Whether you’re selling to businesses or consumers, low-touch clients or enterprises, freemium or high-end premium, people always want the best in the world. And someone will always give them just that.
Everyone has their own definition of the word best but they all, without exception, want the best.
“There is only one real sin, and that is to persuade oneself that the second-best is anything but the second-best” - Doris Lessing
Usain Bolt is a world record holder in the 100 metres, 200 metres and 4 × 100 metres relay. There were 306 medal sets (Gold/Silver/Bronze) in the 2016 Olympics, so even though you could compete in 306 different ways to be the best in the world, I doubt that you’re seriously considering it.
There are more ways to be the best in the world, for instance, there are more than 40,000 current Guinness World Records, some of them as ludicrous as the world-famous Most toothpicks in a beard.
But I’m not talking about that kind of best in the world.
“People where you live grow five thousand roses in one garden. Yet they don’t find what they’re looking for. And yet what they’re looking for could be found in a single rose.” - The Little Prince
Imagine you’re looking to rent an apartment from a realtor. You’re looking for an apartment in the Chelsea neighborhood in NYC. Your best friend lives in East Village and knows the BEST realtor ever to walk the face of the earth. Of course, you want the best realtor in the world, they all charge the same commission anyway, and you’re looking for a place to live, you’re not gonna save a few bucks on such an important thing. You call up this god’s gift to mankind realtor and you immediately hit it off. You really want that realtor to find you a place. They know their stuff! So you casually say, a few minutes into the conversation, “What kind of places do you have in Chelsea?”. Silence. “Chelsea?” they ask. “Yeah, you know, near the market would be great.”. Longer Silence. “Uh, you do know I’m in East Village right?”. Now it’s your turn to be silent. “Can you recommend anyone good for Chelsea?”.
You get the idea. If you’re a realtor, you’re really competing with other realtors a mile or so away. You’re definitely not competing with every realtor in the world. Not even in your city.
Let’s look at a couple of ways to create a “world” where you come out number one.
Price
NEVER, I repeat, NEVER compete on price. At least not officially…
So we used real estate, now let’s go to cars. A lot of people commute for hours a day, they need a fancy car - great seats, advanced climate control, wipers that detect rain and automatically clear your windshield, you name it. Good for them! I drive 20 minutes to work. I need a functional car. I didn’t buy a cheap car, I bought the best car for me. And it just happens to be cheap. Not because I couldn’t spend an extra $10-$20K for a car, but because I don’t need all those things. So granted a Mercedes is better than my car in any benchmark, I honestly don’t need one. But saving big $$$ to get exactly what I need is great! So actually, my cheaper car is better than a Mercedes.
Segment
Salesforce, currently valued at a gazillion dollars, is THE BEST CRM hands down.
Don’t believe me?
They have a skyscraper in the middle of San Francisco!
And they are dominating the market with a 20% market share, double that of their closest competitor - SAP.
That’s right, they are the lead player with only 20% of the market.
Why do I say only?
Because while that’s AMAZING, that still means that 80% of CRM revenue goes to other companies. Some with 5-10% market share like SAP and Oracle. But some with 1% or less.
Oh, and by the way, it’s a $40 Billion market, so 1% is $400 Million. 0.1% is $40 Million, annually, that’s right!
So if there’s a segment of businesses, that you can be the best CRM in the world for them, because they are too small for Salesforce to care about, and there are many such segments, you could get a fraction of a $40B market. And grow from there. Not bad.
Location
Sometimes, even in our global cloud-based world, location does actually matter.
This was obvious in our realtor example, also in appliances, where voltages and local safety regulations apply, but this could also be applied to many industries.
In food and beverage, there’s a strong bias for local taste. In beauty and lifestyle products there are local fashion trends. But even in cloud-based solutions, there are local leaders. Take accounting and legal for instance. While there are radically superior products out there for accounting in the USA, they fall short because they don’t apply for local taxation legislation in other countries. If your country is large enough to support a small business, you could get enough revenue to start a decent-sized company in your backyard and start competing from there.
Demographic
Our last example, and by no means least, is through demographic. Age, gender, race, political affiliation, hobbies, these are sometimes great ways to differentiate a market.
To my knowledge, the smartphone industry is age, gender, and race agnostic, so this doesn’t really apply. But other markets clearly segment themselves demographically.
Axe built a whopping brand based on branding for men. Walker & Company built a similar brand based on curly hair.
Snapchat won over the youngsters because Facebook and Instagram seemed “old”.
Tinder lost a lot of market share to Bumble, who prioritized women’s needs in their dating app.
Strava won over the cyclists from all the general exercise apps.
Final thoughts
In any market, there are unsatisfied customers, a segment of the market that “isn’t getting any love”. If you find such a segment and listen carefully, you might just find a way to be the best in the world for them, without having to compete in the Olympics. Sometimes one killer feature can be all it takes to win over a segment.
Have you found how to be the best in the world for your segment?
I’d love to hear about your journey towards product-market fit!
Photo by Museums Victoria on Unsplash
"Never compete on price."
I think we're always competing on price to one extent or another. It's always a factor in the customer's purchasing decision (and in their ongoing decision to keep paying).
I think what people mean is: "don't make price the only factor you compete on." That makes sense. 👍
> NEVER, I repeat, NEVER compete on price.
I've always known this deep down, but only recently embraced it. Not just because I tremble at the idea of trying to make a living from $5/mo subscriptions, but even more so because I want my work to massively help the people who use it. And for better or worse, people invest more in things they've already invested in.
Two years ago I started an accountability group that cost $650 per year to join and I immediately got two people inside. I pivoted away because I was inexperienced enough to realize that $1,300 in two weeks for a brand new idea with no audience was good, not bad.
Despite the fact that the community never lived up to what I hoped it would, I'm still having regular accountability check-ins with one of those two people.
My next venture is largely based around community once again. And I strongly feel that pricing on the higher side is the way to go. Because it's a community about belonging and self actualization and being the best version of yourself. And - aside from the fact that I'll be spending my full days on this and can't afford to sell it for less - nobody is going to believe the dream you're selling them if the pricetag doesn't match. If I tell you how much this thing could help you, and then I ask you for $5... there's going to be some cognitive dissonance there.