Leaders, Challengers and Survivors
Companies on this planet can be one of these three groups:
- Leaders. A company whose market share (in sales volumes) is much higher than competition's. Their brand and products are known and enjoy high demand.
- Challengers. A company with big market share, yet smaller than the Leader's. Their products adoption pattern may threaten the Leader's positioning.
- Survivors. A company with a market share much smaller than Leaders' and Challengers'. Their products and brand are unknown or barely known in the market, and their sales (if any) are unsteady and unpredictable.
The Long Tail Curve
The so-called «Long Tail Curve» («LTC», for short) is a term from economics science. It shows a Cartesian graph where many events concentrate in a very narrow portion of the «X» axis and reach a high value at the «Y» axis.
Outside that narrow portion at the «X» axis, occurrences drop sharply, showing much smaller values at the «Y» axis along the «X» axis. The following chart shows the LTC:
If we plot on the LTC chart the place occupied by Leaders, Challengers and Survivors on the «X» axis, according to their market share measured in sales volumes («Y» axis), we will obtain the following chart:
As we see in the chart above, few companies enjoy the Leader position, followed by a small number of companies in the Challenger position, then followed by a lot of companies in the Survivor position.
The interesting thing about the LTC applied to companies' market shares is that it consistently shows «L-shape» patterns regardless the market being analyzed, and regardless of whether the market is «hi-tech» or «low-tech».
Following are four examples: two from «hi-tech» (web search engines market, IT operating systems market) and two from «low-tech» (soft drink market, sport shoes market).
Two barriers ruining your sales: the «Know-who» and the «Intentions/Results» barriers
If your company is neither a Leader nor a Challenger, it is a Survivor... at least in Spanish-speaking countries (the territory this website considers), your company is a Survivor in these countries.
If so, keep reading.
Five facts about Survivors' positioning in Spanish-speaking countries (called hereinafter «Target Markets»):
#1: Their brand and solutions are unknown or barely known.
#2: They closed few or no deals, so there's no sales performance historic data to base sales strategy and agenda.
#3: They typically don't speak Spanish, which builds a language barrier between them and customers.
#4: Their scarce resources (people, time. money) don't allow them to establish their own branch in Spanish-speaking countries.
#5: They lack first-hand knowledge of «who's who» in the target markets.
These facts drive many well-intentioned plans from Survivors to sell in the Target Markets to a frustrating waste of time and money striving to reach acceptable sales performance levels in these territories.
Basically, two barriers prevent Survivors' sales efforts from succeed.
I call them the «Know-Who» barrier and the «Intentions/Results» barrier.
- The «Know-Who» barrier
Lack of target market knowledge leads Survivors to establish local channels in these markets who most probably will fail to sell the Survivor's solutions.
Their failure steam from several factors:
#1: A wrong fit vendor-channel.
#2: An inadequate channel's training on the vendor's solution.
#3: An insufficient commitment from channel to sell Survivor's solutions.
#4: A wrong market prospection by the channel, which yields «false positives».
Whatever the symptoms of the failure, their root cause is the «Know-Who» barrier and its outcome is alwways the same: poor sales... or no sales at all.
- The «Intentions/Results» barrier
Aristotle said that we humans are «social animals». We're need to live in groups and interact with others: family, friends, co-workers, etc.
Fulfilling our goals depends on others, and these dependencies apply to our business activities.
By our human nature, we strive to be accepted by people our success depends on, so try to show them the best version of ourselves, omitting our weaknesses. The same goes the opposite way around: other people try to show us their best version while trying to hide their worst.
This socialization strategy is a fact of life, also present whenever we establish partnerships with local channels in faraway markets... no potential partner will speak badly about themselves in front of us, and we won't tell them about our weaknesses either.
So, we have a problem: we never know beforehand if a partner we've chosen to sell our products will be able to sell them, that is, if their intentions will turn into results.
Adding to this is another problem, which I call the «effective partner paradox».
An effective partner is selling well before we contact them. Such a partner is very busy serving their customers, selling to many qualified prospects for their existing portfolio (not your solutions), and other issues to deal with day in day out. This heavy workload leaves the partner with little or no room to invest their resources (people, time, money) in other things… like positioning and selling a new product (yours).
Worse yet, your product is a «question mark» for these partners: they have not sold it yet, so they don't know how well they would sell it, which in turn leads them to be uncertain and demotivated about investing their resources in promoting and selling your product... a vicious cycle that I call it the «effective partner paradox»... which is very difficult to break.
The Positioning Matrix
If we plot on a matrix the relative position of Leaders, Challengers and Survivors in a given market according to these criteria:
Required Resources Investment
Required Market Position
... we will get the following chart:
The Leader invests extensive resources (people, time, and money) to be strongly positioned in the market. They occupy the upper right quadrant of the positioning matrix.
Challengers also invest extensive resources, yet not at the Leader’s level. Their positioning may be more or less strong, but not as strong as the Leader’s, so they usually occupy the upper left quadrant of the positioning matrix.
A Survivor cannot afford extensive investment level of its (scarce) resources, to reach significant positioninjg in the market. Being rather limited their resources investment, they occupy a weak market position, represented by the low-left quadrant of the positioning matrix.
But if your company brand and products are unknown or barely known in the Target Markets, your company doesn't have to resign itself to occupying the unenviable Survivor quadrant in the positioning matrix.
My 4-stage sales approach can drive your company to occupy a fourth quadrant in the matrix, a quadrant that will allow you to reach a strong position (i.e., nice sales level) while keeping your resources costs low.
Moreover, my sales approach can bring closed deals in a relative short term, perhaps as short as ~28 weeks (or less) from the date of my sales plan kick-off.
To understand why, go to next section: Approach.
Effects from the «Know-Who» and «Intentions/Results» barriers
Assuming (a) that your company's brand and solutions are unknown or barely known in Target Markets, and (b) that your company is open to try selling in these countries, you will face three challenges:
Challenge #1: to identify true prospects for your solutions (i.e., well-qualified prospects instead of «false positives»).
Challenge #2: to sell to these prospects while keeping your operational costs as low as possible.
Challenge #3: to close the first deals as soon as possible, to further develop the market.
Both the «Know-Who» and the «Intentions/Results» barriers will work against the fulfillment of these three challenges.
Why?
Most probably your company won't invest resources to establish your own subsidiary in Target Markets if you're not there by the time you plan to sell in these territories. If your company had its own office in these countries, staffed by employees whose salary you pay, you'd be able to supervise their daily work and ensure that your plans are duly executed.
But if your company doesn't have its own local office in the Target Markets, you'll need to sell through third parties: local channels. And here's where the «Know-Who» and the «Intentions/Results» barriers come to play against your sales objectives.
Nobody has the «magic crystal ball» with the ability to foresee the future, including your company.
Therefore, when you establish a partnership with a local channel, you never know beforehand if they will close deals for your solutions in acceptable levels and when you'd like them to get closed... not even if they will sell at all.
You will appoint a local channel based on your best available information (referrals, sales performance historical records, etc) but it might be that even a channels that is successful at selling other vendors' products will fail to sell yours.
It can happen, and it's not necessarily because the channel isn't good at selling, but because diverse reasons.
Firstly, the channel is so busy selling what they already sell (not your solutions) that they have no people and time (and hence, money) to invest in prospecting, promoting and selling for your solutions. Worse yet, your solutions ar new for these channels, so they have not sold them yet... so, for them your solutions are «question marks» because they have no sales historical data about your solutions whereas they have plenty of such data about the products they're successfully selling so far.
An effective channel will ask themselves: will your solutions be sold? when? how much they will take to get sold?. These unanswered questions add to an effective channel's uncertainty about adding your solutions to their portfolio and demotivate them to invest their scarce resources in selling them.
The end result? ... no results (the «Intentions/Results» barrier).
And, what if you establish a local channel that do invest their resources in selling your solutions, but the channel is ineffective and doesn't sell them at the end of the day?
Same outcome: no results (the «Know-Who» and the «Intentions/Results» barriers).
In sum: your company will occupy the worst quadrant of the Positioning Matrix explained below.