An Inside Look at the Category Design: Josh Lowman

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Mark Evans: Hi. It's Mark Evans, and you're listening to Marketing Spark. Most entrepreneurs and companies move into existing markets. There are competitors doing the same things, but the entrepreneur believes they've built a better mousetrap. There's already proven demand for a product or service, so it's simply a matter of letting consumers know that there's a new option available. But what happens when you have a product in a market that doesn't exist, or perhaps you're moving into an entirely new space within within a specific market? Well, you're not only trying to grow a business, but create a new category. And that's a huge challenge. Today, I'm talking with Josh Lohman, who heads up GoldFront, a category design studio that specializes in helping a b to b start ups define and lead new market categories. Welcome to Marketing Spark.

Josh Lowman: Thank you, Mark. It's nice to be here.

Mark Evans: Why don't we start with a high level question? What is category design, and who uses it? Why do why is it important these days?

Josh Lowman: So category design is a discipline often used by startups, but could be used by other many other kinds of companies to define and lead new market categories. And, that idea of new market categories means that you're looking for an entirely new space to compete in, and you're not competing in an existing category. And so there's a whole set of ideas and tools and a whole discipline built around that idea of how do we design a new market category for our for our company.

Mark Evans: One of the things that people may think about when it comes to category design is that it's just the latest buzzword. It's something new that consultants have rallied behind so that they can sell different kinds of services. Is category design a real thing? Obviously, it is a real thing because you're making a living doing it. Yeah. But does it work?

Josh Lowman: Yeah. So in the world of, business, startups, marketing, there's always gonna be the b sification of any discipline. Anything that becomes valuable at all is going to also have a bunch of people who are saying they're doing it, but they're not really doing it. You know? And they're just trying to make a make a buck off of some new trend.

Mark Evans: Right.

Josh Lowman: But, no, category design actually is a real thing. It has real substance to it. In some ways, the, you know, the the precursor to it is brand strategy. And when, brand strategy was invented, there was a number of people who said, if we can define the central DNA of a company and its products, then our brand strategy could become the North Star for everything that that company does. Right? The problem is that if you go into the startup world, chief product officers, people who run sales, people who run HR, and people department, they don't take brand strategy that seriously. The chief product officer is often not gonna look at a, a a brand strategy as, yes. I want this to be the North Star for our product road map. And so in a way, category strategy has come out of that problem that there is no unifying whole company strategy when for for companies who are really trying to go big and do something new. And so category strategy fills that gap. And so, yeah, you could do it in a way that where it's just kind of it's not real, and it's just kind of, like, something that marketing marketing people say, but there's no meat to it. But when it's done right, you're doing it with the CEO, whoever runs product, the person who runs marketing, person who runs sales. All of those executives are agreeing to the central strategy, and then they're going to change what they do according to what that north star is. And when you do that, it's really substantial.

Mark Evans: One of the things I think about when it comes to category design is that in theory, it sounds amazing. So for example, if you're a Drift and you can actually create conversational marketing and own that category or at least emerge as the leading business because you've moved first, that is an awesome way to grow and build a business. But the one thing that I would say, I guess if I was the devil's advocate, is how hard is it is it to create a category given that there's so much competition out there? Companies are taking like, startups are so agile these days that you can move you can start you can start a business really easily. What is that alignment between concept and reality, and and what are the challenges companies face when they try to create a a category?

Josh Lowman: Mhmm. Yeah. This is a question that I get all the time, and it makes sense that it's like, hey. Are we really a category creator? Like, not everybody can be a category creator. Right? But I look at it a different way. I you know, we work with startups and late stage startups and companies that are tech companies that just IPO ed and people that are in that world. And in my mind, those companies are all saying, we have a really big idea that's gonna turn into a very large market or a very large valuation for our company. They're going to investors saying, we've got a big idea. It's gonna be really successful. That's why you're gonna give us millions of dollars. And what category design does in a way is it keeps those people from backsliding into incrementalism. Right? It's like you go into you start the company and you go to get investors and you're like, we're going big. Then you get into actual the work of making the thing, the product, and the marketing, and the sales. And you're like, well, actually, it's just a better way to do something that already exists. And that doesn't lead to companies that have a high valuation or end up with really good, like, good good outcomes for investors. So in a way, category design is just it's it's almost like something that just keeps keeps founders and executive teams honest that they really wanted to go big in the first place.

Mark Evans: So that I'm clear on category design, Is it, for example, a company looks at the CRM space, and there's all these sort of generic CRM applications out there that serve all kinds of different companies, and they decide that they want to create a CRM specifically for b to b SaaS marketers. Not for anybody else, but just for b to b SaaS marketers, and there's no other company that has that laser like focus. So they've decided to create this category within a existing category. Is that category design, or is that incremental product design?

Josh Lowman: I don't know if I don't know if the b to b SaaS CRM is specific enough to be a category. There's probably because, like, CRMs now are used for marketing, sales, customer success, all kinds of things. Right? The question you're asking, the answer is yes. If you you know, it this all takes place in the mind of the customer. If you can get your customer having the idea that, oh, this isn't just an incremental improvement on something that already exists, but they're like, oh, this is a whole new way of doing things. This is actually gonna transform the the work that I do. That's when they're thinking this is a new category. So if if you can get that to tip in their mind and it's you know, it could be really specific. I mean, what you know, one thing we've we've we've talked about is, hey. Is, is Southwest Airlines a new category? You you might say, well, no. It's not. It's just like a a budget budget airline. But maybe in the minds of their customers, they think of it as something totally different because there's so many, ways that Southwest Airlines is really unique. And so it gets a little bit philosophical here about, like, well, what, you know, what is a category in the mind of the customer? But but that's really the question is, can you get the customer thinking, okay. This is a whole new way of doing things that is not in something in a in a category that already exists.

Mark Evans: It leads to two question. One is who should consider category design? And number two is how do you get started? What are the first steps you should take?

Josh Lowman: Yeah. So every funded startup should be doing category design. And category design could be as simple as I have an idea, and then I look at it through the lens of category. I I have an idea for a startup. Is that a new category? I have an idea for a product. Is that gonna be a new category? You know, that could be the that's the simplest version of category design is that you're always looking at everything that you're doing through the lens of, hey. Could this be a new category? And if the answer is no, what would I have to change about that idea in order to get it into that into into the space of being a new category? So you could do any kind of cat you could do category design in a very lightweight way like that. People hire us to do a much larger engagement, and they're often already at the point where they sort of found product market fit, but they really wanna make sure that they stand out. And that's a much bigger thing where we're doing a, you know, three month strategy engagement and doing a deep dive on their business and helping them figure out what's really unique about what they do and how that thing that's unique can can be honed and worked on and made clear that this is a categorical difference, not an incremental difference out in the marketplace.

Mark Evans: Yeah. That's interesting because I do a lot of positioning work with b to b SaaS companies trying to identify how they're unique or different so that they can stand apart from the dozens, if not hundreds, of competitors out there who talk and walk the exact same way. But what's the connection between strategic positioning and category design? Are they Yeah. Do they flow one into the other?

Josh Lowman: Yeah. They're really close. In a way, you could say category, creation is a is a kind of positioning. Right? When you when you come out and say we've invented something entirely new and we've given it a name, that is your positioning. The difference, though, is that positioning there's two big things. One is positioning tends to also often include what's your position within an existing category. And category design says, no. You can't do that. You have to come up with a new category. Like, that that road is closed to you. That's one thing. The other thing is that positioning is seen as a brand or marketing strategy. So it can be hard to go talk to the chief product officer and say, hey. This is our positioning now. You need to go change your product road map based on this positioning. Whereas you sit in a room with the CEO, CMO, chief product officer, and the rest of the executives, you go, we're creating this category. When it works, it's because everybody's bought into this single idea, and then the chief product officer is going to change their product road map according to what that category is that you're creating. So that when marketing and sales are going out to tell the story, they're not just telling some BS. It's not just, like, a story they're telling. They you know, product is coming right behind with, like, really great proof points.

Mark Evans: So I've created a better mousetrap. I've found some customers. I've I've proven that there's demand for this product, and people are willing to pay for it. And now I start to think, wouldn't it be great if I could create a category that I could own, I could move into, and really be the pioneer and the evangelist? What are the steps that I need to take? Where do I start in terms of launching this process?

Josh Lowman: Yeah. You know, some of it depends on where you are in the process. But let's say you already do have customers and you have a sense of the domain that you're working in. You're maybe you're in an existing category. Maybe you're in an emerging category. You have a sense of where you play and you have some customers. What I would do and let's say you didn't you didn't hire us at all. You just we're gonna sit down and try to do it yourself. You're gonna start with trying to understand in really well what problems you uniquely solve. Write it down. Get every single thing down in a list. What problems do we uniquely solve? And there will be different things on there. There'll be some problems that we're we unique we uniquely solve, but they're not that valuable to the customer. There'll be some things that are really valuable to the customer, but that other people can do. You're looking for those things that do both of those. We're we're unique in it, and these are really valuable to the customer. Then you're thinking, can I look at this entire list and come up with a single overarching idea for what we call the gap? And the gap is just a concept of what is what is that high level problem that we're really solving for the customer, and you name that gap. And you've gotta kind of be both true to today and forward looking. When you name that gap and you come up with what is that what is that gap that we really solve for the customer, has to be like, yeah. This is true today, but we can make it much more true in the future. So you've you've got that gap. So for example, we we wrote the strategy for Qualtrics with a category strategy for Qualtrics. Their gap was the experience gap. The experience gap is a difference between the experience that you think your customers are having and the experience they're actually having. And so, you know, a gap is different from just problems that you solve because it's much bigger. It's a much bigger, more strategic business problem than just, hey. We do surveys. We do real time surveys. You know? It's a it's a big problem that your that if you if you can get it right, your customers will hear that and go, oh, yeah. Yeah. That that that would be really valuable if somebody could solve that for me. So that's the gap. Next thing is you're gonna look at your vision for the next three to five years. So you could write down in three to five years, what will thing how will things be different for our customer if we are ultimately successful? So in Uber's case, which is another client of ours, they might say, we're gonna take 50% of the cars off the road in in cities because people won't need to buy cars so much. They won't need to own cars so much. So there's gonna be less cars. Like, that's a really cool vision statement. Now that's not just a single vision statement. You're gonna need a number of these where it's like, hey. In in the world that we're building, this will happen, and this will occur, and this will happen. So that's your vision. And then there's one more step in the process, which is your category idea. So if you look at the gap and you look at your vision statements, like, what will we make happen if we're ultimately successful? The question is, what category are we inventing to get our customers from that gap state to that vision state? And you'll come up with a category idea through writing down some names of categories. So for Qualtrics, it was experience management or experience management platform. Right? You'll write different ideas down for for the name of the category and then maybe a sentence or two that says what each of those names means to you. And you kinda just have to play with all these ideas. Well, what if the gap was this? What if well, maybe that would change our vision to this. Well, maybe that would change our category idea to this. And you're sort of triangulating these three things until you get something that really feels right. And you gotta look at it as, like, can this be pretty much right today, but could we make it really, really right tomorrow? So there's a lot of kinda ins and outs to this where you're you've got your three ideas that you're triangulating, then you're looking at can it can we make a real case that this is true today? Then can and but are we also building a a big space for us to to grow into this, tomorrow? And that's that's kind of a crux. That's that's kinda the essence of the process of of the of category strategy.

Mark Evans: In about two minutes or less. Yeah. Yeah. It sounds like a a combination of of subjective and objective or art and science.

Josh Lowman: Yeah. Absolutely.

Mark Evans: Absolutely. I would have is once you've gone through the process, once you've got your product, you've got customers, you decide that category design is something that you want to embrace, and you go through this process, you come out the other end with experience management or whatever category name that you've developed, what comes next? What do you do with it? Like, what are the next steps in terms of using it for marketing sales, customer service, all the things that are part of your operational pillars?

Josh Lowman: Ideally, you know, and I know you you a lot of your audience are are, you know, in the marketing world. One of the cool things about category strategy is if you're a CMO and you bring or you're working in marketing and you bring category strategy into your company, now the strategy that you're doing is no longer brand strategy and something that maybe the, you know, the people that run product are gonna ignore. Now you're bringing in a strategy that it's like, okay, CMO, CEO, chief product officer, all working together to form this thing that everybody can agree to. And so that's very, very powerful, and it's fun for marketing to be part of that. The next thing is, okay. If we're all in agreement on this is the category and this is our story and this is the rationale for why we think this is a we've got the business case to go forward on this, then you need to do a category launch. And the and a launch happens in two places, inside the company and outside the company. And the first most important place is it happens inside the company. So that usually is a presentation by the CEO to everyone in the company saying something like, today, we're changing the trajectory of our company. We're no longer gonna be lumped in to this category doing something incremental. We're now, you know, category creators. And here's the category that we're creating. During strategy, we write something called a category POV that basically the CEO will take the whole company through this category POV, through the gap, through the vision, through the category idea, and what the, what how much promise there is for this category in the future. Once you kind of have everybody on board and you're letting different departments know what they can do to help manifest the category. Right? So, like, people doing recruiting are now gonna be using the category idea as part of their talking points. Sales is totally gonna change their pitch so that the category ideas, especially, is at the beginning of their pitch. Product is gonna change your product road map. Everybody in the every department has a certain set of things that they'll do to go manifest the category. And then on the outside of the company going public, there's something that, you know, we call it a category launch that will happen usually three to five months down the road after we create the strategy. And that's often for b to b companies. It'll be a often a conference. The CEO may do a vision category vision presentation at a conference, and there might be a number of other things that are done all at the same time so that you can really get your message, your new category message out to your audience with a lot of density. You get the whole company pulling together on the internal launch. You get the whole company pulling together on the external launch, and good things will follow.

Mark Evans: So if you established a new and exciting category, how much of a competitive advantage have you created? Is it the ultimate tool in terms of outflanking companies that may do something similar, but you've decided to stand apart Yeah. And not only compete in the same marketplace, but be very distinct in in terms of where you compete. It sounds like a great if you can pull it off, it sounds like a great way to basically own own a market.

Josh Lowman: Yeah. I mean, it can be a very, very successful thing to do. That said, we're dealing with people's minds and could be you know, we're we're dealing with the mind of the customer, and that is always mysterious, and there is always the unknown to deal with when you're dealing with, well, will people think this is really valuable or not? But within that space of, hey. This is unknown. We don't know for sure how this is gonna go. Category design is sort of one of your first best things that you could do to to, like, create and win a new category. So for example, there's a number of reasons why. So, first of all, if you're a startup, people customers tend to give more credibility if you say we've created something entirely new. If you, if you go to to a startup's web page and they say, hey. We're doing this thing, but we made it faster or easier or better. Like, hey. It's a thing you already know, but we made it faster easier. People don't really give a lot of credibility to that, and they sort of zone out on on messages like that. Whereas if you say, we've created something entirely different. And if, you know, you have a podcast, if I said, well, we're gonna change the podcasting game with this new category of podcast product that we've invented, you at least would give me three minutes to find out whether that's BS or whether there's something really true about that because it might change your entire industry. And so there's a weird way that by going big with our message and and category, we're we're we're making it so that people are much more likely to to listen to that message. So that's on the kind of almost the hook side of of messaging. Right? You gotta hook your customers in order to get them interested and get a little bit of time with them. And then if we look at things on the valuation side, all up and down the spectrum of, you know, of of the valuation of a company from investors to customers to everything to recruiting, people value category creators and category leaders much more highly than they do to me too companies. So for Qualtrics, for example, they were lumped in with surveys, when we first started writing category strategy for them. And, they weren't valued. They were valued a little bit under a billion dollars. Now, five years later, they're the leader of experience management, and they're valued at, like, $25,000,000,000. So there's a whole valuation piece to this that that works really well, also.

Mark Evans: I did wanna follow-up with you in in terms of looking at Qualtrics. I'm interested in really walking me through that category design process with a company that obviously is doing very well. I mean, billion dollar valuation is nothing to sneeze at. Why did they come to you? What were some of the challenges that that they were facing? And and why did they think that category design was was a way that they could jump start the growth of their company and jump obviously, start their valuation? Walk me through that whole that whole journey with them.

Josh Lowman: Well, you know, we were brought into that project by our, my friend Al Ramadan, who has an agency called Play Bigger. So they brought us into that process, and we worked with Al and Dave at Play Bigger to write the category strategy. And from the briefing documents that they gave us, it was clear that Ryan, the CEO at Qualtrics, and the executive team had a very ambitious idea of what the product would be in the future, and they had already done a ton of work on that. And so they already had this idea that their product was much more than surveys. And so the thing that they didn't have was, okay. What's the name of that category? What's the, what's the story of that category? What's the gap? What's the vision? All of that. So the the the process was fairly straightforward of taking founders who had a really ambitious, clear idea for what they were creating and then figuring out, like, how do we tell the story of that? And that all fell into line pretty quickly. You know, we did I think on the first draft of the category POV we did, it was like, hey. This is really working. We just need to make a few changes, and and we're good to go. There's a few other things that we did. We we created a a set of visuals that showed the the category idea working in, advertising and kind of, you know, customer facing creative that worked out really, really well. It kind of vetted that, yes, this could be the new category. And then from there, Qualtrics created a launch event, and Ryan came out and sort of had his Steve Jobs moment where he took the category POV and presented it to press and Fortune 100 companies. And, you know, it was kind of like, wow. This is a that, you know, is really well received and very successful because people were like, oh, wow. This is exactly what we need. We don't really need more surveys. We need experience management.

Mark Evans: I guess in that case, you knew right away or fairly quickly how well that category design project would resonate. But in other situations where you're not getting that immediate feedback, how long does it take you to know whether what you've done is is actually worked? Whether that whole category design process is has done what you wanted it to do? Because does it hap does it usually happen right away, or does it sometime need time to to nurture and sort of permeate through the community?

Josh Lowman: Yeah. There's a number of variables there. You know? And there there's a couple of things I wanna call out. One is you can design the category the Steve Jobs way, which is like, hey. We're not gonna do research. We're not gonna go ask our customers. We know what's best. We're gonna create something entirely new that we know is awesome. We're gonna release it to the world, and hopefully, people think the same thing that we think about this. And and that's absolutely a way that some of our clients work and that will work with our clients where if you can get it into a category POV, if you can write the Steve Jobs, like, presentation of this new category and you feel it in your gut and you're like, I love this, and you give it to your, you know, number one investor and they're like, I love this too, you have a pretty good chance that's gonna go over really well. However, we have some clients who are like, we really need to vet this and make sure this is gonna work before we ever go out in public. And so we have something called, category advisory community, which is a way that we do research with customers on an ongoing basis while we're doing category design. So while we're doing the strategy, we can check back in with customers, take their pulse. Is this working for you? Are you as excited about it as we are? And then build back any any kind of insights that we've gotten, build that back into the category that we're creating. That's one thing. And then the other thing I wanna say is you were basically asking, like, okay. Does it take a while? Does it hap you know, what like, what is that all about? Obviously, because we're dealing with the mind of the customer, there's a aspect of this that is completely mysterious, and we don't know how it's gonna go. That said, within that context, each client that we have that is trying to launch their category publicly has a different capacity for how well they're gonna do that. How well do we all work together as a company to launch this thing? How coordinated are our efforts? How in sync is marketing and product? How how much does sales really have its, its decks and its pitch together for the category launch? All that has to do with crazy social dynamics that has to do with how companies really work together and people work together. And we have a few ideas for how to keep companies on the right track, but there's a certain amount of people every every every group, every organization is different, and that that's a big variable in all of this.

Mark Evans: So what happens if it doesn't work? What happens if after all this work, all this creative this creative process, the back and forth, the alignment internally that go to launch a new category and it falls flat in its face? Have you ever run into that situation and what do you do?

Josh Lowman: You know, I I actually, we haven't. We do have clients who they they launched their category recently enough so that we're still waiting to see what happens. But, really, the version of failure that we've seen is there's a couple times where we've had clients who they thought they were hiring us to do marketing strategy to just do the story that they would be telling, and they never fully got their product and the rest of the the rest of the company on board with it. And in that case, it just becomes some stuff we set on our website. It just doesn't really take off because customers can see that it's flimsy. It's just it's kind of just something you're saying. It's not doesn't have substance to it.

Mark Evans: So unless you get all hands on board, everybody's re reading off the same page, it's not gonna work. Thanks for all the great insight about category design. Josh, where can people learn more about you and GoldFront?

Josh Lowman: Come on over to goldfront.com. Also, we just launched our own podcast and newsletter. It's called Category First.

Mark Evans: Well, thanks for listening to another episode of Marketing Spark. If you enjoyed the conversation, please leave a review, subscribe via iTunes, Spotify, or your favorite podcast app, and share via social media. To learn more about how I help b to b SaaS companies as a fractional CMO, strategic adviser, and coach, send an email to Mark@MarketingSpark.co or connect with me on LinkedIn. I'll talk to you soon.