CXL - Innovate or you're stuck

Your host today is Peep Laja, Founder at CXL

The stability of market positions is jaw-dropping. In established categories whoever is in the top 3 tends to stay there and whoever is #17 will also remain 17.

It's amazing to see how most marketing has little to no impact on this. Major changes in the market dynamics happen when new categories or subcategories emerge, making some companies more relevant and some less relevant.

Look at Figma. Coda or Notion. Klaviyo or Gorgias. Deel and Oyster.

They didn't grow because they beat incumbents in the brand preference game... they created a new subcategory and dominated it.

If you look at a buyer's decision process, they first select a sub/category (e.g. SUVs). Then they determine which brands to look at (consideration set) - Lexus, BMW, Audi. Then they make a selection.

So first 2 steps are about brand relevance. Category plays a key role in the decision-making process.

The very last part of the decision-making process is brand preference: Audi or BMW?

It's the least impactful, but guess where companies spend most of their money? They spend way too much on brand preference competition, and way too little on brand relevance competition.

In the Brand preference competition, you win if your brand is preferred over other brands. This game is played through incremental improvements. You add a new feature here and there. A little better, a little faster. The problem is, that incremental innovation is not exciting. It's not enough to move market dynamics.

It's hard to win this game because your "we're better" marketing message is not that exciting AND whatever "better" feature you shipped, the competitors will catch up and copy you very quick (or at least signal to the market that they have the same thing).

You need to spend atrocious amounts of money to make a dent, get into consideration sets and win the preference war.

Monday.com did it... but how much did they spend? Excess share of voice is a viable strategy if you can afford it. Odds are you can't, and you'll never catch up.

In the brand relevance competition, the competitor brand is not considered.

You can do that if you bring substantial innovation. With this type of innovation, you're improving something that people already using. You improve it so much that those improvements become the new must-haves. And companies that don't have the must-haves will not be considered.

Figma brought substantial innovation over existing design tools and won big. It was browser-first, which was made possible by their understanding and usage of new web technologies. Adobe wasn't relevant anymore.

Tesla created the electric car category and many didn't consider anything else. The electric SUV buyer didn't consider Suburban vs Model X. The Suburban wasn't relevant.

Companies that allocate more resources to substantial innovation take care of their differentiation and marketing problems while creating new subcategories. Companies that pull this off are winning big.

Connect with Peep on LinkedIn.

Your weekly dose of marketing updates

1. Playbook community

If you're in marketing in 2022, you're in the content marketing game. And if you don't have a strong yet simple content production and distribution playbook...

Well, what's important is that you have it now. Everything from setting your goals to establishing content pillars to guide you while creating the content.

Get your free playbook on creating a content and distribution framework here.

2. How to create a marketing funnel by responding to customer behavior

The marketing and sales funnel is a time-tested framework for mapping the customer journey.

However, with every new technology, channel, and distraction served up by the internet, that journey becomes less linear, and the traditional funnel becomes less relevant.

In the current landscape, to successfully guide a person from prospect to customer, you need to think about their behavior and deliver marketing that fits their needs at every stage of the funnel.

In this article, you’ll learn how to do just that. We’ll look at how to use the marketing funnel as a model for your content, how users behave throughout their journey, and what it takes to inspire action.

Read the entire article here.

3. Google Shopping course is here

This course will teach you how to get more out of the best-performing campaigns in the Google universe, learn the difference between a performance max campaign and a standard shopping campaign and figure out how to optimize your Google Shopping set-up.

Check out the course.

4. CXL job board

Some great new job offers on CXL’s Job Board this week. There’s more here.

If you want top brands to reach out to you, sign up for CXL Talent Pool. It's free.

And if you're a company looking to directly access the best marketing talent and skip all the spammy applicants, apply here.

5. Latest episode on How to Win

Oz Alon is the person you want to hear talking when it comes to obsessing with your customers.

He's the founder and CEO of HoneyBook, a client management software for small businesses.

He can tell you all about how they stayed ahead of competitors by aligning their product with the interests of their target audience, supporting them initially in ways that wouldn't scale.

Listen to him spill his beans on Spotify, Apple Podcast, or your favorite podcast platform.