Creating Your Own B2B Category
It’s not easy to create your own category. It takes vision, it takes competition, and it requires the analysts’ blessings. But, if done right, category creation can differentiate your business in a big way. B2B brands that establish a new category often become the household names of said category—visionary thought leaders who are tuned into ever-evolving customer needs.
CMO Scott Brazina joins us in this episode to discuss how he’s helped create not just one, but two categories during his career. First at PTC with the product lifestyle management category (PLM) and now at Impact with partnership automation. Be sure to tune in for incredible insights into when it’s time for category creation, how to know it’s working, and how to continue standing out when competitors begin to follow your lead.
What You’ll Learn in This Episode
- When a business should consider creating a new category
- How PTC and Impact created PLM and Partnership Automation categories
- How to measure a new category’s success
Renegade Thinkers Unite, Episode 204 on YouTube
- [0:29] Differentiating Your Brand by Creating a Category
- [3:31] How PTC Created PLM (Product Lifestyle Management)
- [7:22] Pre-Requisites for Creating a Category
- [15:51] The Business Advantages of Creating a New Category
- [22:40] How Impact Announced the Partnership Automation Category via Rebrand
- [28:44] Signs that Impact Successfully Created a Category
- [31:02] How to Stay Differentiated in your Own Category
Transcript Highlights: Drew Neisser in conversation with Scott Brazina
[0:29] Differentiating Your Brand by Creating a Category“One way to differentiate your brand is to put yourself in a new category and claim leadership of that category.” @DrewNeisser #RTU #podcast Click To Tweet
Drew Neisser: Hello, Renegade Thinkers. Last night I devoured a book called Pink Goldfish by my friend Stan Phelps. It’s an easy read, which of course is my favorite kind of business book, and it’s chock full of examples of people and brands embracing if not flaunting their weirdness to great success.
Stan’s co-author, David J. Rendall, for example, wears head-to-toe pink—including his shoes—when he speaks and uses this as a launching pad for many of his best stories. Ultimately, this is a book about the power of being unique even if that uniqueness stems from a negative, like Alamo Drafthouse, which has become famous for shushing its moviegoers and annoying folks.
Brands by definition are supposed to be unique. We can go all the way back. I just looked this up—5700 years ago, the Egyptians marked their livestock with distinctive insignia so that you would know who owned it. Now, if everyone used the same hieroglyphics, imagine the chaos of sorting the herds.
Most brands aren’t unique, not by a long shot. In a recent study Renegade conducted among 125 senior marketers, only 40% believed their marketing was unique. That figure was just shocking to me, stunning. As a call to arms, if you’re listening to this show, my hope is you’re not among the 40%, that you indeed have figured out how to differentiate your brand from your competitors.
Maybe you’ve already embraced some weird aspect of your company or culture or purpose or service approach or target or product, which brings us to today’s episode. One way to differentiate your brand is to put yourself in a new category and claim leadership of that category. Think HubSpot with inbound marketing or Demandbase with ABM.
But adopting this approach is not as easy as it sounds, and many have tried to do it without success. It takes vision. It takes time. It takes resources. And ironically, it takes competitors. It’s not really a category until there are competitors. One company that has found success in creating a category is Impact. Their CMO Scott Brazina is here today to talk about the category of partnership automation. Scott, with that long preamble, welcome to the show.
Scott Brazina: Fantastic. That was great. I learn something every time I watch your show, including that intro, so that was exciting to hear. Thanks for the intro.
Drew Neisser: I’m just imagining those hieroglyphics on those sheep and those cows: “Dude, that’s mine!”
[3:31] How PTC Created PLM (Product Lifestyle Management)“You can't just create a category. You want company; you need company.” @ScottBrazina of @impactpartech #RTU #podcast Click To Tweet
Drew Neisser: This isn’t the first time you’ve been in the category creation business. Let’s talk about your experience at PTC. What was the category that you created there?
Scott Brazina: This is my second dedicated effort at category creation in the software space. First and foremost, I’m a B2B software marketer. Engineering background, sold software for a couple of years—but 80-85% of my professional experience has been marketing B2B software. I was fortunate to be head of global enterprise marketing at PTC, a company that’s founded and headquartered out of the Boston area. Now, it’s a NASDAQ traded company. With those symbols, PTC is $10 billion-plus current market cap.
The category—PTC is a B2B software provider in the product development software space. PTC is an amazing story from zero to a billion in ARR as a software company in 10 years. That’s unique. That first wave of growth was off of a point solution. A massively proprietary, differentiated, and protected point solution called 3D parametric CAD. That’s MCAD, computer-aided design, but in a new way. You could drive with formulas instead of just graphics. Spreadsheet merged with a CAD system—rocket ship.
But then that market gets saturated. The next stage of growth is when I joined. That was, “Where do we go from here? What’s the strategy? We have amazing customers around the world, 7000 employees, but we’re shrinking.” We shrunk. I’d joined right in the middle of a four-year slide of a 40% reduction in ARR. We lost $400 million in ARR. I joined in the middle to help fix marketing and we very quickly came up with this category idea. Basically, that was about thinking along the x-axis, thinking through the customer. The product developers out there, Nike customers, Toyota customers—seven or eight major vertical markets. We had to think about the assortment of software point solutions that they have to wrestle through and the inefficiency of that to strategically figure out which ones made sense to stitch together and in what sequence.
And then, what are we going to call this? We’re just one of the three largest CAD players in the world. It takes a village. You can’t just create a category. You want company; you need company. We battled it out for the next two years with the two very big global CAD providers. They were both much bigger public companies than us. We were talking to Gartner, Forrester, AMR, all the analysts at the time, and talking to the trade press and many of the leading customers about our vision of this new category and what you call it.
The category was and is—that whole space now is referred to as PLM—product lifecycle management. It’s software that encompasses all the way from the very beginning ideation, origination, sketching all the way to design, and then released to manufacturing. Then all the way at the backend, maintenance repair overhaul, and recyclability. All that software now is stitched together for companies like Nike all the way up to Boeing. That’s PLM.
[7:22] Pre-Requisites for Creating a Category“Litmus test the ideas with your leading customers and analysts and leading press that know the space. Let them challenge your ideas.” @ScottBrazina of @impactpartech #RTU #podcast Click To Tweet
Drew Neisser: Based on that experience, what was the critical moment? I know that analysts are really important in this, but you can’t just one day say, “Hey, it’s a new category.” There’s got to be some groundwork that happens. If you’re a CMO right now and you’re looking at your situation and say, “You know what, we’re different than these guys. We have a vision that’s different.” What are the things that you think a company needs to have in place to think about trying to create a category?
Scott Brazina: You want competitors in this because you can’t have a category of one by definition. In fact, the antitrust people come very quickly if that’s the case. They’re circling right now in a few big spaces. But it’s a spot-on question. You’ve got to go through this litmus test to think through whether or not your journey has any shot of being successful. It really starts with the customer value of the vision.
Particularly in the software space, we see this time and time again. I mean, Salesforce is one of the most amazing, easily recognized examples if you look at what CRM is today. We’ve been around long enough from the start of Salesforce and the early competitors, which were really just online Rolodexes, address books. Look how that has expanded. They’ve done it organically. They built stuff themselves for that expansion and they’ve done strategic acquisitions and pieced it all together. Now, their vision is so much broader. That category is doing so many different things.
But first and foremost, don’t even get started if you’re not convinced that the customer value is broad enough, real enough, and demonstrable. It cannot be a sales pitch. It can’t be a marketing pitch. You’ve got to be arm-in-arm with executive leadership and product and say, “Does this make sense?” You’ve got to go litmus test it as we did at PTC and we’re doing in spades at Impact. We’ve been doing it for a number of years. Litmus test the ideas with your leading customers and analysts and leading press that know the space. Let them challenge your ideas.
Back to the story at PTC, after about a year of evangelizing, it became clear that the momentum was building, and then it got into a dog fight with those two other large public companies. You can’t keep this stuff secret. You don’t even want to. You’ve got to get ready for the battle. So, then we had to go in and explain our POV compared to these two other big public companies and they were trying to call it something else. You go through all those gyrations, but it starts being really certain that there really is value to put all this together and say, “Hey, there’s a new category of software. Look at the advantage of having it integrated in a category.” a la CRM.
Drew Neisser: The analysts have to agree, they have to bless this. How far do you need to be from a product development standpoint? You mentioned Salesforce. They essentially started out as database plus so that we could manage our sales force with the leads that came in. Then they added all these things and clearly couldn’t possibly have had that entire vision for the full suite. How much do you think you need to have going into at least claim category leadership?
Scott Brazina: It’s a good question. In my experience at PTC and what I’m in the middle of right now at Impact, in both those cases, both companies were about 10 years-12 years old when I joined. PTC was much bigger than Impact. They already had 7000 employees, over a billion in ARR. Impact is 500 plus employees, but we’re growing really fast with a couple thousand major customers.
I think that what’s really critical is the customer experience and a range of really smart testing customers, ideally across more than one segment. You think about software going horizontal and providing value to multiple vertical markets like CRM or PLM or like partnership automation. We have seven or eight major vertical markets that Impact is in from credit cards to retailers to food delivery.
You wouldn’t have the knowledge of a category potential just by starting with a clean sheet of paper and not even having any customers. Unless you started in that industry and left that company and have an idea, then you already have that track record. What’s critical is having deep experience and knowing that there’s this range of customer needs both within a vertical market and also horizontally for it to be a sizable category like a CRM or a PLM or partnership automation. We were trying to bring that category of the solution to multiple vertical markets to be a true, big, tens of billions of dollars software category.
Back to your roadmap, at that point, you would already have a number of years of experience and some customers. You’ve got your existing solution and you’ve got your 18- to 24-month roadmap. What we did in both cases, you also develop your category roadmap. An A, B, and C. A wild, really aggressive one that’s far out there, one that’s more in the middle, and then one that’s more conservative. Then you start to talk that out.
[15:51] The Business Advantages of Creating a New Category“You’re looking back to strategic pieces that you bring together. By bringing them together, it's not just additive, it's multiplicative.” @ScottBrazina of @impactpartech #RTU #podcast Click To Tweet
Drew Neisser: We’ve been talking about category creation. I started the show by saying this is about differentiation, but I guess we should talk about the advantages of creating a category. You obviously wanted to do that again. What did you see as the value to the business of creating a category?
Scott Brazina: Great question. It’s the enterprise value of the company that you’re working with to do this. As a leader, it’s the market cap, the value in my team in the software company I’m working for. If we’re able to legitimately start a category, to be considered a major player, and the category is real, those are huge ways to create value in both directions.
Drew Neisser: Interesting. Let me explore that. You might get a higher multiple, for example, as a result of defining and leading a category as opposed to if you are in a different category where you’re one of 30 or 50 or 100. In which case, your value may be less because you have so many different competitors. Is it as simple as that?
Scott Brazina: Yeah, it’s that. And if you’re just a point solution in a very crowded space where you’re only doing one thing like email marketing or something. But if you’ve got a whole bunch of adjacent functionalities and there’s value in bringing the value to the client, it really just gets back to the, “Hey, is there a big value to the client for these things to be integrated?”
Drew Neisser: Right. I’ve seen that a lot. You’ll see a MailChimp or a Cheetah Mail or a Constant Contact that started out as email and then they added various things, whether it’s CRM or website construction or marketing automation. They try to expand but in some ways—you mentioned Salesforce, they’re not great at all those things. That’s one of the challenges that I see with this model—the broader you go, the more likely you’re going to be exposed in one place or another as not having the best solution. Integration isn’t always the best solution.
That may not matter from an evaluation standpoint because the people who are crunching the numbers are seeing something different, but from a customer standpoint, in your experience, is the value of integration a 2x, 3x, 4x relative to having a best of breed solution in one particular area of that integration offering?
Scott Brazina: That’s a spot-on issue that you’re always wrestling with—the classic leading point solution versus a broader integrated solution that’s good at many things. It’s that point solution battle versus one throat to choke. What you’re going after in that integrated solution is 1+1=3. That’s a key thing.
You’re looking back to strategic pieces that you bring together. By bringing them together, it’s not just additive, it’s multiplicative. That’s where the value jump comes in. You can imagine things like AI learning, machine learning. You bring in an email marketing touchpoint with web-based consumer behavior, and you have those two things integrated so that they can learn from each other. If you were just the mail provider or the other one, you wouldn’t have that insight. Your clients wouldn’t have that insight.
Drew Neisser: The value goes two ways. It goes to the value of the enterprise being perceived as worth more. The value goes to the customer, in theory, because you have this one synergistic installed product. We’ve established the value of trying to at least lead your way into a new category. It certainly set you up if you’re the leader to be perceived as a leader. That’s always a good thing.
Typically, the leader in a category can be the premium brand, so there’s some pricing strength if you will. That’s typically the case. I’m wondering if that’s your experience.
Scott Brazina: That’s one of the advantages for sure. The critical way to get there is through the thought leadership, being a category evangelist and catalyst. By definition, you’ve got to be investing heavily in thought leadership and then getting those pieces out there and getting it challenged by competitors and press and media and analysts.
The advantage of that, of course, is other leading customers wanting to partner with the best of breed suppliers. Ultimately, it gets back to truth and value. We’ve all been through experiences where things weren’t really quite as they were promised. That’s a waste of shareholder capital. It’s a waste of all the human capital chugging away at it for a couple of years trying to make it.
It starts with figuring out if it increases the value by bringing us together. Then go out and sponsor studies and thought leadership pieces. Get them out there, get them checked and challenged. Trademark certain concepts and open-source them, which is what we did in PLM and what we’re doing in partnership automation. You want people to use CRM. You don’t want to own it.
Drew Neisser: Right. I remember years ago with IBM creating the term “e-commerce,” which they didn’t bother trademarking. They just put it out there, thinking that they would win with that offering.
[22:40] How Impact Announced the Partnership Automation Category via Rebrand“Impact Radius to Impact—that announcement was to signify the announcement of the category. We used that as an opportunity to explain the vision of partnership automation.” @ScottBrazina of @impactpartech #RTU #podcast Click To Tweet
Drew Neisser: When you came to Impact almost three years ago, was it assumed that this is what you were going to do? Was that part of your charter going in?
Scott Brazina: It was a close second. The first one was my experience, which was also honed and developed at PTC for those seven years in global, account-based marketing and selling. That’s highly targeted marketing and selling go-to-market strategy. How to do that from a marketing standpoint, how to lead that, how to develop that. In fact, I don’t even use the word ABM. Mine is AMB-S. It’s highly partnered with sales. Impact made the decision that they wanted to switch to an ABMS go-to-market approach.
The second was the category. When I joined Impact three years ago, the company was called Impact Radius. Job one was to rebrand the company to Impact.
Drew Neisser: You had to change the name from Impact Radius to Impact. You had to build a go-to-market strategy. And then it was redefining the category. As we try to wrap this up into a tight little bow—you had a lot on your plate. What made you think that Impact could in fact become the leader in this new category?
Scott Brazina: It’s a good question. The company was founded in 2008, so when I joined, the company was already growing for 10 years at that point. It had and still does have an amazing set of customers, brands using our partnership solution across four or five major vertical markets. It was clear that our strategy was being basically the salesforce.com for modern day partnerships. That’s what we believe partnership automation can be, and we are one of the leaders in partnership automation.
I knew that, as we started to talk through it, there could be nine vertical markets that we take this to. There’s such a mix of partnerships today, whether it’s an affiliate, an influencer, an app-to-app partnership, or a traditional biz dev partnership that’s global. We have customers that are doing that on global scales and managing it in the system.
The range of partnership types is exploding because everybody’s digitally connected and it’s all over the internet. It’s ripe for automation because to do that at scale, by definition, you need automation. We came from a great position of strength in one traditional type of partnership affiliates. Today that’s still a very critical building block for all the partnerships, but we went from that leadership spot in affiliate marketing to addressing all these other partnership types.
Impact Radius to Impact—that announcement was to signify the announcement of the category. We used that as an opportunity to explain the vision of partnership automation.
Drew Neisser: That’s such a great point. I just want to pause. A lot of companies think about changing their name, shortening it, or elongating it, and often they do it as if that’s news. To me, the huge risk of that is the same old brand just a new coat of paint, and that is a waste of an opportunity. I love the fact that you said, “We are changing our name because we have a new vision. Not because it’s shorter and we were able to get the impact.com URL, but because we have a vision that the new name more appropriately addresses.”
It’s a pain to change your name, but if you’re going to do it, make sure you’re changing something fundamental about the way you present yourself to the world. I don’t mean just color and logo. I really mean something substantive like you described. It’s really music to my ears to hear that.
[28:44] Signs that Impact Successfully Created a Category“At major trade shows, major public companies that are competing against us were putting the word ‘partnership’ and ‘partnership automation’ on their trade show booths.” @ScottBrazina of @impactpartech #RTU #podcast Click To Tweet
Drew Neisser: When did you begin to believe that they’re taking it seriously, that you really had created this new category?
Scott Brazina: It was three things. One was Impact’s amazing brand customers—talking to their partnership professionals about the strategy and watching their eyes light up. We were getting a lot of confirmation with that and with our Alpha and Beta solutions.
We tested the vision in meetings with leading partnership customers combined with ~42 analyst interviews between Gartner, Forrester, and a few others to talk about this strategy. Also, we had to find out which ones were the right ones to be talking to. That’s actually why it was so many, because, by definition, no one’s covering partnership automation. We’re talking about a new category but we’re trying to find out the ones that Venn diagram in. It was about getting their reaction to it as well. Then thirdly, to be honest, folks like you and other smart marketers out there and people that are writing in this space. We were getting them to challenge our thinking. Then we started to see the customers purchasing the first versions of the solution.
A fourth—this is another sign, but imitation is a form of flattery. If you look in the space, there are major competitors that changed their company name. At major trade shows, major public companies that are competing against us were putting the word “partnership” and “partnership automation” on their trade show booths. Those are all signs that we were onto something and they were hearing it from their customers.
[31:02] How to Stay Differentiated in your Own Category
Drew Neisser: We started the show by talking about differentiation and weirdness. One of the conflicts or ironies of category creation is that, by definition, you have competitors. Otherwise, it’s not a category. What have you done to make sure that Impact is still differentiated in the category of your own creation?
Scott Brazina: This was the secret sauce at PTC. I cannot reinforce this enough and I could give lots of examples of the primary research that we did back there with BCG and McKinsey. We had the advantage of having Michael Porter on our board of directors, so we did a bunch of research with Michael Porter and some of his grad students at HBS.
We’re doing exactly the same thing. We’re on our third round of primary global research with Forrester. We just released it last week—a global study done in nine months around the world. It’s not an Impact commercial at all. This research is about the category and the potential value to the customer. At Impact, our first round of that primary research was a global study with Forrester to answer why. Why would you even care? What’s the value of partnership automation to a company? That was that first stage two years ago.
Then what do we get? We got lots of feedback. “You got me. I agree. I understand now. Tell me how.” This next round of research that we just published is how the best in class are doing it against the maturity model. How novices, intermediate, and advanced are doing integrated partnerships. To answer your question, be dedicated to research and be dedicated to moving the ball forward for everybody as thought leadership.
Drew Neisser: Right, so you have to act like the category leader. You have to sell the category. You cannot be worried about speeds and feeds. That’s what leaders do. You sell the category.
Scott Brazina: We’ve had some competitors go to the same research house recently and underwrite and publish their own research. We applaud that. Some people not in our company and salespeople get offended or upset by that and say, “What should we do?” We should clap our hands. We should say, “Fantastic. There are more people contributing to moving the thinking forward. This is wonderful.”
Drew Neisser: Here’s what I think is so interesting about challenging yourself where you are to say, “Could we create a category?” You can’t do that without a vision. You can’t do it without a product roadmap. You can’t do it without your customer saying, “Hey, we actually could use this, and we believe you could do it, so lead us there.” There’s a business benefit that is really clear and that business benefit gets bigger and bigger as companies adopt the category.
From there, you could say, “We might be able to do this,” then you can go talk to analysts. The good news about analysts is they’ll go, “You’re crazy. We’re never going to create that category. You can use it all you want, but we’re not going to support you.” Then, finally, you can prove it to them because you get enough customers. You have a category when you are the trade show for the category. Like Dreamforce or RSA Security. Those are two examples of categories that do it.
It’s hard. It’s challenging. But obviously it’s rewarding because your company stands apart as a leader, you are valued more, and maybe you have some pricing strength. With that, Scott, thank you so much for joining us on Renegade Thinkers Unite.
Scott Brazina: Fantastic. It was a lot of fun. Thank you for having me.
Drew Neisser: My pleasure. And for all you listeners, if you’ve enjoyed this episode, you can thank me by writing a five-star review on your favorite podcast channel or by sharing this show with a fellow marketer.
Renegade Thinkers Unite is written and directed by Drew Neisser. Audio Production is by Sam Beck. The show notes are written by Melissa Caffrey. The music is by the amazing Burns Twins and intro voiceover is Adam Cornelius. To find the transcripts of all episodes, suggest future guests, or learn about quite possibly the best B2B marketing agency in NYC, visit renegade.com. And until next time, keep those Renegade Thinking Caps on and strong.