Planting a flag: How to go to market with a completely new product and define a category
This piece is from Jeff McMahon, CEO of Voicify.
With over 1300 startups being founded in 2019 according to CrunchBase, there are a lot of entrepreneurs looking to head out on their own these days. Some of these people and companies are heading into completely new waters with a product in a completely undefined marketplace. While defining a new category allows the chance to establish your company as the clear leader in a new space, the task can be incredibly challenging.
At Voicify, we have been shaping and defining a massive new category called Enterprise Conversation Experience Management™ starting back in in 2017. Our space leverages the massive growth of voice assistants in recent years, such as Alexa Dot and Google Home Mini. With growth in user adoption skyrocketing — there were 66 million people using smart speakers as of March 2019 — it won’t be long before these devices are commonplace in most American homes. The opportunity for innovative brands to develop in this space with numerous voice assistant platforms and chatbots is immense, but incredibly time consuming.
So Voicify has developed a software platform that allows enterprises to build a single conversational experience on the Voicify Platform and automatically deploy it out to every major voice assistant and chatbot. Market reception has been strong with innovative organizations such as like L’Oréal, Saucony, The Campari Group, Deloitte and Principal Financial Group all building engaging conversational experiences on our platform.
Creating our early success and finding our customer base has come from building on our plan for creating our marketplace. Any company setting out to define a new market or category will need to develop its own nuanced strategies for how to address that specific market, but here are five key success factors that we believe are universal:
Assemble a World-Class Team
This has almost become a cliché since Jim Collin’s Book, Good to Great, but assembling a talented, interdisciplinary team of technologies, strategists, marketers and sales executives is even more important when you are creating an entirely new product and defining a new category or market. You need to find people who are deeply motivated by the prospect of creating a new category rather than being overwhelmed by the sheer scale of the task or the fact that there is no clear path to success charted by others. These are people who enjoy operating in gray, undefined spaces and who are happy to pivot and recalibrate regularly, as is necessary in this type of endeavor. These rare individuals want to leave a legacy, not just make a quick buck and retire to a beach.
Educate the market
Other than assembling a world-class team, the number one task of any company looking to define or create a new market or category is to educate the market on the value proposition of your product or service. When you call on a prospect customer, they will likely have never heard of you and in many cases, they will not even know they have the problem that your product or service supposedly solves. If done correctly, however, you will be able to define and articulate the problem they are experiencing, whether they know it or not, and then position your solution as the obvious or only solution available to solve it. Some of the specific channels we have used to successfully educate the market are conferences, podcasts, blogs, social media, white papers and our website.
Create market validation
As you are educating the market it is critical to get validation from customers, partners and other key constituents. Early on, we were fortunate to identify some forward thinking and innovative executives within key organizations, like the ones referenced earlier. Those leaders have been energetic champions and evangelists for Voicify and our products and services. The result is that from an early stage we had referenceable customers from the top companies in Retail, CPG, Finance, Healthcare & Pharma, Sports & Entertainment, Education, Government and other verticals that we believe are most important to our success.
Prove value relative to your price
It is often hard to determine price and value when you have no competition to compare your pricing or value to. However, while we have no peers, we can show how much it would cost to develop voice applications and chatbots across all the major platforms if they were to pay contractors to develop them independently without our platform. We have based out pricing on being at least 10x cheaper and 10x faster. While this is not possible for all new products/solution, being an order of magnitude less expensive is a great way to demonstrate the value of your product within the new market you are creating. This is also not to say that our product is inexpensive or our that we have a low-cost selling strategy. In fact, we have developed a premium enterprise product. However, while we do not have a competitor’s product that we can point to, we can say that we have a solution that is an order of magnitude faster and more cost effective than the alternative to using our product.
Leverage parallel markets
Look for parallel markets to help tell your story and value. We are creating and defining Enterprise Conversation Experience Management™ category. However, it is not without parallel or analogous categories. For example, the Web Content Management System space is very well defined and has major companies such as Adobe, Salesforce, Sitecore and Episerver. Those companies all have systems that make it easier for the marketing departments at large enterprises to create and maintain content as part of customer experience on websites. Thus, when we are talking to our prospect customer in the marketing departments of large enterprises, we often reference that the Web CMS space as an analog to how our product works and where it fits within the new category we are defining. A majority of the time this resonates, and then we are no longer seen as a brand-new product in a completely brand-new category, but rather as something that is more familiar.
Final Thoughts
Growing a successful company is hard enough when that market is clearly defined, and you can use existing competitors to demonstrate how your product is faster, cheaper, and/or better. There is no shortage of companies that set out to define new markets or categories only to fail as a second or third entrant into the field comes in and dominates the market by leveraging the hard work the initial company did to educate and develop the market.
If you choose to choose the road less traveled, make sure you are ready of the long haul. You may be slightly early to the market or it may take longer than you expected to educate prospect customers. So, you should make sure you and your team are prepared. Ideally, you should secure enough capital to get you through the market education phase and into the customer traction and revenue generation phase. You should also do a sensitivity analysis on your projections to see how different growth rates and market penetration scenarios impact your profitability and long-term financial sustainability. As with many entrepreneurial endeavors it will likely be longer and harder than you anticipated. However, it is hard to imagine anything more satisfying in an entrepreneur’s journey than the legacy that comes from building a world-class team that works together to successfully create and lead a new market.
