Winning Against Giants, Driving User Adoption: Insights from Segment's Strategy - Tactician #0065

"Winning against giant incumbents is like playing a video game on the hardest difficulty. You start off thinking, 'How tough can it be?' Then you’re 10 hours in, making no progress, and you realize, 'Oh, the game is rigged. The incumbent has all the cheat codes.' But then you find the secret weapon: actually listening to people."

26/02/2024

Winning Against Giants

Jason Cohen, Founder at WP Engine, offers strategies that allow startups to outmaneuver and succeed against well-established incumbents, emphasizing the unique advantages startups can leverage that large companies cannot or will not pursue in “How startups beat incumbents”

• Taking Risks that Cannot be Quantified:

  • “So, whichever projects appear through traditional cost-benefit analysis to be low-ROI, are unlikely for an incumbent to do, even though there’s a good chance that (a) they’re rejecting genuinely good ideas and (b) they’re accepting weaker, more straightforward ideas, because those more readily lend themselves to ROI analysis. A startup who selects ‘apparently’ low-ROI projects, will probably have no competition from incumbents.”

• Addressing a Profitable Niche:

  • “The startup can focus on a niche and ICP that a big company cannot afford to target, either because that niche wouldn’t hit the overall revenue materiality threshold, or wouldn’t hit the one-team P&L threshold. With that focus, the startup has no direct competition from an incumbent. In fact, the larger the incumbent, the less the startup has to worry about competition.”

• Doing Delightful, Valuable Things that Don’t Scale:

  • “But a startup can launch something in a few weeks and iterate. We had to be heads-down for most of a year. And so another startup opportunity emerges: A startup doesn’t have to operate at scale... But if the product is naturally difficult to scale from day one, that’s ideal for a startup.”

• Unsurpassed Customer Service:

  • “Customers are impressed by the quality of support and the range of problems you can solve. They won’t get that from a company with a thousand tech support reps. Some startups aren’t interested in providing great support, but those that do are naturally and even effortlessly orders of magnitude better than a large incumbent.”

• Having an Opinionated Personality:

  • “When a large company tries inject personality, it often comes off as contrived, not genuine. Whereas with a startup, it feels genuine because it is genuine. Some potential customers will be attracted to that personality and some will be repulsed. But that’s true of anything that is wonderful and different and powerful in this world.”

• Being Worse-But-Acceptable in Most Dimensions:

  • “Startups can be worse, but unique, and better where it counts. Most customers don’t care about most things. This is great news for startups, who can select one or two dimensions to care about, and the ideal customer segment who also cares mostly about those specific things, and win that segment while incumbents chase complexity in all quarters.”

• Being Low-Cost Against a Profit Center:

  • “Therefore, an incumbent cannot compete with a startup which is ‘a ’lite’ version for 1/10th the price.’ This is a softer way of restating Disruption Theory... More specifically: Whatever generates the most profits for the incumbent, is the thing they are least able to change.”

Driving User Adoption: Insights from Segment's Strategy

Laura Krieger, Sr Product Manager at Mixpanel, shares insights and strategies from Segment's Digital CS and Experience team on how to effectively onboard users to a technical product in “How Segment avoids user onboarding drag for its technical product”

• Use Case-Driven Onboarding Approach:Measuring Success:

  • "We used to focus more on pointing customers toward information so they could teach themselves how to use the product. We still have that info available, and it’s still important, but we don’t recommend people start there. Instead, we give them a quick survey that asks them why they signed up for our product... Start very slim, narrow, and tight on that particular use case and drive that to completion. Measure the value of it."

  • "We have built several different adoption scores based on different kinds of features. These are all machine learning-based models that we have built with help from our data science team, and the models are trained on retention data... So when we’re onboarding someone, we’re looking at that score weekly to measure impact."

• Strategies for Less Active Users:Designing for Multiple Personas:Thoughts on Gamification and Value:

  • "We have a whole suite of different strategies... One of our more effective nurture programs is a campaign that pulls all of a customer’s important metrics into a personalized email and sends it to the main contact on that account monthly, starting in the first month... Later on in the onboarding process, about three to six months out, we do a lot of triggered outreach."

  • "At the start of onboarding, we ask people to identify as either “technical” or “non-technical.”... If someone self-identifies as technical, we use a more “show not tell” approach... We built a different flow for people in roles like business or marketing that’s more like, “Hey, you need engineers to help you, so here’s how to go and get buy-in from them.”

  • "We tried that at one point, with some success, but it didn’t show huge results. Ultimately, buying software has to drive value, and gamifying it doesn’t necessarily equate to value... Making each step more fun or interactive can be worthwhile, but creating a game that, say, offers people five points for getting to the next level often isn’t."

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