📂 Hot take: The Ugly Truths of Category Creation

​

​

Today's newsletter is proudly supported by 42/Agency 🙌

​

When you're in scale-up mode and you have KPIs to hit... the pressure is on to deliver demos and signups. And it's a lot to handle: multi-channel strategy, remarketing, landing pages, email sequences, revenue ops, conversion rate optimization.

42/Agency, founded by my friend Kamil Rextin, has worked with companies like Sprout Social, Klue, Qwilr, Uptick, Onfleet, and many more to help them with all things demand generation. They're always my top agency recommendation for specializing in SaaS demand gen. Go read some spicy takes on freemium, "inbound marketing", and category creation and then schedule a free consultation.

​

​

Today's newsletter is authored by my friend Sebastian Cuervo from 42 Agency.

I'm excited for you to read their hot take on something that we all hear in startup-land.

​"In a liquid modern life there are no permanent bonds, and any that we take up for a time must be tied loosely so that they can be untied again, as quickly and as effortlessly as possible, when circumstances change." — Zygmunt Bauman​

Categories are the mental shortcuts or frameworks that allow our brain to understand the myriad of stimuli around us. We are prone to think in categories because rigid structures of similar patterns make sense and simplify the world around us. The brain works on mental models - when you see a door, you intuitively know how to open it because of your existing knowledge of how doors work.
​
Categories simplify our lives and our experience as humans. But categories today, in a more digital (not physical) realm are blurry and unstable, and the effort to create one might not be worth it.
​
Let’s swallow the red pill and review a couple of reasons why it does not make sense to start your own category from scratch.
​
​Category creation truths:

1. Creating categories is expensive and very difficult: Drift created the Conversational Marketing and Revenue Accelerator categories, and they still have an intense uphill battle against Intercom & one could argue conversational marketing never became a thing - we all agreed forms are just more efficient & work just fine. They did however do a great job and convinced many of us that it made sense to purchase their product, but that does not mean creating your own category island equates success.

2. Creating a category means that you have to market the product and the category: In other words, it doubles the effort. For example, the reward might be great for the early stages of the tech adoption / early adopters curve. Yet, if you want to scale up and reach people who are not as tech-savvy with longer sales cycles, the amount of explaining you have to do is simply too expensive.

3. Category creation is not a one-size-fits-all strategy for growth: "The Ehrenberg-Bass Institute asserts that the recipe for growth is to build a brand's penetration by increasing its mental and physical availability.". As Kantar studied on the link above, brands need two things to grow: mental and physical availability. Given that digital products have no problem being physically available, being mentally available becomes the domain to conquer. However, this one is a quality many SaaS tend to overlook; being radically different and providing a poor experience with the product will not work (it will backfire).
​
Becoming a leader in a category means you are salient (the top-of-mind brand that meets category needs), different (you are worth more because you are unique), and meaningful (functional needs and communication needs met). Creating a catchy and different story for your product is not the same as creating a category. Creating a great experience with the product, quick customer feedback loops, premium customer service, and predictable revenue operations is probably better for your SaaS.

4. By creating a category, you miss out on the intuitive associations people already have built: This one is self-explanatory, but just think that if you position yourself in a category, you can use the language, semiotics, symbols, etc. that others have already created before you. Just don't copy whatever your competitors say; keep it original and focus on your users and how your product helps them accomplish something. Here is an excellent example of how a bike company leveraged category positioning comparing itself with cars and public transport by Sam Grover.

While there isn't an ultimately trustworthy and universal source of category creation, one thing is for sure: It is not as simple as we have been led to believe.

Just because many marketers live in a digital bubble where terms like Revenue Intelligence/ Revenue Acceleration/ Conversational Marketing mean something does not mean actual buyers experience the same world. Nor should they go through the cognitive load to figure out what you are trying to sell.

It is time to kill the buzzwords and start to leverage clarity over cleverness.

It is time to tear apart the myth that "All happy companies are different; every unhappy company is doing the same as other unhappy companies." Thanks Mr. Thiel.

You can be wildly successful belonging to an already established category providing a great product and experience for your customers. Your SaaS can thrive and succeed even if the ocean is red and the category is crowded. The key is to truly understand your customers and solve their problems. And, of course, to invest across the buyer lifecycle, being present and providing insightful solutions and insights even if they are not necessarily ready to buy. Only then will you be able to develop a revenue engine that is steady and that allows you to cross the chasm and get the traction startups need to survive in a highly competitive digital ecosystem.

This is not a Tolstoy story, nor a Thiel binary tech world. It is a rich and saturated market with lots of opportunities for those who manage to solve people’s problems.

Note: Read the full article on Category Creation here.​

—Sebastian

Thanks again to Sebastian for the great hot take.

What did you think?

—Corey

p.s. do you want to be able to compare your marketing metrics with other SaaS companies? Fill out the State of SaaS Marketing Survey →​

Thanks again to our featured sponsors:

1. ​Agorapulse: “The Zappos of social media management platforms” helps you plan, schedule, and report on your social presence.
2. ​Ahrefs: Ahrefs Webmaster Tools is a free SEO toolset to help you build backlinks, improve your site, and rank for keywords.
3. ​The Juice: “Spotify for marketing & sales content” to discover blogs, podcasts, and videos to help you grow your business.
4. ​42/Agency: My #1 recommended demand generation agency for SaaS to help you drive demos and signups.
5. ​Supermetrics: Get all your marketing data into your reporting tool of choice. Push data from 70+ integrations into Google Data Studio, Sheets, and more.

​

​

​