I’m watching a nine-year-old line up with four of their friends along one side of their living room rug. We have vacuumed it for this because the idea is that each kiddo will somehow get a wobbly yellow potato from one side to the other without the use of their hands, which is usually done with their faces. It’s this kid’s birthday party and they had forewarning about this game, and thus time to plan how they would win it.
Mom counts down—three, two, one—and they’re off! Four noses drop to potatoes and start rolling. But this kid, they open their mouth wide, and with their new adult teeth, they chomp down hard on the spud, pick it up, and run across the mat. Winner winner vegan dinner! Every other kid was barely inches into their race but this one had taken the trophy in about a second and a half, something they would not let any of their friends forget for the rest of the party.
The birthday kid had a few hours of advance warning about the game, which amounted to a whole morning to construct their winning strategy. It gave them what we call in marketing the first-mover advantage. As we collected the potatoes and moved on to the next activity, I started thinking about why first-mover advantage is such a boon for software companies.
What does first-mover advantage mean?
First-mover advantage is often confused with first-to-market, which isn’t the same thing. Amazon was not the first online bookseller, just the first to capture a good chunk of the market share. What is market share? It means a slice of the available pie. Isn’t that a little self-referential? Yes. Doesn’t the pie change size all the time, due to the marketing activities of said companies? Yep. I didn’t say it made sense.
Importantly, it means you don’t have to be first—only the first to win over a good chunk of the available market of customers. So what represents a good market share? It depends on what you’re selling. In a crowded field like survey and form building software, a dominant early market position might be 10 percent.
What advantages do you get from early market share?
You can own the narrative for your entire category
The first big advantage is that you get to tell the story of the problem and solution, with your product at the center. Done well, that can give you great brand recognition out of the gate. Since you’re the only product your prospects have heard of that does what you do, your name can easily be correlated in their minds as the solution to their problem. Early-market products can use simple statements like “we’re the Canva for X” and people will just get it because they’re the only one.
Lower costs for outbound, easier inbound
Without well-funded and well-organized competitors, you can own the field for outbound marketing. Your ads and paid placements will be cheaper because you’re not competing directly for the same market and are unlikely to be outflanked on creative. Put simply, no one else cares yet, so you can experiment and grow your funnels to your heart’s content. That’s not to say it’s free. You are still competing with every other software company that wants your prospect’s time and money, and you still need to invest if you want healthy pipelines.
Inbound marketing can also be simpler because there will likely be fewer companies fighting for your keywords and audiences. There is a flip side to this, however. See my note below about the disadvantages.
Novelty is compelling
This may be my favorite part about working for software companies with early market share: Free publicity! Novelty is simply interesting to us as humans, which means marketing is easier at this stage.
You’re marketing the problem/solution pairing instead of the product itself, which means conferences are more interested in your talk, podcasters and other influencers want to signal-boost your offer, and prospects are just simply more interested in what you have to say. “I didn’t know there was a fix for that!” is a thing your sales team will never tire of hearing.
You’re ahead on everything you need to keep ahead
As the market matures, the conversations will get more nuanced about exactly what your product offers that others don’t—but you’ll have a head start on that, too. Since you were first to market share, you were the first to get customers, which likely fed your product roadmap with great insights on how to improve.
They also likely gave you case studies and testimonials you could use in sales enablement to gain more customers. You were first to run ads and get web traffic, and media mentions, which all helped your brand recognition grow and your channels fatten. The faster you get to revenue the faster you can reinvest and prove your RoI to investors and partners. A company that can feed all the first-mover advantage inputs back into its product and marketing programs can keep its market share, even as cool new products and well-funded players enter the fray.
Downsides to being first
There are a few disadvantages, though, and they’re often the flipside of the advantages outlined above. Being the first means your marketing and sales often need to focus on education—that there is a fix for your customer’s problem, or even that they have a problem in the first place! For example, I wonder sometimes how Canva marketed Canva before Canva existed.
When you’re first, you sometimes need to create your whole category. That means establishing the keywords and concepts that are relevant to your space. Being able to regularly rank highly on keywords isn’t that crash hot if no one knows to google them in the first place.
That emphasis on education can really gut time and energy from building out the resources you will need further in the buyer journey, including critically important sales enablement pieces. More than once, I’ve seen marketing operations that are geared toward awareness be too slow to pivot and therefore hemorrhage their market share to an undercooked challenger or a software behemoth with deep pockets and a barely relevant product.
That’s not to say you should wait! While there are some things to watch out for, the advantages hugely outweigh the disadvantages. So grab that potato in your chompers and get out there!
Featured image by Jernej Furman, CC.