Everyone loves to complain about how competitive their market is. But I hate to break it to you, it’s not just you. Technology has made it easier than ever to create game-changing products and every single industry is only going to get more competitive. It’s sink or swim out there and if you don’t know how to compete, you’re going to drown.
Here’s one great example: Every year, an industry report analyzes every company in the marketing technology space. In 2011, there were 150 companies on their list. Today? That number has ballooned to 7,500 companies competing for those same customers!
This isn’t meant to scare you. It’s simply a reminder that there are no guarantees in business. Anyone can get into your space and start eating up your market share. So you better be ready to compete.
Why I thought it was crazy to enter the hyper-competitive CRM space (but did it anyways)
If you told me 5–6 years ago that I would be running a CRM business, I probably would’ve laughed in your face. Not only is the market crowded with options (including the billion-dollar behemoth that is Salesforce) but 90% of companies still build an internal CRM.
If you’re looking for an easy industry to succeed in, this would be last on your list.
So why attack a market that’s already flooded? To be honest, we inadvertently stumbled into it. But looking back in hindsight there were some crucial events and decisions we made that allowed us to beat the odds.
Today, I want to share some of those “secrets” that have allowed Close to compete in one of the most competitive industries. And how you can use these same lessons to stand out in your own market.
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1. Find your unique product vision
You’ll never win in a market if you’re following what everyone else is doing. But still, so many companies are afraid to make bold, unique products.
Let’s use the CRM space as an example. In the beginning, every CRM was simply a contact database. Companies needed to store the information on their customers and who better to maintain those databases than the salespeople who were using them regularly?
Eventually, someone decided to start adding more sales-specific features and the modern CRM was born. But the problem was that this new software was being built by engineers who rarely interacted with or understood the pain points of the salespeople who would be using them. Even worse, they were sold to upper management who had very different needs than the actual sales reps who would be using them (such as forecasting and reporting).
In other words, the tool that was supposedly made for sales reps was made by engineers who didn’t understand, nor care for their needs, and sold to management who had vastly different requirements than them.
When we launched Close, we chose to do the exact opposite.
Up until that point we had been running an outsourced sales team for startups and Close was our internal tool. With more than 200 different sales campaigns from companies in every imaginable industry, we needed a tool that was flexible and focused on selling. So our product vision wasn’t to build the best CRM tool, but to empower our reps to be the best sales team possible.
By approaching our CRM from the user’s perspective (not the management that would be buying it), we developed a drastically different vision than every other company. This is how we became the first CRM with inbound and outbound calling baked in as well as two-way email syncing.
While every other competitor was just trying to keep up and copy the major players, we went back to the basics and developed a unique point of view for a specific user. Similarly, if you want to stand out in a crowded space, you can’t simply iterate on what’s out there. You need to be unique, different, and bold.
2. Understand who your exact customers and stakeholders are
It’s easy enough to say “make a unique product,” but how do you actually do it? It all comes down to understanding who your ideal customer is. Everyone wants to buy a product that feels like it was made specifically for them. But few companies do this.
And when you try to sell to everyone, you end up selling to no one.
Knowing your ideal customer will not only allow you to make those bold product choices you need to stand out, but also to create a powerful identity people can identify with.
At Close, we’ve committed to servicing exclusively SMBs. This means turning down Enterprise clients or people who don’t fit our ideal customer profile.
That’s a good start. But to be truly successful you have to take it a step further and understand who your key stakeholder is at that customer’s company. Even if you’re selling to startups with a team of 30 people, you’ll have different stakeholders to consider. For us, that means:
- Company founders who ultimately make the buying decision
- Sales Managers who run sales teams and help decide what software to use
- Sales reps who actually use our software
- Technical teams who need to integrate our software
- Support & success teams who want access to our software
- Marketing teams who want to make sure they can connect to our software
Most people would look at this list and pick the top two. Founders and management have the most decision power when buying your product, so why not build and sell to them?
Again, you won’t succeed by just doing what everyone else does—especially when you believe what everyone else is doing is wrong. To us, it only made sense that a tool should be built first and foremost for the people who would spend the most time using it. That’s why we chose to focus solely on the end user as our key stakeholder. While we want to do a good job for everyone at the company, our number one priority is always the sales rep.
Whoever you choose as your main stakeholder is up to you. But you have to pick one and make sure they always feel like their needs are your top priority.
3. Adopt a business model that supports long-term thinking
Your business model will determine how you can act as a company. And if you want to compete in your market for the long run, you have to have a business model that allows you to think long term.
Unfortunately so many “standard” business models don’t give you the freedom to do this. Instead of the freedom to build the business and product you believe in, a business model that relies on venture capital means someone else always has a say in how you operate. Who you hire. What markets you go into. The customers you chase.
In our experience, this is how so many companies die. You know your product, customer, and market best. And being beholden to someone else who wants you to chase buzzwords and trends won’t help you truly compete.
When it came time to grow and scale Close, we chose to stay profitable instead of taking more outside funding. We chose independence over investors and stayed small, lean, and remote. Because of this, we get to think long-term. Our customers support us and our responsibility is to them. Not investors.
If you want to build a business that can truly compete, you need to have the freedom to do it on your own terms. And while this can happen in some venture-backed situations, more often than not you lose that independence the second you take someone else’s money.
4. Build a brand that connects with customers on an emotional level
Your brand becomes more valuable and impactful as the marketplace gets more crowded. The less differentiated products become (because everyone can quickly copy good features), the more people start to ask questions like:
“What company have I heard about/do I trust more?”
“What company makes me feel the way I want to feel?”
The way you present your company and the brand you build is one of the most important factors in surviving in a hyper-competitive market. But I didn’t always think so. Before starting a company I thought all this talk about branding was a waste of time. I didn’t realize that human beings make decisions not based on facts, but emotions.
To stand out, your brand needs to connect on an emotional level. You can have all the best features in the world, but what you really want is for your customers to feel like the second they buy from you, they’re going to become better at the thing you’re promising. You want to give them inspiration and aspiration. Not just tools.
The most powerful way we’ve found for doing this is content marketing.
When Close first started, we realized we could never out-sell, out-market, or out-advertise the competition. But we could out-teach them.
Five years ago, every CRM company’s blog was full of outdated, 80s sales advice. So we set out to change that. Using our own experiences, we wrote posts full of real, honest, actionable advice that readers could see immediate results from. It was a high standard, but since day one, content has been one of our only two sources of growth (the other is word-of-mouth).
If you want to connect with your customers, you need to share what makes you unique and exciting to them. For us, that meant years and years of hard-earned and time-tested sales knowledge. Whatever that is for you, find it, share it, and grow naturally from it.
5. Compete on value. Not price.
When you’re faced huge competitors like Salesforce, it’s an attractive idea to try and beat them on price. You want their customers. Everyone wants to save money. So why not become the cheapest option?
But you’ll never win if you compete on price. The cheaper you price your product, the more your business model will have to change. You’ll need to raise more money, spend more acquiring users, and operate on razor-thin margins. In the end, you won’t be able to focus on and champion your users.
With Close, we knew we could never compete on price. So we decided to compete on value. We marketed ourselves as a premium product and charged a premium price. Were we missing features? Sure. But being profitable from the start let us talk to our users, build and grow with them, and continually provide value to them. And in turn, they told more people about us.
Not only did we make more money, but we attracted the right customers who were getting value from us and were more than happy to pay the premium price. It may seem counterintuitive to try to compete by charging more. But remember, even if you win the race to the bottom, you’re still nowhere near the top spot.
6. Ignore FOMO and be ultra-focused on your company identity
All of these factors will help you compete in a busy marketplace. But the most important by-product of following them is that it will give you an incredible amount of focus.
If you spend your days trying to copy the competition or chasing after the latest buzzwords, you’re going to zig-zag your way to nowhere. But, when you know who you and your customers are, why they want to buy from you, have a brand that people trust, and continually create value for everyone, you won’t get sidetracked with hacks and trends.
You need to have self-awareness and self-confidence as a company to stay the course when everyone else is drowning in the noise of the marketplace. When you’re confident in who you are, it lets you say no to opportunities that might sound exciting, but aren’t right for you.
For us, that meant turning down partnerships promising thousands of customers (which never materialized). Or saying no to Enterprise customers promising millions of dollars in revenue (which went against our brand and identity, and would most likely have required us to loosen our focus on the sales people’s productivity). It also meant focusing only on features we knew our customers wanted (not expensive nice-to-haves like a mobile app).
Focus will ultimately be what separates you from the hundreds and thousands of other companies in your space. Know who you are as a company and have faith that the path you’re going down was the right choice. This will help you clearly recognize where to invest your resources, and how to compete in even the most crowded markets.
If you’re going to play the game, play to win
The business software world isn’t getting any smaller. So why spend time complaining when you could be competing?
Don’t just look at what other people are doing and copy them. Look at what everyone else is doing and then turn around and look at your customer.
What do they need? Where are they being undervalued and ignored? How can you build something that brings them value and opens up a niche for you?
It won’t always be smooth sailing. Your competitors will copy your features, your strategies, and your unique vision. But if you learn how to compete effectively, build a loyal customer base, and constantly create value, the competition will never be better than second best.
You can’t change the game.
But you can always change the way you play.
Want more tips on growing your startup? Grab a free copy of From 0 to 1,000 Customers & Beyond, a book on customer acquisition for B2B startups I co-authored with Hiten Shah.