Since the internet became mainstream, much of the world’s technology innovations across industries have been geared toward improving experiences and outcomes for buyers and the businesses that serve them.
Customer experience projects have two priorities, according to Harley Manning, research director at Forrester Research:
Do the greatest good for the greatest number of your customers
Do the greatest good for your business with a focus on revenue and profitability
What is Category Creation?
Category creation is a business strategy that focuses on positioning and communication of a new problem observed in the marketplace, in addition to the solution for that problem.
If you drink coffee, you’re probably familiar with Keurig. You might not know that Keurig is also a category creation success story with a breakthrough product and business model.
Several years ago business people fell in love with cup-at-a-time brewing and variety that Keurig pioneered as an alternative to large coffee-pot hassles in the office. After the company moved into the home market, sales grew dramatically. In 2012. U.S. sales of Keurig coffee-makers and pods exceeded $3.8 billion.
Anthony Kennada on Category Creation
When I heard in October 2019 that Anthony Kennada would be speaking at the Nasdaq Entrepreneurial Center in San Francisco with Nick Mehta about category creation, I RSVP’d immediately. Nick and Anthony are the founding CEO and CMO team behind Gainsight’s success, as well as co-creators – among countless others – of the customer success management (CSM) industry.
The software industry, and other industries that rely on cloud and software-as-a-service (SaaS) technologies, have experienced significant changes in the past two decades given the internet buildout and continuously evolving customer expectations.
Many successful entrepreneurs and company executives have observed and acted on problems that have never actually had solutions. Companies like Hubspot created inbound marketing, Drift created conversational marketing, ServiceNow created digital workflows, and Gainsight created customer success management.
“These are all different markets and categories that didn’t exist until these companies evangelized the markets and problem sets, as well as the solution -- being their products and services,” Kennada said.
What’s the secret to success for category creators, whether they are startups or established Fortune 1000 organizations?
“The relationship between the CEO and CMO is critically important to get category creation right,” Kennada said. “Creating a category is really hard because it’s expensive; sometimes the ROI is hard to articulate in the early days, and it tends to be where there are not a lot of proven benchmarks.”
What’s next for Kennada after Gainsight, publishing his book (Category Creation), and joining the Front team as CMO in December 2019?
“Front has an incredible opportunity to not just create a category, but rather, to evangelize a brand new philosophy around work that will impact over 280M knowledge workers across the globe,” Kennada said. “Our CEO Mathilde Collin is a massive believer that unlocking meaning and fulfillment at work will lead to better outcomes for both employees and customers, and I'm excited to work with her to tell that story."
Jon Miller on Building Trust for B2B Solutions
Marketo was referenced in Kennada’s Category Creation book. Jon Miller, one of Marketo’s founders and more recently Engagio, believes that building trust is critical for success.
“In B2B, there is asymmetry -- if your customer makes a good purchase, their company is a little better off. If they make a bad purchase, they can lose their job,” he told me in this 2-minute interview on the need for trust in category creation.
“B2B solution providers that demonstrate expertise and thought leadership for potential customers and employees are in a better position to ultimately build the category and drive sustainable growth,” he said.
Medallia recently found through research that B2B leaders overwhelmingly view improving their understanding of customers, and of customers’ experiences with them, as a top business concern. Twenty-seven percent highlighted this as their company’s number one priority (including 41% of C-suite respondents), and 73 percent put it in the top three.
How to Create and Dominate a Category
"According to Simon Sinek in his famous ‘Start with Why’ TED talk, people don't buy what you do, they buy why you do it,” Tom Wentworth, CMO at Recorded Future, said.
“While companies in mature industries can compete on the ‘what they do’ (like being cheaper or better), that approach just won't work for companies trying to create a new future we haven't imagined yet. Elon Musk didn't create Tesla to give us better gas mileage, he wants to save the world,” Wentworth added.
Category creation is important from customer experience and growth perspectives. Done well, it inspires buyers, employees, investors, and influencers to think differently about problems, solutions, and industry opportunities. This enables companies to create new value and rise above the noise of previous or ineffective solutions.
Seven Principles for Category Creation Success
In Category Creation, Kennada provides a wealth of best practices, tips, and success stories. Here’s a snapshot to consider:
1. Live your purpose, values, and culture out loud
2. Focus on the people in your market, not just your products
3. Create a lifestyle brand for your category
4. Grow community by doubling down on live events and experiences
5. Activate customers as brand ambassadors
6. Recognize that analysts don’t create categories, customers do
7. Establish trust at scale through authentic executive communications
Real-time value propositions and solutions are being launched from category creators worldwide. According to IDC, by 2025 nearly 30% of data created will be processed in real-time.
“Creating effective customer experiences is one driver of the real-time trend,” said Blaine Mathieu, chief marketing and product officer. “People are no longer willing to wait to be processed in ‘batch mode’ -- they want a personal experience and they want it now.”
At the rate of change due to digital transformation and evolving customer expectations, there are plenty of opportunities for new category creators to thrive across all industries by applying proven principles and one final thing.
“Your product needs to support the core differentiation that is creating a new category,” said Nick Bonfiglio, CEO of Syncari. This speaks to product-market fit. Bonfiglio is no stranger to successful SaaS products at Marketo and more recently at Aptrinsic, acquired by Gainsight.
Fundamentally, I believe you are a creator. And teams of people are co-creators when they collaborate and apply technology, their unique talents, and shared purpose to create customer value and achieve business goals. It’s these beliefs that drive the Creatorbase mission.
My resource list can help you learn more about category creation:
Watch the category creation discussion with Anthony Kennada and Nick Mehta, recorded live on October 29, 2019, at the Nasdaq Entrepreneurial Center in San Francisco.
Read this Harvard Business Review article, “Why It Pays to Be a Category Creator,” which Kennada mentions in his book.
Learn how Medallia pioneered a category and created their culture with research and development.
Share your ideas, insights, and news about category creation in the comments below. Follow Creatorbase on Twitter, LinkedIn, and Facebook.