?? What's the big deal with Category Design... when to discount... and a B2B startup's 3-step GTM playbook

In this issue:

1. What is “Category Design” and examples to help you apply it
2. When is it ok to discount… and why isn’t there an Appsumo for services
3. Startup chronicles: Follow Moveo’s “0 to 1” go-to-market journey in the US

Scroll all the way down for a preview of our upcoming "Ask the experts" segment

What is “Category Design” and how to apply it

I’m doing a deep-dive on Category Design (“CD”) this month.?I’ve traced the origins of CD to the book “Positioning: The Battle for Your Mind” by Al Ries & Jack Trout that came out in 1981.?So it’s not a new concept by any means.?But it hasn’t reached mainstream yet and it's a powerful concept for #b2bgrowth. The first book purely about Category Design is "Play Bigger: How Pirates, Dreamers, and Innovators Create and Dominate Markets" - a great read!! I think we’ll start seeing more Category Designers in the coming years...

So... what is Category Design?

The idea behind CD is that most companies compete in crowded markets and try to differentiate by claiming that they’re better, faster, or cheaper.?To communicate this differentiation, they have to scream louder than the competitor next to them.?And eventually, the space becomes over-saturated, customers are totally confused or just don’t care anymore, and it’s a race to the bottom.

The solution is NOT to differentiate and scream louder.?It’s to be DIFFERENT in a way that’s difficult to copy.?To accomplish that, you want to define a new category or niche.?And since you’re the company defining it, you can more easily dominate it.

It all starts with a deep understanding of your ideal customer and their problem (the “job to be done” if you’d like).?You’re not coming up with a new problem but rather with a different way to solve it.?You crystallize that new way in a distinct point of view (“POV”).

Put your POV in front of the right people: not ALL customers, just the RIGHT customers.

For example… Saab “the winter car”

I just had a chat with CD practitioner John Rougeux ?? who shared the example of how Saab couldn’t win as just another car so they positioned themselves as “the winter car” and dominated that space.?I thought that was pretty funny - and fascinating that it worked! - because a car should be for all seasons, right? What’s next: we need one different car for each season? ??

Nevertheless, this clear positioning makes it much easier to have a POV that resonates with your ideal customers and works as the north star for messaging, offerings, acquisitions, etc.

The “horseless carriage” ??

Another example I read in "A Marketer’s Guide to Category Design" by Category Pirates is Ford.?At first, Henry Ford was pitching the car as “the horseless carriage.”?

“What is that?” his customers would inquire, with a very perplexed look I can only imagine. THAT’s your cue to know when your customer is ready to get educated.

When you have a new solution, don’t start by educating your audience because they don’t care yet. Start by showing your personality and entertaining or intriguing them with a stark contrast to what they’re used to. And once they’re primed with curiosity, THEN educate on your difference and benefits.

Drift “invents” conversational marketing

Drift is essentially an AI-powered chatbot.?There are hundreds (thousands?) of them.?So they could compete head-on with the rest in the same “chatbot” category and fight an uphill battle for scraps… OR what they did was create a new category that they called #conversationalmarketing

And then, they even wrote the book about it to become the de facto owner of the category! ("Conversational Marketing: How the World's Fastest Growing Companies Use Chatbots to Generate Leads" published in 2019)

On their website, they only talk about building customer relationships through conversational marketing.?It’s never about the lowly chatbot ??

Drift shifted the entire narrative to be customer-focused, instead of talking about AI, new features, or how they may be marginally more accurate than competitors.

Hmmm… so how can I apply this to my business?

Here’s a real-time example of applying CD to help a business stand out.?Boost Win Rate (“BWR”) works with B2B companies in the crowded “build your authority with video” space.?It’s different because it realizes that #b2bvideo is broken.?Who wants to invest money & effort to get a handful of views and no engagement?

B2B video is difficult, expensive, and ultimately the time-to-value is very long so most companies end up wasting time & money before they eventually give up.

B2B companies don’t want video (or any type of social content for that matter)… they want distribution!

Besides a bunch of ways BWR stands out (with a "7 videos in 7 days" challenge to improve your at-home studio and on-camera presence, mini masterminds to capture authentic content, and pods for early feedback and traction), these are just points of differentiation.

How it’s DIFFERENT is that it says “NO” to B2B video and makes it all about the distribution.?Their POV is “You don’t want video, you want distribution.”?Their content is about “B2B video is broken, doesn’t work, is too expensive, doesn’t have ROI etc.”?And their category is “Traction-first Video” – though there’s clearly room for improvement here ??

When it’s ok to discount your product or service… and why isn’t there an Appsumo for services?

My favorite part of the Category Pirates’ "A Marketer’s Guide to Category Design" was the discussion about discounting.?Most brands do it in a transactional way, which is wrong (think Groupon or Black Friday deals that fail to build any loyalty to your brand or connect you with the right customers).

What's wrong with discounting?

Perhaps the best indication that this type of transactional discounting doesn’t work is the collapse of Groupon, which went from a peak valuation of $12bn all the way down to ~$200mm market value today.

Merchants were initially enamored by the idea of getting hordes of new customers through their doors.?But they quickly realized that these were the worst customers looking for deals.?Few - if any - would come back and pay full price.?And in order to make up for the lost margin, merchants had to raise regular prices in order to be able to offer Groupon’s steep discounts, which alienated the regulars too!

How to properly discount ??

Instead, you should only discount if you’re getting something in exchange for that discount.?For example, discount if you can ask for a referral or testimonial in return, or if it’s a great “foot in the door” offer for you to upsell and expand a relationship (a “land and expand” strategy).

This got me thinking…?

What about an Appsumo for service providers (coaches, consultants, agencies, etc.)??Appsumo is a very successful discounter of digital products (the OG), especially in B2B SaaS (now they have tons of competitors, at least a handful I can think of off the top of my head, like PitchGround by Udit Goenka).

Appsumo-style discounting works for digital products because they get early adopters, feedback, testimonials, backlinks, and non-equity funding through upfront payments.

That could also work for Services startups because they need case studies and testimonials as they build their portfolio and need to establish social proof.?And referrals can be very valuable.

But I couldn’t find any marketplaces discounting Services but I think there would be some demand for startup service providers or even established ones launching new offerings.

My rationale for NOT building an Appsumo for Services is that the market opportunity is much smaller.?Primarily due to capacity constraints.?Service providers can only serve maybe 5-10 extra clients whereas digital products are infinitely scalable so they can sell thousands of licenses with no real capacity issues.

What do you think? ??

Follow Moveo’s "0 to 1" GTM journey in the US

If you’re a B2B startup developing your GTM plan, comment or DM me to explore if you’re a good fit to get featured in this section.

M?veo AI is European super-charged conversational AI "that builds itself.”?OK, most buyers would translate this into “yet another chatbot” so what would be a feasible GTM plan to enter the US market??We had some long and fun brainstorming sessions with Moveo... (full disclosure: we’re investors and advisors)

Positioning ??

AI-powered chat is a very saturated space that leaves no room for competition.?Our a-ha moment was when we realized that implementing AI in a business is a painful process with a steep learning curve and questionable ROI.

That’s how we came up with the positioning of “AI that builds itself” which evolved into “1-click AI” to highlight that it’s frictionless and doesn’t need any effort from the client.

Coupled with that, we also developed the POV “AI still sucks” which means creating content that highlights the pain point (AI chatbots that give silly answers that lead to disasters etc) …?

I think this will resonate with many companies that have actually tried AI. And it sounds exciting - or at least controversial - right?

The power of laser focus ??

Moveo has a very talented team.?But growing in the US while managing already-successful international operations can be overwhelming.

There are so many directions, marketing experiments to run, channels to test.?So many rabbit holes… you can easily get lost.

Too many choices + shiny new objects + getting pulled by legacy operations = paralysis

Which makes the new positioning all the more important.?It functions as the north star and gives the team laser focus.?If any activity doesn’t align with the north star, chop it off without debate.?Saves a ton of time, effort, and frustration.

0→1 traction playbook

With the team super motivated behind a bold positioning, the question becomes how to get it in front of the right customers.?So we came up with this 3-step B2B SaaS traction playbook.?Follow the story to see how different experiments play out!

Step 1: Share expertise to connect with influencers

AI is very on-trend but it’s also difficult to understand, which creates an opportunity to educate potential channel partners.?So Moveo will organize ask-me-anything sessions (AMAs) for AI newsletter authors, and offer to advise AI journalists at business magazines like Forbes, Fortune, and Inc.

Step 2: Build social presence

Moveo is starting its video journey on LinkedIn, YouTube, and even TikTok!?But it won’t start with boring educational videos because nobody cares (yet). They will start by sharing their story - including their many challenges - to humanize Moveo… because people connect with people.?They will also sprinkle in some entertainment by showing how most AI chatbots make silly mistakes.?And only AFTER these pieces of contents are out will they talk explicitly about the problem and the solution.

Step 3: Leverage other people’s audiences (OPA)

Next, Moveo will launch an Appsumo deal to gain early adopters that will provide feedback, backlinks, and testimonials (social proof). Many startups are scared of lifetime deals, but you just have to structure them right and have depth of product.?As early adopters grow, Moveo will have many opportunities to grow with them through services that help them leverage the power of AI within the organization.

After getting traction through social and the Appsumo deal, Moveo will expand their audience by appearing on podcasts like Nathan Latka B2B SaaS podcast, sharing their story on Starter Story and launching on Product Hunt

What would you do differently? ??

Thanks for making it all the way down here ??

See you next week! Oh, and we're launching an "ask the experts" segment if you want to see an example and submit your challenge (at Snackable Idea we interview dozens of experts every month, and we try to get some free advice for our audience)