If you’re a CEO or CMO leading a business that is solving a completely new problem, I urge you to read this book as soon as possible. Category Creation by Anthony Kennada will change the way you think about your marketing programs.

What is category creation?

• Kennada defines it as “a business strategy that focuses on positioning and evangelising a brand new problem in the marketplace as well as the solution to that problem.”
• The output is a new industry with a category-leading company as the winner.
• Category creation usually involves a new market category but it can also be a new product category.
• Category creation is not disruption. Disruption is positioning a better product against an existing incumbent vendor. It involves taking a challenger position. With category creation, the value proposition is brand new.
• Marketing’s job in category creation is to start/grow a conversation that doesn’t exist. For example, Hubspot sat between the CRM and the Marketing Automation categories. It could have taken a challenger position in either but instead created the Inbound Marketing category.

6 signals you’re creating a category

1. You have little to no competition for what you’re doing – certainly no 800lb gorilla
2. There are low search volumes for terms related to what you’re doing
3. No media or analysts are covering it yet
4. You’re targeting a marginalised buyer that no-one is paying attention to
5. There is a small but passionate group of people who ‘get it’
6. There’s a larger group of people who do not ‘get it’ right away

Why create a category?

• Creating and dominating a category will get you faster growth, higher valuations, and leadership. If you’re a start up you’ll also also get more funding and more talent.
• Be aware that not all category creators end up as the leaders – a fast-follower could overtake you.
• At Gainsight, the first thing Kennada did was reach out to analysts. He gave demos, organised briefings with customers, shared the vision. The analysts didn’t get it. They wanted Gainsight to be Customer Support or CRM or RRM.
• But Gainsight knew their persona was CSMs. CSMs understood the impact of churn. That’s what Gainsight focused on – churn – and they focused on best practice and building community to solve that problem.

The role of brand in category creation

• According to Seth Godin, brand is a “set of expectations, memories, stories and relationships that, taken together, account for a customer’s decision to choose one product or service over another.”
• A human with an unmet need (the marginalised buyer) is at the heart of category creation.
• “You have to develop a brand that authentically recognises and serves your audience as heroes, stokes conviction behind the problem you want to solve together, and equips them with tools, resources and opportunities to self-actualise with the new industry you are creating.”
• A disruption-minded marketer will take a product marketing approach to this, e.g. content on features/benefits, competitive landing pages, field events with demos, paid ads, user conferences, customer advocates. They focus inwards.
• A category-creating marketer will create content to solve complex problems, e.g. field events for community, organic rankings, a community event to grow together, brand fanatics. They focus on the customer and the market.
• The audience isn’t ready to buy but they’re reading your stuff and getting your brand – for example, Salesforce’s ‘end of software’ campaign when they created the Cloud Computing category.

B2H (Business To Human)

• B2B branding took off in the internet era.
• Marketing automation has been one of the most successful new categories. Eloqua created the category. Marketo was the fast follower. Silverpop got bought by IBM. HubSpot IPO’d. Pardot and Exact Target were acquired by Salesforce.
• Kennada is an advocate of B2H marketing (business-to-human). He says the customer will choose to work with companies they trust and admire, especially if they are market leaders.
• B2H is viable because of:
  • The proliferation and commoditisation of digital products
  • Subscription business models
  • Social media – G2, Capterra, TrustRadius – customer voices are heard
  • The digitally empowered buyer – likes to research and doesn’t like being sold to
  • Content creation and distribution capability – podcasting etc
• A B2H marketing strategy is both philosophy (the narrative) and practice (the channels). It focuses on the human behind the logos.
• Gainsight recorded a hip-hop single that drove funnel. His peers thought he was mad as they were all sticking to SEO/SEM, email, outbound.
• Brand does work: thought-leadership, content, community all drive revenues AND help with funding, customer satisfaction, employee retention.

The 6 challenges of category creation

1. Not everyone will get it right away.
   • Marketing will have to wrestle with the intellectual challenges of balancing category marketing/problem definition with product/demand marketing that solves the problem. Gainsight used two work streams: 1. Position the category and 2. Position the company.
2. Customers are initially interested in education and not your your product.
   • Your content marketing will have to focus on a) is this category relevant to me? b) how can I convince my CEO that the category is important c) do I need to build a team for it d) what’s a sample job description I can use e) how do I prove the value?
   • If your content is always prominent, you become aligned with the category. Your brand becomes a partner in strategy definition – when other companies are ready they’ll engage you. But you have to create more content about the category than about your products. Gainsight moved Product marketing to Product to allow marketing to build category.
   • Then comes the hardest bit: the two funnel effect. You create a marketable database and use lead scoring, ABM or other measures to identify signals of intent that you can then engage in funnel two.
   • The chasm can be huge. Maybe the buyer isn’t ready to buy and still looking at strategy. Maybe the buyer needs to hire someone. Maybe they can’t purchase, or don’t know how to buy the product. The two funnel effect requires sales and marketing alignment. Funnel one is a moat of people who prefer to do business with the leaders.
3. You’ll need a lot of capital.
   • Ariba spent $46m on sales and marketing before their IPO in 1999. They had to create awareness to spark the flywheel for their category. They then spent 6x as much post-IPO.
4. Short-term planning is hard.
   • Most of BANT goes out of the window.
5. Execs and investors need to buy-in or you will fail.
   • They need to be “long-term greedy”. Sales quarters will be lumpy and CAC will be out of whack.
6. Understanding the competition is confusing.
   • Some competitors will adopt your category positioning. In the early stages it’s about the market and not the competition – you need enough energy to will the market into existence. Your job is to enlarge the TAM.

For companies in commoditised markets

• If you’re in a commoditised market, you can launch into a new product category either by building, buying or partnering, e.g. Salesforce bought Demandware.
• You get to leverage your unfair advantage to become category leader: your existing customer base (you have price elasticity and the opportunity to get big customers to try new ideas), your established brand equity (eg if you’re Ford and you expand to electric scooters people will expect them to be good), and your budget/GTM resources.

7 principles to create dominance in a category

• Live Your Purpose, Values and Culture Out Loud
  • Category creation must start with why.
  • Your purpose is foundational to success – you must stand for something.
  • Your purpose:
    • Informs your brand.
    • Shows the industry and community a preview of the world you are creating.
    • Inspires the values that will guide your decision-making.
    • Draws talent to your org.
    • Retains leaders through trial and triumph.
    • Helps you grow by attracting customers with a strong emotional bond.
• A company purpose must (according to Jim Collins):
  • Inspire those within the company.
  • Be valid 100 years from now.
  • Help you think expansively about what you should be doing.
  • Help you decide what not to do.
  • Be truly authentic.
  • Also add a 6th characteristic to Collins’ list: “it must be inspiring to your community”.
• Your goals will change but your purpose won’t.
• How to articulate your purpose:
  • Define the individual purpose of the exec team – a) talents and gifts and b) how they employ them e.g. “I want to get better as a human and I want to lift others and help them do better”.
  • Break into small groups to find gold threads: what business are we really in? what is the benefit of our service to our customers and society? why does it matter? why do we exist? The best purpose statements show why you are going to help your customers achieve what matters to them.
  • Develop a people strategy informed by shared purpose/filtering recruits.
  • Defining the why is the start – then move on to values. Gainsight’s purpose is “to be living proof that you can win in business while being human first.”
• How to activate purpose:
  • Activate = increase both internal and external awareness and engagement.
  • Explain your purpose on your About page.
  • Write blog posts to share at scale.
  • Standard slide in sales deck.
  • Create platform for execs to express personal points of view.
  • Leverage PR.
  • Talk about purpose & values.

• Focus on the People in Your Market, Not Just Your Products
  • You’re moving people up the hierarchy of needs. Can you justify the strategic importance of the category to give them safety? Can you hold a community of peers and innovators around this to give belonging? Can you get them promoted for esteem?
  • Early adopters are motivated by information, novelty and status. They like to research new things, so saturate the web with your content. They care deeply about their personal brands and will want to promote themselves. You will require a groundswell of support from early adopters. You have to develop content, community and other strategies that activate them.
  • Marketo defines early stage (awareness) content as thought-leadership (not gated), middle stage (consideration) as RFP templates, buying guides, ROI calculators (gated) and late stage (evaluation) as onboarding, case studies (not gated). Middle stage content is critical for getting people from funnel one to funnel two.
  • 5 principles for your content marketing strategy for category creation:
    • Name Your Category – brand the category around people not products. Focus on job titles. Find the job owner within your own company for help.
    • Identify spokespeople, writers and contributors – will be CEO to start with.
    • Articulate the Why behind your category – prove the existence of the problem and help justify investment.
    • Educate on the How – build the online destination for category best practices. Get early adopters to tell their story on your site. Live events also matter. Get ideas for content from what customers are telling you and where you want to lead the market and what content data is telling you.
    • Evangelise the category as leader of the market – they wrote the book at Gainsight, while Marketo’s definitive guide series was important.
  • Maria Pergolino on content marketing programs:
    • Buyers control the buying cycle.
    • Some execs build things they should buy.
    • A buyer has 2 options when they buy – ask their network or go to the internet/an event/or book.
    • Be sure the buyer can find your content for their problem.
    • There’s too much content so find a way to stand out.
    • Websites are fine but you need to be across all channels.
    • Content needs to be optimised for the channel.
    • All roads need to lead to your solution.
    • You need a prospect database that is clean.
    • Build content for single buyers and groups of buyers.
    • Embrace the competition.
    • You must be the biggest, boldest, most credible and differentiated voice to become the leader.
    • Keep up to date on AI in content.

• Create a Lifestyle Brand for Your Category
  • B2H firms need to combine traditional content marketing with premium content. Premium content = lifestyle branding in B2C. In B2B a lifestyle brand = career companion.
  • What is a lifestyle brand? “a company that markets its products or services to embody the interests, attitudes, opinions of a group or culture. Lifestyle brands seek to inspire, guide, and motivate people with the goal of their products contributing to the definition of the customer’s way of life.” e.g. Harley Davidson and freedom or Red Bull and extreme sports.
  • To articulate on the why and educate on the how you create content to contribute to the culture of your community:
    • Digital media: high quality video to tell stories; live-streaming of events (Gainsight cater to people’s office if they gather to tune in); Spotify song Who’s Fired up for Customer Success (so they were on the platform). Podcasts.
    • Education & career services. We learn in 7 ways: visual (images), aural (sound & music), verbal & words, physical, logical, social, solitary. You have to appeal to all 7 groups. You could create an industry certification. Promote at top of funnel so anyone can sign up.
  • Drift became a lifestyle brand. Their 5 principles:
    • Become a student of the game.
    • Understand signal-to-noise ratio and try new channels.
    • Zig when the competition zags – they created the Drift Insider program.
    • People are willing to pay for premium content.
    • The publishing industry still matters and physical copies are important.

• Grow a Community by Doubling Down on Live Events and Experiences
  • We want connection and belonging. The unmet need you’ve identified is the common cause. Salesforce had their Trailblazers. Marketo had the Marketing Nation. GS had Pulse and got 300 attendees. Now they have 1800.
  • Create experiences and not events. Activate an emotive and sensory experience for the attendees. Focus on details – the music, the food, manage the energy.
  • Types of corporate experience:
    • Field events are usually for accelerating pipeline. Dinners or private events. Lead with best practice.
    • Community groups are organised by volunteers. Like user groups but not only about you.
    • Executive forums – invite-only.
    • Industry conferences – execs set the tone and customers/prospects talk to the category. This one is critical for category creators.
    • How to plan an industry conference:
      • New messaging from marketing
      • New products/features from product
      • CS new services and education
      • Make it about the market and not your product. This is sacred. It will change over time and later they might want to hear about your products. You can put clearly marked product sessions on the agenda if you like.
      • Source speakers who add credibility – if you get good people to speak, people will show up – a) VIP keynote or b) execs from companies or c) practitioners. As long as they are from reputable companies with a great story to tell and can deliver the story.
      • Build an agenda to inspire and educate – map out the attendee personas and ensure each has a strong journey.
      • Create a memorable experience with your culture on display. Gainsight’s culture is childlike joy. The right venue, food, convenience (phone charging etc), themes.
      • Use pricing tactics and team activations to drive registrations – ads and database mktg are with mktg; outbound cadence is with sales; relationships are with CS and influence is with the execs. Pricing band expirations really work, as does tickets running out. Promo codes and honouring expired pricing works too. Have team packages so people can use education budget to come to your event.
      • Monetise by adding value – a) agree to meet at the conference b) exec/VIP dinners c) booth presence and d) onsite exec briefing centre.
      • Measure success – NPS and group people by promoters, passives etc. Growth in attendance, meetings booked, closed revenue. Other benefits: customers will be proud to be affiliated with you. Employees will be hyper-motivated. Investors will leave confident. The powerful part is that you build a community of brand advocates and help them self actualise.

• Activate Customers as Brand Ambassadors
  • “Your ability to create a category successfully is inextricably linked to validation from your ecosystem, with customers serving as the most leveraged relationship from which to begin.”
  • How do customers impact category creation?
    • Customers validate the pain you’ve observed is real. You need them to participate in the conversation and add their own content. They feel the pain, the solution to the pain lies in the new category, your company is leading the effort. You’re asking them to promote the category, not you. The support of big companies and job titles will help you.
    • Customers co-author industry best practice. The first few are the practitioners so let them share on your platform as well as with their networks.
    • Customers make your product better – your product must become widely accepted as the defacto standard for success in the category. They must be able to provide feedback.
    • Customers crown the category leader. People say it’s analysts and quadrants but it’s not. Do a good job and let them advocate for you.
  • How to create brand advocates
    • You have to make them successful with your product first.
    • CS = CX (CX is the sum of all touchpoints a customer can have) + CO (customer outcomes that are shared and documented)
  • 9 steps for good Customer Success:
    • Define success – what is it for your customers? “What does wild success with our company look like to you?”
    • Align around success – make sure every function knows what it has to do to support CS
    • Listen to the CS team – take the CS VP as seriously as the sales leader
    • Prioritise CS and don’t deprioritise it
    • Empower the CS team
    • Measure CS – gross churn, net retention, early warnings from NPS etc
    • Incentivise towards CS
    • Challenge the company to push retention and satisfaction goals
    • Celebrate success
  • How to engage and mobilise advocates
    • We don’t like asking for favours. Advocate moments are not favours. Should marketing ask customers or CS? You should incentivise the CS team to identify potential advocates and then enroll them into an advocacy program.
    • Advocates like Access (VIP treatment), Power (early access and influence) and Stuff (swag)
    • Once you’ve identified them, mobilise them. Give them opportunities to contribute to the momentum of the category.
  • Advocacy moments:
    • Customers validate pain – blog posts, videos, PR
    • Customers co-author industry best practice – as above
    • Customers make the product better
    • Customer crowns industry leader
  • Mark Organ doesn’t agree that there are category creators – there are category discoverers and popularisers. Once the category is understood, it is popularised. The freaks become the majority. They’ll have groups on LI, FB and Slack and Whatsapp.
  • Framework for brand ambassador mobilisation:
    • Exclusive tribe – an identity tied to a sense of purpose
    • Measurable impact – give people feedback on likes, scores etc.
    • Social capital – what can they post on their LinkedIn?

• Recognise that Analysts Don’t Create Categories, Customers Do
  • Analysts offer 4 services:
    • Retainer or subscription based advisory
    • Numbers and research
    • Vendor consulting
    • Marketing and opinion
  • The customer voice is changing analyst relations. Analysts don’t offer total transparency like customers do. Capterra, G2 and TrustRadius are more trusted.
  • Analysts will only care about you if there is a lot of buyer-side interest.
  • GS bought two expensive analyst contracts and got duff info. Don’t sign contracts but do consider sponsoring research for content development, analyst speaking opps, and regular cadence of briefings.
  • Expand your understanding of ‘analyst’ and have an influence program.
    • Subject Matter Experts
    • Super Consultants
    • The Majors
  • G2 has 90,000 products in 1500 categories from 40,000 vendors. Gartner has 1500 vendors in 400 categories.
  • Make a list of problems that the new category addresses, make a list of competitors (6-10 is ideal) and a list of defining features that make the category unique.
  • Categories change – content marketing software became content creation software and content distribution software.
  • B2B peer review platform – claim your profile and upgrade the profile

• Establish Trust at Scale Through Authentic Executive Communication
  • Your exec team is the outward expression of your purpose, values and culture. Your CEO must express purpose, expertise, ideas.
  • Four Cs of exec comms:
    • Comfort – make the exec feel comfortable
    • Context – align multiple execs with specific messages
    • Content – give concise talking points and contexts
    • Connection – include their background and experience
    • Also 5. Culture
  • You scale trust through contributed articles, social media, speaking at events, brand campaigns.

How to convert category creation programs to growth

• Einstein: “not everything that can be counted counts, and not everything that counts can be counted”.
• Proving brand value is hard but proving brand value from the two funnel approach and the chasm between them is harder.
  • Success in Funnel 1: engagement on best practice.
  • Success in Funnel 2: hypergrowth.
• The long term greedy will need patience. Category leadership will deliver more sustainable shareholder value (53% incremental revenue growth).
• You need a common language and data to make this work.
• Conversions (identify themselves in return for info) – MQL (buying intent) – SQL – SAL.
• 6 growth outcomes impacted by category creation:
  • Marketable Database Growth – email is always needed. Your database is a great indicator. Are you getting the right personas from the right company profiles? Conversions are the right metric to use to qualify the impact of brand awareness of your new category (funnel one) as well as leading indicator for future sales (from email marketing). Gross number is good but by demographic is also good.
  • Marketing Database Engagement – if your database is showing engagement with content, it’s good. Apply an account-based lens to see where companies are in their maturity.
  • Pipeline Creation – conversion to MQL ratio is a good metric to show funnel 1 to funnel 2.
  • Pipeline Acceleration – marketing should influence 100% of deals closed in one way or another. Prospects still need marketing.
  • New business ARR – create a process for pulling together an analysis of every deal closed as well as conducting win-loss interviews that capture qualitative feedback. Brand matters and you need to show that.
  • Expansion ARR – acquiring a new customer is 5-25 times more expensive than acquiring a new customer. Net revenue retention matters and brand can help. You can work out second order maths – e.g. execs that buy you and then move to another company and buy you again.
• The Gainsight conference:
  • Close rates were 3.5 times higher if a prospect attended Pulse. Pulse attendees had a 40% higher average contract value. Pulse drove higher retention. It also flagged a problem in customer health if they didn’t attend.
  • Pulse also expands the TAM, advances leadership equity with customers, investors and employees, uses partner ecosystem and registration fees to make money back
• Bridge to Funnel Two:
  • Biggest challenge in Category Creation. Funnel one might be huge but sales are under plan. Loss reasons = not now. How do you short circuit the learning curve?
  • Step 1 – learn how to prioritise marketing programs targeting companies in funnel one that are showing signs of moving to funnel two. Lead scoring is essential.
    • Pure Gold – qualified and engaged
    • Hidden Gems – qualified and low engagement
    • Groupies – not qualified and engaged
    • Distractions – not qualified and low engagement but keep an eye
  • How to get people to funnel two:
    • Position your solution as a painkiller not a vitamin
    • Teach them how to buy
    • Let your customers do the talking

The intangible benefits on customers and teammate success

• Radically high ambition – ambition is inspiring and creates a kinetic energy that attracts customers and employees
• People centricity – people resonate with your noble mission
• Pioneering spirit – you’re writing the pages of a history book. You must hire value sellers to your sales team.
• Think of employees as allies. Companies want business transformation and impact and employees want career transformation. You need transparency, buy-in, candor, and rigor.

Your next steps:

Buy and read Category Creation. I’ve only summarised the main points above and Kennada provides a lot more insight.

Let me know if you’ve read the book and what you thought.