How to Position a Business in a Crowded Market
When we founded Help Scout more than seven years ago, we did so not because there was a lack of good customer service products in the market — there were several — but because there wasn’t one that mirrored our values.
Thousands of successful businesses, and most of my personal favorites, were founded as a result of a similar frustration. It’s a narrative that’s common on the wonderful How I Built This podcast. Entrepreneurs enter a “red ocean” — a crowded market, against all odds, and often without anything proprietary, patentable, or particularly unique.
But what they do have is a unique passion for an underserved subset of the market.
One great example of a company breaking through a crowded market is the story of Timbuk2, founded in San Francisco’s Mission District in 1989 by bike messenger Rob Honeycutt. Although messenger bags had been around since the ’50s, Honeycutt wanted a bag rugged enough for his brothers and sisters in arms, but functional enough for hip urbanites looking to trade in their backpacks.
Honeycutt quit his job, taught himself to sew, and started making bags by hand at a rate of 10–15 per day. Within a few years, he was selling custom bags in about 50 local bike shops. By 1994, Timbuk2 was the first company to start selling built-to-order custom messenger bags directly to customers, which they still do today. Walk the streets of any busy metropolis and you’re bound to see one of their signature bags, all of which include a lifetime warranty.
I’ve been carrying Timbuk2 bags since I was a teenager — what started as a fashion statement turned into a 20-year love affair with the brand, their values, and the quality of their products. I’m so proud to be a customer that we give every new employee a Timbuk2 bag with the Help Scout logo on it during their first week.
It all came full circle when Timbuk2 became a Help Scout customer a few years ago. Not only was it exciting for me personally, but it validated why we followed in their footsteps and decided to create a new product in a seemingly crowded market.
So what is it that enables a small company in a crowded market to stand out and achieve runaway success?
I’ve been asking this question for years, and what stands out to me in every case is the company’s ability to position their product. They know their market so well that they can craft a brand that’s differentiated from everything else, and uniquely resonates with “their people.”
How we differentiate
Choosing a customer service platform feels personal, because customers are the most important asset in your business. The platform you choose is customer-facing, so it’s at least partially responsible for their experience with your company. It should be a reflection of your brand, your values, and your priorities.
Back in 2011, the position we set out to own was the best customer experience. Not our customer, but our customer’s customer. If we could create the best experience for them, then surely the world’s most customer-centric companies would want to use our product. We’ve been focused on it ever since.
While the end-customer experience is still our main focus, we recently started to look at the problem in a different way, visualized by two axes: the Relationship axis, and the Sophistication axis. This was our view of the market.
The Relationship axis describes both the quality of the end-customer experience, and the level of relationship context that’s typically required to deliver a great experience.
“Transactional” may seem like a negative way to describe a relationship, but we all have transactional relationships with businesses that don’t require anything more formal. When you order fast food, for example, or stream a Netflix movie, both sides are happy with a transactional relationship.
My favorite brands differentiate in crowded markets by investing in the relationship, though. I’ve bought running shoes from Marathon Sports in Boston for the last seven years. I don’t live in Boston anymore, but I still purchase my running shoes there when I’m in town. Why? Because they have my information on file, they’ve watched me run, and they know what kind of shoes I like. We have a relationship, and by way of that relationship, they can give me better advice than anyone else. It feels good giving them my money. We built Help Scout for businesses that partner with customers in this way, so being much higher on the relationship axis is really important.
The Sophistication axis refers to the product and its capabilities. A sophisticated product can do anything you want it to do, but that comes with a host of challenges and complexities as well.
I liken this axis to the process of purchasing a suit. On the “simple” side, you buy something off the rack. Maybe there are some light alterations, but generally you are buying a suit that was mass-produced for someone that looks like you. On the “sophisticated” side, you buy a custom suit, requiring multiple fittings and 6–12 weeks before you have a finished product. Every detail is stitched to fit you and you alone. It’s one-of-a-kind, and there’s a price to match the effort that goes into it.
It’s worth noting that you can find high quality and craftsmanship on either side of the axis. The difference is more specific to the purchasing and manufacturing process.
The customer service market is full of sophisticated products, which is one of the reasons we chose to keep it simple. We wanted it to be easy for folks to get up and running in a few hours or less. Taking an “off the rack” approach allows us to focus our time on quality over quantity of features, offer better pricing, and provide free support and training to everyone.
Defining these axes allowed us to identify what position was most important for us to pursue in the market.
The axes in which you choose to position your business will vary depending on your market. We tried a bunch of different ones before landing on these. There are many ways to think about positioning — and I encourage you to lean into several of them — but this approach was really helpful in our case.
Positioning is always a challenge, but it’s worth the investment.
A mastery of positioning has the potential to set your business apart in any market, no matter how crowded, and pave the way for long-term success.