In Real Leaders Don’t Follow, author Steve Tobak explains how real entrepreneurs can start, build, and run successful companies in highly competitive global markets. He provides unique insights from an insider perspective to help you make better-informed business and leadership decisions. In this edited excerpt, Tobak explains four of his marketing principles that will help make your company a success.
If marketing is critical to the success of any business — and believe me, it is — how do we reconcile that with the reality that few business leaders actually understand marketing and give it the focus it deserves?
I think I’ve figured out the answer. While selling is relatively straightforward and intuitive, marketing is not. Marketing is complex and nuanced. That’s why it mystifies so many, and yet it’s absolutely critical to business success. That’s why the four principles I’m about to put forth are important.
Principle 1: In competitive markets, it’s winner take all.
While markets tend to grow and shrink over time, at any point in time, markets are static, and so is market share. Those near the top enjoy higher margins, pricing power, and more money for employees, perks, and future development. Those near the bottom will soon be goners. And it’s a tough slog for everyone else.
Contrary to today’s popular feel-good wisdom, in business, winning is everything. To win, your products, support, sales, and communications have to be hands down better than your competitors’ in the eyes of the customer. And since you have the best products, the customers win, too. The only people who lose are your competitors. That’s the goal. If you’re not cool with that, you shouldn’t be in business. Period.
It’s a good rule of thumb to aim to be number one in every market you enter. Your strategies and plans must reflect that goal. If they don’t, competitive life will get ugly. Sure, you can gain market share, but something has to change for that to happen. It takes planning, strategy, money, and time to gain market share.
It’s a competitive world. It takes a lot to win. The equation that determines the success of your products and your company has many variables. Business is all about how effectively you use and control those variables.
Principle 2: Innovators turn ideas into products people can use.
While neither Steve Jobs nor Apple invented speech recognition technology (aka Suri), since they’re the ones that incorporated it into products millions of people buy and use on a daily basis, that makes them innovators. Innovation isn’t necessarily coming up with a novel idea — it’s coming up with a product people can use.
Besides, first to market is rarely an advantage. That’s because technology is so complex that it usually takes several iterations for the right combination of functions, features, ease of use, and price to emerge before the market takes off. Personal music players, smartphones, and tablets had all been around for years when Apple entered those markets with the iPod, iPhone, and iPad. You can search far and wide for the first movers in those markets, but you’re not likely to find them.
Some people are great inventors. They come up with wild concepts nobody’s ever thought of. But great marketers tend to be innovators who turn ideas into products people want and need. Marketing thrives on reusing ideas in new ways, and companies with great marketing thrive as a result.
When industries are brand-new, if you build it, customers might come. But once markets begin to mature and the competition heats up, product development and marketing need to be joined at the hip. In innovative companies, they usually are.
Principle 3: Differentiate or die.
As a business owner, it’s a necessity to have a differentiated value proposition. But differentiation isn’t just about focusing on what you’re best at. Often it’s more about positioning: how you define and segment the market.
For example, how did WhatsApp, a four-year-old company with one app, 55 employees, and no revenue to speak of garner a half-billion highly engaged users and end up being acquired by Facebook for $19 billion? After all, the market is flooded with thousands of apps, including dozens of messaging apps, some from the likes of Google and Apple.
The answer is part focus group of one, part market segmentation, and part development. Its founders wanted a simple messaging app that didn’t store messages, collect user data, or bombard users with ads, games, and gimmicks. They thought others would want that, too. That was their value proposition.
In his book, Marketing High Technology, Bill Davidow says, “Segmentation lets Davids slay Goliaths.” That’s exactly what happened with WhatsApp. Product positioning and market segmentation are perhaps the most powerful tools for coming up with a differentiated value proposition that can set your business apart from hordes of competitors. It’s not complicated: You simply want to leverage some sort of unique capability, innovative positioning, or both to target a distinct market segment with specific customer attributes. Once you establish a beachhead—a niche you can call your own—you expand from there.
If you can’t distinguish your company and its products against the competition in a way that’s meaningful to customers, you’re doomed to slim profits and minuscule market share. And just because you say you’re different doesn’t make it so. If customers don’t agree, forget it. That’s how marketing connects products to customers: through a differentiated value proposition. Without it, you’re doomed.
Principle 4: You can never afford to lose a customer.
There’s a lot of confusion over cause and effect in business. Too many entrepreneurs think it’s all about them and their employees. It’s not. Not even close.
There are actually three and only three major stakeholders in any company: investors, employees, and customers. Investors give employees money to make and sell products to customers. Without customers, employees lose their jobs, and investors lose their money. No customers, no company.
Winning and keeping customers is the sole purpose of any business. That doesn’t mean you need to do anything a customer asks you to do. It just means your primary goal is to bring unique value to customers. By all means, have a purpose. Set your sights on achieving professional goals. But if you can’t create customer value, you won’t succeed in either.
Many of today’s would-be entrepreneurs have that backwards. They’re focused on themselves, not the customer. It’s all about me, me, me. My personal brand. My blog. My social media platform. My friends and followers. My network. What can you do for me? What’s in it for me?
What a load of self-serving crap.
In a world where so many are focused only on themselves, it’s never been easier to stand apart by focusing on what really matters: serving the customer. That doesn’t just lead to success. It leads to fulfillment and good karma, too.