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The Overlooked Importance of Market Share

The Overlooked Importance of Market Share

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“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.

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Page 1: The Overlooked Importance of Market Share

The Overlooked Importance

of Market Share

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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

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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

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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.

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“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:

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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.)

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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

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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.

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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.

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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.