Owning an entire category is every ambitious startup’s dream, but taking on an existing market with a well-established leader has been the demise of many new businesses.
So what’s the alternative?
Build your own category! 🤷
If you’re the only SaaS solution in your market category, you’re automatically the leader by default.
If you’re unsure how to create an entire market category from scratch, stick with us, and by the end of this article, you’ll be brimming with inspiration and armed with the strategies to make your leadership dreams come true.
By following the playbook of successful SaaS market leaders like Salesforce, we’ll be outlining essential strategies to help you build a market-leading company, including:
Why category creation?
The concept of category creation has been a bit of a hot topic over the past couple of years, and according to many thought leaders, it’s critical for a new SaaS business to succeed. It’s not hard to see why, creating your own market category means:
- No direct competitors
- You can set your own price point
With no direct competitors, customers don’t have a preconceived price point in mind. This sets your average contract value (ACV), which is a major factor in your valuation further down the line.
Creating a category doesn’t necessarily mean you have to have the best product, it’s about positioning your product in a way that differentiates it from everything else on the market. It’s about identifying a problem and showing why your product is the only viable solution out there.
According to an article in the Harvard Business Review ‘companies that create a new category typically capture 76% of the total category market capitalization.’
That’s a sizable chunk of the market and a statistic that suggests in most cases owning a category is the only way to reach the level of growth and investment multiples that venture capital demands.
So, let’s take a look at the strategies that’ll play a significant role in taking you there:
Define, define, define!
Companies who start with a broad vision often lose focus, they stray into different market categories and are swallowed by the vast competition, unable to differentiate themselves enough to attract a strong customer base. From the very beginning, you need to know why , why are you building this product? Why do people need this service?
Simon Sinek’s ‘Start with the Why’ (featured on our ultimate SaaS reading list) offers some inspiring frameworks to help you understand what your company stands for and what your brand is. Once you have a better idea of who you are, craft a vision statement that outlines who you are as a company and what your unique contribution to the market is.
Check out the competition
The best way to find your niche in the market is to check out the market competition, even if you’re a category creator.
You may not have any direct competitors, but companies could develop your solution or reach your customers with an innovative, new solution you failed to offer first.
The upside of having competitors is other people are spending their marketing budget to help popularize the value of your service, which in turn legitimizes your market.
Competitive intelligence allows you to identify key trends and behaviors and preempt the competition so you can maximize your service and effectively keep them at arm’s length.
Check out product reviews to see what their customers like and dislike about their service. Social media can also be a goldmine of information. Spend time on their websites and gated assets as if you were a prospective customer. Additionally, job postings reveal a lot about your competition’s product, growth strategy, and where they’re trying to grow their business the most.
Once you’ve done your research ask yourself:
- What does the competition offer the market?
- Have you found a way to elevate that solution?
- What makes your service unique?
Craft your messaging
Content marketing is a great way to build market awareness and trust with your top-of-the-funnel prospects. However, throwing product pages at your writers just won’t cut it anymore. If you want your messaging included in every aspect of your content, you need to document it and distribute it to every single team in your organization.
Ceillie Clark-Keane Senior Marketing Manager, Content and Engagement at Unstack, shared some thoughts on product messaging and content, you may find helpful over at Product Marketing Alliance. She outlines a framework called a message map, an informative, up-to-date, document for everyone from marketing to sales to access.
Your message map should include:
- A description of the product or service
- A list of its features
- All prospective buyer personas
- Value proposition
- Images/screenshots of the product
- Design guidelines
Remember to build out the framework for your new category’s content with your value statement and your buyer personas at the forefront of your mind.
As a creator, it’s your responsibility to carry the torch for your market category; there’s literally no one else who can do this for you.
You need to be the most knowledgeable users of your product and the most excited and enthusiastic evangelists of your brand.
Get out there (post-pandemic) and pitch up at every industry conference you can check out investor events, meet-ups, and company kick-offs, wherever you can spread the word, spread it.
It’s important to develop a degree of credibility in your industry, and that takes time. However, you could hire an evangelist who genuinely believes in your product and already has credibility and reach in an adjacent market, freeing you up to run your business full-time.
Hiring an evangelist doesn’t mean you’re off the hook though. We firmly believe your executive team should be the public face of your product’s purpose and your company’s values. People prefer to do business with professionals they trust and admire, instead of nameless, faceless corporations.
Your marketing team can do wonders in capturing the personality and core values of your executives and getting them out there via creative campaigns and content.
5 examples of category creation in SaaS
Category creation isn’t about improving something that’s already out there, it’s about identifying a problem and solving it better than anyone else is (or could) so let’s take some inspiration from the experts, the category creators, who are making disruption look easy.
Slack is a fantastic example of a company that offered a solution to a market that had no idea they even had a problem.
Intraoffice communication has always had its issues, but before Slack came along and claimed its place as the number 1 communication and productivity tool, we were all just plodding along, digging through Gmail and old post-it notes for past correspondence.
What started as an internal tool became the most popular communication SaaS product in the world.
Used by 77% of the Fortune 100 and boasting 500,000 customers in a year, Slack is a shining example of the return on investment of creating a category from scratch.
Hubspot changed the B2B marketing industry forever by coining the phrase ‘Inbound Marketing’.
They set the bar high for quality B2B content designed to help prospects over the line, by offering them information, resources, and genuinely good advice.
Businesses who took this on board and produced quality content gained trust and won business, and in turn, HubSpot did the same, and now stand out proudly as the foremost authority on B2B marketing.
The founding fathers of SaaS. As well as disrupting CRM software, Salesforce built an open ecosystem allowing complementary software products to integrate and meet customer’s needs, and by doing so, improved its customer experience and reinforced its position as category kings.
Zenefits disrupted the HR market by providing by offering a variety of functions, like payroll, and benefits management for free. They monetized the service by enrolling willing customers into health insurance plans via the platform, acting as health insurance brokers, and receiving a commission on every sale. Thanks to this business model they became the fastest growing SaaS company in history.
Surescripts took on the mammoth task of replacing paper prescriptions with electronic prescriptions. Trying to unify a system for ordering prescriptions and maintaining patient records was majorly ambitious and required a wide range of technology to come together to solve at least three, very big problems.
The sheer effort it took to optimize each feature was enough to scare off any and all competition, creating a space that Surescript currently reigns over, processing over 6 billion transactions every year.
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