What to do when a Big Dog enters your market
You created and sell a product that is the best in its class. You have built a company that is one of the leaders in your industry niche.
Your product is technical, bought by technical people, but the approvers of the purchase - and the people who benefit most from the product - are non-technical business people.
You are looking for ways to expand your market, and you know that part of that challenge requires that you get through to the business people. You're working on this.
Meanwhile, a Big Dog in the tech industry has decided that your success - and the success of your direct competitors - is strong enough to warrant their entry into your market. They've started a division selling exactly what you sell.
Now what?
In my experience, participating in and observing these situations for years, one of two scenarios can play out. Either they win, or you do.
Scenario #1: They win.
The Big Dog has an immediate advantage when they enter your market. Because they are big and "known," the press pays more attention to them ("press" meaning anyone who covers the industry, including bloggers and discussion group moderators). Their entry into your market causes the press to pay attention - and write stories that reach the people you are trying to sell
to.
In some ways, this is great for you, because the press is now covering your market in a way they didn't before. The problem is, most articles won't mention your company, because you haven't been on the press' radar screen (remember, this is the "they win" scenario).
Business managers are one of your target audiences. A business manager who sees an article about the Big Dog entering the market will send a copy of the article to the IT manager in an email, in which he asks, "What do we know about this technology? Could it help us do X?"
If you have been successful selling to IT managers, and this IT manager happens to know about you (or finds out about you when he Googles the subject), at least then you will be in the running with the Big Dog. So far, the Big Dog has done you a favor. If the IT manager is not familiar with you, and you don't come up in his Google search, the sale will proceed without you.
Let's say that the IT manager does see you in his Google search. He will do what IT people always do; they gather product and company data, build a comparison table, and start to prepare a report for business manager. He will certainly visit websites and forums, and will ask his technical buddies about their experience with your type of product. He might even decide that you have the best product.
The IT manager will then present his findings to the business manager.
The business manager, remember, has already become familiar with the Big Dog and the Big Dog's product, because he read the article about it. He now understands what you have been struggling to tell him: How the product could help him, and how it has helped others. The language used in the article was language he could understand - more about business than technology. When he went to the Big Dog's site, he saw similar language - plain business language - that reinforced what he read in the article.
He will also be inclined to think that the Big Dog knows what it's doing, is devoting sufficient resources to the success of the new division, and their customer service is at least up to industry par (which isn't fantastic, but at least it's a known quantity). His company may also already use other Big Dog products, and he may have some sort of agreement with the Big Dog. All of this adds up to the business manager being more inclined to go with the Big Dog than some Underdog, even before he gets any input from the IT manager.
The painful part of this is how quickly a Big Dog can undermine all the work you've done creating your product, selling it, and growing your business. Big Dog simply waltzes on to the dance floor you created with your blood, sweat and tears, and starts getting customers to dance.
Unfortunately, it gets worse.
The Big Dog probably doesn't have a superior product. The developers who are especially good at your type of application are probably working for you or a competitor. The developers working on the Big Dog product may not even specialize in that area; they may have been brought in from other types of Big Dog projects. Or, the Big Dog got into your market via an acquisition, and the best developers bailed out shortly after the deal was signed.
The product may not have anywhere near the functionality that your product has, but the developers probably did get one thing right: The user interface. That's one thing the Big Dog developers know how to do. The business manager has probably used other Big Dog products, so the interface will be familiar to him.
The "buying process" momentum is clearly in the favor of the Big Dog. The IT manager, who may be personally convinced that your product is the best one, will have a very hard time getting the business manager to agree to go with an Underdog. The differences will be too subtle to be of much concern to the business manager. The Big Dog product will be "good enough" for his needs. The perceived sufficiency of "good enough" will create sales for the Big Dog and take sales from you.
All your hard work will have created a primrose path for the business manager's purchase decision. Given everything we've just covered here, there will be no doubt in his mind that going with the Big Dog product is the safest choice.
This scenario will play out over and over, until your sales slip so much that your business is threatened. Big Dog will then try to recruit your top developers, further eroding your ability to compete. A sad story. Very, very common. It doesn't have to happen to you, though.
Scenario #2: You win.
For some time, you've known that Big Dog has been sniffing around your marketplace. You were positive of it when they came calling on you, pretending to want to do a deal - so you would spill your guts and give them all sorts of helpful information. But you knew that they do that sort of thing, and you were very careful. You didn't let yourself get suckered into the idea that they were serious about acquiring your company. You didn't want to sell your company anyway.
One of the reasons that the Big Dog knew about you, in the first place, was because you have done a good job getting your story out to the beyond-the-technical-audience press. Business media covered your product and company because you had, from the start, made sure that you could explain what the product could do for business managers, in their language. You had case studies on your website, organized by industry. You had a regular email campaign, where each new industry-specific case study went out to prospects - and existing customers - who were in that industry.
All of your copy, except for copy aimed specifically at your technical audience, is written so any business manager can understand it. You focus on describing which kinds of results can be achieved and how a business manager would take advantage of the software to achieve them. You have a separate section of your website for the technically astute - for the technical people who would actually use the product (perhaps at the request of business people), and for those who would have to install and maintain it.
Your website also includes quite a bit of information in the "about" section, talking about the founders of the company and the development talent. You describe their expertise in general terms, so as to avoid being raided by recruiters. In other words, you talk about "the development team," and brag about their knowledge and accomplishments as a group.
You have made sure that your company and products are associated with other well-known companies and products, through joint ventures. By associating with other Big Dogs, you don't look so small when compared to the Big Dog who is out to get you.
Even before Big Dog enters your market, you have created a fair, balanced, and detailed table comparing your product to others in your market, organized primarily by function (what you want to do/how you do it). When the Big Dog enters your market, all you have to do is add their product to the list, and send the comparison to potential customers with a note from the CEO.
Your sales team is equipped with tools that help them sell the technologists and their bosses. Marketing has made sure that the internal champion technologists have selling pieces they can forward to a business manager, including Excel charts and graphs, and descriptions of "what will happen to you after you buy" - what those business managers will get out of the product, and how it will most likely be used.
You never assume, for a moment, that the Big Dog product won't hurt you because 1) it's not very good and 2) Big Dog has traditionally had a hard time getting out of its own way.
Neither of these deficiencies, although they may be perfectly true, will help you, because the momentum is always with the Big Dog when a Big Dog enters a marketplace. This is especially true of technical products, because there are compatibility and "familiar look and feel" issues that drive business managers toward the Big Dog. They know they won't have to spend as much time learning the program or having other people trained on it, if it is compatible with other programs they're already using and it behaves the way users expect it to.
One thing you didn't do when the Big Dog started sniffing around was to go into denial. It's quite common for a technical CEO to be convinced that the Big Dog product is terrible, a mere shadow of his product, and that the Big Dog can't do anything right. It's easy to assume that they are big and cumbersome, and too slow to move. You could convince yourself that the managers at Big Dog don't understand this type of product, and never will.
Some or all of these things can be absolutely true, but it won't help you if you haven't done what you need to do to counter them.
In short, the worst thing you can do is "nothing." The best thing you can do is be prepared for this day to come, and when it does come, move yourself up into a higher gear. Your market has just changed, overnight, and you have a whole new set of conditions that must be identified, understood, and attended to. At the very least, ride the coattails of the Big Dog, to the point of saying to the press, "Big Dog has just entered the market that we've been in for years." Your pitch to them is that you have years of experienced and specialized knowledge about that market, and how people are using that type of product. Yes, you may end up in a Big Dog story, but that's precisely the point. The buyers will check you out as well.
The Big Dog is in the room now, there's nothing you can do about that. Accept it. Think of him as the best opportunity you ever had, and find ways to capitalize on the attention he has brought to your market.
You should even look for ways to partner with him. Also, observe his marketing and the reactions people have to his messages. Analyze his search strategy, so you can be there when people search for his company name and your product type. And, of course, start being very aggressive about what you can offer versus the Big Dog. They are sure to have a flaw that just happens to be your strength. That's what usually happens.
Good luck.
