the competition.

Here are some basic rules to grow market share and steal customers from your competitors — and some marketing mistakes to avoid.

Rules to increase market share. Rule number 1 — Never Believe Everything You Hear.

Don’t believe the internal hype surrounding your brand’s importance to the customer. This view is myopic because our own brands are never as important to our customers as it is to us. Being successful at increasing market share is hard earned — and you earn it by knowing more about your customer then anyone else in the category. Only then can you align your strategic brand and tactical marketing messages to reflect that knowledge.

It is not enough to know the demographics and usage habits of your customers or prospects. You must find what drives trial and incites loyalty beyond traditional product features and attributes. Product features and benefits provide the keys to opening the gate for entry in a competitive category.

The attributes that provide marketers with so much pride are rarely why a customer prefers one brand to another. If choice were always about product features and benefits, all market leading (winning) brands would have the best features and pricing. Are you the market leader? Does no one in your category have equal (or superior) service or product? Enough said. It is possible to live and die by features and attributes alone.

Get everyone on board

You are most likely the market leader if your R&D department keeps you miles ahead of the competition and your advertising budget is so large that you are always in the face of your prospects and customers touting your NEW AND IMPROVED.

To increase market share and win, you must up the ante onbeing smarter than the competition rather than focusing on simply being better. Your prospect/customer believes the purchase decisions that they make to be germinal to their own sense-of-self.

This sense-of-self is a more important factor in the mechanism of choosing than any product feature you can possibly imagine.

This is an emotional (right brain) value that R&D has no part in. The left-brain part of the purchase decision is reflected in the CATEGORY choice.

The logical part of all this

This is the cognitive part of the equation. This means that, when a customer seeks a solution, they evaluate product benefits to decide which category of offering they will choose. For example, if someone is purchasing an oven for their home, they will first choose a category of solutions — microwave, conventional, or convection oven.

Once they decide which of these category choices is the right decision, they will then seek out those players in that category. But how do they decide whether they want a VULCAN, Amana, GE, KitchenAid, or Jenn-Air?

That decision is not based on cognitive thinking. They will all cook food well. No, the final leg in the decision tree is an emotional evaluation and choice. It is a choice based on what the brand means to them rather than what the product does or does not do.

If you understand your customer better than the competition does, you will be in a position ensure that your brand promises more of “THAT” whatever “THAT” turns out to be. What we can promise is that “THAT” will not be about the benefits and features of your product or service. (Although features may fulfill the brand. But features alone are unemotional and unpersuasive.) Instead, “THAT” will be about who the prospect believes they are at the moment of purchase and how much your brand reflects their own beliefs about whom they aspire to be.

Rule to increase market share. Rule number 2 — Don’t’ Believe Your Own Hype

It is easy to get caught up in the self-serving belief that your product, people, and expertise are better than the competition.

You know the story — “We have better people!” Banks(i.e. Bank of America, Chase, and Wells Fargo), pharmacies (i.e. Walgreen’s CVS, and Rite Aid), and automobile dealerships (i.e. Ford, GM, Chrysler, KIA, Honda, and Volkswagen) are fond of building their marketing messages around this self-serving and foolish idea.

Let’s face facts — we all draw our employees from the same pool of workers. It is not only foolish to assume “our folks are better than your folks,” it is a ticket to certain disaster.

Being dispassionate must be your goal in developing a strategy. Factor out these category table stakes (the minimum requirements to gain permission to play in the category). Then create your marketing messages. At the same time, do everything you can to ensure that your work force is the best trained and best in the industry.

Think how many banks tout their table stakes (i.e. online banking, friendly people, and competitive rates). How many beer brands tout their table stakes (great taste, quality ingredients and a caring brew master)?

Destinations and Tourism brands want to increase market share too

Many destinations tout their table stakes (exotic locations, endearing natives and authentic cultures). Think how many automobile manufactures tout their table stakes (sexy design, great road handling and top-shelf engineering and attention to detail).

If all of these generic benefits were all that important, we would expect that there would be no Toyota, Budweiser, Apple, Walgreen’s, and Bahamas as market leaders. We would have a much more diverse market space with many main players.

So… forget all of those obvious and generic features and benefits. Look closer for real differences. Factor them out. What is left?

Then work as hard as you can to have the best tasting beer, best online banking site and friendliest employees. Just don’t expect your competition’s customers to choose your brand because of them. Do it because it is a best business practice not a marketing advantage

Rule to increase market share. Rule number 3 — Don’t Be Like the Market Leader

Copying the market leader is a major marketing mistake. When you copy the marketing message and style of the market leader, you are absolutely their very best friend. As long as Target and Kmart copy Walmart, they can expect Walmart to remain the runaway winner. Your strategy must be to be different.

Being a market leader has two distinct advantages.

1. Share of voice and top-of-mind awareness is often just enough. Woody Allen once said, “Half of success is just showing up.” As far as the market leader is concerned, he was mostly right.
2. Market also-rans are prone to copy the market leader’s successful messaging, which is a sure-fire way to help the market leader to keep on winning and remaining the king of the hill.

Think about this. Why should a customer choose AMD over Intel? The messaging and marketing looks the same and speaks to the same benefits. In a tie, who do you think wins? Why should a United Airlines customer choose to fly Delta Airlines if the messaging looks and feels the same?

Why should a computer purchaser choose Dell over HP? In each of these cases, the marketers believe they are communicating a benefit that matters to prospects. Mostly, they are preaching to the choir and helping the market leader lap the field.

Rule to increase market share. Rule number 4 — Be Consistent

Your greatest enemy is in confusing your brand strategy with your marketing tactics. Strategy always drives the tactics and ALWAYS remains consistent. Too many throw out their brand strategy because immediate results are not as successful as they initially hope. They panic. In most cases, there was nothing wrong with the strategy but the tactic used to deliver the message was flawed.

Napoleon once said that an Army that marches in the wrong direction and then turns around and goes back has made two mistakes instead of one. Toyota did not gain its market leadership by changing its brand marketing strategy on a whim.

Brand strategy is a long-term commitment and your own lack of commitment spells its doom.

When challenging a market leader, you need to be compelling. Be consistent so that the target market begins to see your brand as you have communicated it. Apple has changed tactics many times over the years. But its brand promise of the customer thinking differently and seeking simplicity has never waned.

Result — Be a Brand

Increasing market share at your competitors’ expense takes more than a catchy commercial and tagline. If your goal is to be smarter and better than your competition, you need to remain focused and disciplined. You need to have clarity in your brand space so that your potential customers can find you in the sea of choices that they are bombarded with everyday.

In such a competitive din of noise, with each demanding hatchling screaming, “Feed me,” your prospects will inevitable seek a means to simplify their decision process. Brand does that and nothing else does. Let your brand make it easier for them by reflecting the precepts and values that define their lives.

How to Grow by Stealing Market Share

Growth is getting harder and competition more fierce as technology markets mature - which is why ignoring competition is no longer an option.

Growth leader at Zendesk and Reforge alum, Brianne Kimmel, walks us through using her OODA Loop framework to build a competitive marketing program and systematically steal market share from competitors.

Competition is inevitable and turns every product into a commodity -- including yours.

For early-stage companies, competition is taboo. The goal is to build a disruptive product that shakes up an existing category, or better yet, creates an entirely new one. As your company matures you’ll need to directly compete with low end copycats and larger established companies that want a piece of your success.

For mid to late stage companies, a strategic framework for competition is required.

In addition to tracking competitive moves, there are a number of new ways to win over your competitor’s customers and win back churned customers.  

In this essay, I’ll walk you through the competitive marketing framework I’ve developed and implemented at Zendesk. As we’ve transitioned from a single product to family of products, our competitive landscape has changed. Competitive marketing was once viewed as taboo, however now it has become a growth advantage.

My Key Takeaways for Competitive Marketing:

1. HOW TO STRUCTURE YOUR COMPETITIVE MARKETING PROGRAM.

Traditionally, tech companies have viewed competition as a potential distraction. In the early day of a startup, it’s important to stay focused on building a great product. Market leading companies and category disruptors want to avoid giving competitors free publicity. But for new players, a copycat strategy is an easy way to leverage a market leader’s credibility with scrappy competitive campaigns.

Competitive marketing is a tool you want on your side, but you’ll need to create your own cross-functional team to execute effectively.

2. APPLY THE OBSERVE, ORIENT, DECIDE, ACT (OODA) LOOP FRAMEWORK TO SECURE YOUR POSITION IN THE MARKET.

As a member of a lean growth team, I needed to create an agile way to win over and win back competitive audiences quickly. I adapted the U.S. Air Force’s OODA Loop framework of observe-orient-decide-act and applied it to competitive marketing.

The OODA Loop favors agility over raw power in any competitive situation.

Whoever observes and reacts quicker than the competition can thereby “get inside” the opponent’s decision cycle and gain the advantage.

For the purpose of competitive marketing, we can leverage data signals and competitive intelligence to develop smarter programs to win over and win back opportunities with targeted messaging and offers.

Here’s the 30 second summary of the framework:

• Observe -  Use competitive intelligence and intent data sources to understand when customers are in market or at risk.
• Orient - Use qualitative insights and competitive tracking to turn competitive context into actionable insights.  
• Decide - Create cohorts of marketable contacts and prioritize based on opportunity size.
• Act - Build and execute a program to win over or win back opportunities with targeted messaging and offers.

3. THERE ARE A NUMBER OF USEFUL TOOLS TO HELP WITH COMPETITIVE AND CUSTOMER INTELLIGENCE.

Here are a few favorites:

• Clearbit for gathering enriched data on target companies and prospects
• G2 Crowd for identifying companies searching for software in our category
• Bombora for creating intent scores for prospects based on search behavior
• HG Data for finding companies that use competitive products via backend technology installs
• Crayon for automated reports on changes to competitors’ products, packaging, pricing, and landing pages

In the sections below, I will explain how each tool is used to develop an end-to-end competitive marketing program.

Growth insights from leaders who actually moved the needle

Get real cases from authentic growth leaders. No listicles, infographics or hack-tics.

Ignoring your competition is keeping your head in the sand

Companies of all sizes can’t afford not to do competitive marketing. For startups in particular, competition is critical to success. There are many lessons to be learned from your competitor once you have your OODA loop in place.

Building and sustaining market share is getting harder as market competition intensifies. With open-sourced technology, it’s never been easier or cheaper to start a company and raise venture money. This landscape has created a new breed of competition that’s well funded and ready to steal market share.

Like many companies, Zendesk focused on building a great product and providing best in class customer support. But our competitive landscape has changed dramatically since the company was founded in 2007. Copycats followed us into the market - Freshdesk in 2010, Help Scout and HappyFox in 2011, along with dozens of additional low end players.

As the market leader with over 100K+ customers, we could easily ignore these competitors.

But with a better product and higher CSAT score, our message is centered on choosing a product that can scale. Differentiation and competitive marketing has become a focus for our growth strategy to ensure we’re saving prospects from potential pain points with low end competitors.  

How we’ve implemented competitive marketing at Zendesk

I spent most of my career focused on performance marketing and international growth at Orbitz and Expedia. The OTA landscape is highly competitive and dominated by two players: Priceline Group and Expedia Inc.

I joined Zendesk before it rebranded and transitioned from a single product company to a family of products. This was an inflection point for our team as we recognized that our competitive landscape had changed and we had to become actively involved in competitive conversations.

This meant we needed to create a competitive marketing strategy, spell out the tactics and assemble a cross-functional team to get it all done.

I started by looking at our own customer data for insights on how our customers decided between us and the competition. Here we found a meaningful segment of customers that we call our “boomerangs” - the opportunities lost to low end competitors that organically come back to Zendesk.

We used qualitative insights from boomerang customers to show the team that competition isn’t really about Zendesk versus a competitor. It’s about empowering prospects to invest upfront and choose a partner that’s built to scale.

The learnings that came from studying boomerangs, opportunities lost, and recent competitive wins did three things:

1. It helped us build internal consensus around the need for competitive marketing.
2. It consolidated support to assemble a cross-functional team.
3. It seeded our hypothesis on competitive positioning and messaging for Zendesk.

Once we had internal buy-in and had started to build out our team, we then adapted the OODA Loop framework to structure Zendesk’s competitive marketing program.

How we adapted the US Air Force’s OODA Loop framework for competitive marketing

OODA is Observe, Orient, Decide, Act, and it’s used by the US Air Force as a framework for decision making around competition.

According to OODA, you need to do 4 things to defeat your competition:

1. Observe what your competitor is doing.
2. Orient yourself within the context of what you learn about your competitor.
3. Make a decision based on the inputs and insights from steps one and two.
4. Take action to execute against your decision.

Over time, you can move through the loop faster and faster to compete more effectively and efficiently.

The OODA loop provides a good structure for any quick decisions, but it works especially well for competitive marketing. In many organizations, competitive insights sits with one team or it’s confined to an email update with little to no actionable insights.

With this structure, a lean team can quickly execute highly targeted campaigns.  

Here’s how you can apply the OODA Loop to steal market share from your competitor:

1. Observe -  Use competitive intelligence and intent data sources to understand when customers are in market or at risk.
2. Orient - Use qualitative insights and competitive tracking to turn competitive context into actionable insights.  
3. Decide - Create cohorts of marketable contacts and prioritize based on opportunity size.
4. Act - Build and execute a program to win over or win back opportunities with targeted messaging and offers.

It takes some time to build a competitive marketing machine.

You will need to develop a system to Observe, Orient and Decide, but once it’s established you can quickly act and establish market dominance.

In the next section, I’ll go over exactly how we applied the OODA Loop framework to competitive marketing at Zendesk.

STEP 1: OBSERVE - COMPETITIVE INTELLIGENCE AND DATA TO BUILD A TARGET COMPANY LIST

In competitive marketing for SaaS, there are a number of data vendors available that can help you identify prospects who are searching for software in your category, reading white papers and ebooks, or recently installed a competitive product.

At Zendesk, we use multiple data sources to build highly qualified contact lists:

• Real-time search data: G2 Crowd identifies companies searching for software in our category and provides frequency of page visits.
• Intent data sources: Bombora is a data source that creates an intent score for businesses that are looking for customer support software, and reading about “customer experience” or “customer relationships.”
• Technographic data: HG Data identifies backend technology installs to identify competitive product users at the company level.

To create a wide audience pool, we identify competitive product users and opportunities lost to competitors. We identify relevant contacts within the target companies and pass the contact lists to Clearbit  for enrichment. Our goal is to identify multiple decisions makers within the target company for a multi-touch entry strategy.

STEP 2: TURN COMPETITIVE AND CUSTOMER DATA INTO ACTIONABLE INSIGHTS

Once we have our list of contacts, we enrich them, again with Clearbit, to get detailed contextual data for personalized first touches such as industry for more personalized content. Technology tags are a great way to identify which business tools matter most.

We also use a product called Crayon to monitor competitors’ digital footprint and receive real-time updates when competitors launch landing page and pricing changes and have big customer wins.

STEP 3: PRIORITIZE BASED ON OPPORTUNITY SIZE

At this step, we again use the enriched Clearbit data to bucket our prospects by company size and identify which should go into a self-serve flow, and which require a call from our sales team.

For steps one, two, and three, Clearbit has been one of the most useful tools in our competitive marketing toolkit. In many cases, we will have a company name or an IP address only, which Clearbit can enrich for the employee count, revenue, an overview of the company’s techstack, zip code and more.

STEP 4: BUILD A PERSONALIZED OUTREACH PROGRAM

In the final step of our OODA Loop, we built an automated and sales enabled outreach program to win over or win back opportunities with targeted messaging and offers. All of the data we collect in the first three steps of the loop feeds our outreach program with data that allows us to create rich personalized touch points.

We’ve tested multiple types of touch points:

• Automated outreach with content offers
• Product-specific guides with specific competitive pain points
• SDR or AE calls
• Landing pages that speak directly about competitors
• Vendor evaluation scorecards and calculators

The ad, landing page and content offer shown below target a prospect currently using Freshdesk, and explain the benefits of switching to Zendesk.

After we cycle through each step of the loop, we then start all over again to bring our learnings back into the process. Our competitive marketing operations hinge on our ability to track the performance of all of our outreach campaigns and continually iterate, while keeping an eye on the competition.

Competitive marketing is a powerful growth lever that helps you define your value proposition and defend your position against low end and upmarket competitors. The OODA Loop provides an agile framework to observe your competition and make quick, strategic moves before your competition does.

https://www.reforge.com