3 ways to outcompete
3 ways to outcompete
Steal these proven tactics from hyper-competitive companies
👋 Hey, Toni from Growblocks here! Welcome to another Revenue Letter! Every week, I share cases, personal stories and frameworks for GTM leaders and RevOps.
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Slack beat Hipchat
Zoom beat GoTo Meeting
UserPilot beat Pendo
All of these companies beat out their competition in hyper-competitive markets.
There are hundreds of factors in why each one won. But after speaking to hundreds of people in hyper-competitive spaces, three strategies consistently come up.
And whether you’re in a high-velocity market or not, you can still use a variety of these yourself.
Outcompeting on Differentiation
In a crowded market people will come to you for the same reasons they go to a competitor:
They’re looking to solve a core problem.
And let’s just say all market competitors solve this problem really well. How’s this prospect supposed to make a decision?
You have to differentiate yourself.
Back in my Falcon days, we were in a competitive market of social media management. And in that market, there were a couple of vendors who were really good at one thing.
Some would be great at publishing/engagement, others would be great at analytics, and some would have a killer monitoring solution.
In our case, our core was publishing and engagement (and a little analytics), but we also had other products in our suite, like listening (monitoring). The latter wasn’t better than what other single-point vendors already provided.
But we knew we needed more to have appeal in the market and be seen as a different player in the mid-market. This approach enabled us to say we’re the all-in-one solution.
And we could admit on sales calls that, sure, one single point vendor will always be better in specific areas.
“But it sounds like it’s really important for you to have [insert whatever the vendor doesn’t have].”
Now all of a sudden, despite having a similar product, sales calls got a lot easier for people who wanted more options. That was our differentiator.
In my experience, people get this wrong a lot. Especially when they’re asked about differentiation, they point to their marketing and branding.
The reality is, there has to be a sales conversation.
Prospects might look to you because they love your brand, but if a competitor does the exact same thing and is 10% cheaper, your brand won’t take them across the finish line.
In SaaS, it’s really hard to make people pay a premium because of the brand. There has to be elements to back it up.
Outcompeting on GTM
Simply put, this means building a more awesome machine to plow through your competitors.
If you run a lean machine, that means you can do a lot more because you can distribute some of your costs to where they’ll have more leverage.
Imagine you woke up tomorrow and saw your competitor raised their prices by 20%
What does that enable them to do?
All of a sudden, they can pay 20% more for paid search. Maybe they can go to more events. Or they can make more hires that you just can’t.
The leaner they are, the more they can afford a bigger CAC, and the luxuries that go along with it.
Specifically, the GTM optimization I’m talking about can mean anything from picking up leads faster, talking to them in a smarter way, or optimizing the different routes the lead could take.
Basically, you’re incrementally improving the full funnel conversion rates from something top end of the funnel to something at the bottom end of the funnel.
Some of the best companies I’ve seen do it subscribe to a hyperfocus mentality. Meaning they find one motion that works, and put all their resources into it.
By keeping that one motion efficient and lean, they can compete against people running two motions or more.
RevOps are obviously the best people on your team to run this. And there are tools to help you.
Outcompete on Cash
The last way is something that has been extremely popular for the last four or five years: having more cash on hand.
There are two ways that companies achieve this.
First, it’s based on your customer base. The bigger it is, the bigger your source of cash.
The math is simple. If you’re a 50 million player going up against a couple of 5 million players, you have a big advantage simply because of that, right?
So you can basically outcompete on cash and on size, and allowing you to make bigger bets like moving into a new market.
But what if you’re early and you don’t have enough customers?
The tactic then falls on the ability of your CEO or CFO to fundraise.
One of the biggest winners in this strategy? Drift.
Series A: In January 2016, Drift secured $15 million, led by CRV.
Series B: In September 2017, Drift raised $32 million, led by General Catalyst.
Series C: In April 2018, Drift raised $60 million, led by Sequoia Capital.
Series D: In September 2019, Drift raised $32 million, again led by Sequoia Capital.
For those following along, that’s only seven months from Series B to C. That sort of rapid investment allowed them to take bigger risks and acquire better assets.
Of course, Drift raised because they could. Maybe you can’t (to that level).
And maybe you’re already squeezing enough out of your customer base.
If that’s the case, then go back and focus on a version (or combination) of strategies 1 and 2.