Really? Oh, come now… in every press release I ever saw the company says they are the market leader, but in what? Market-share? Revenue or installed base? Technology perhaps? And in who’s eyes; besides your own? And why is this really important anyway?
Well it IS important, and it is important because often success begets success and many customers buy on the theory that if they buy from a market leader they can’t be wrong. This has value and investors pay for value. But what distinguishes you as a market leader?
When we look at market leadership, we boil it down to a few things:
- Customer acceptance. This can be measured in revenue; number of installations, seats sites etc., but just as important is customer references of widely deployed, production product. Investors will place more value on a smaller number of deployments if those deployments have shown production level pervasiveness throughout the customers and their supplier ecosystem. When customers use the product and are willing to speak on your behalf; that indicates real market leadership.
- Brand recognition. Now while it would be great if everyone had products that roll off the tip of the tongue at a party, but often technology doesn’t work like that. Nevertheless some form of name brand recognition (with a positive connotation) is a strong indicator of leadership. If investors search the web and the only thing they find is your web-site, you probably aren’t there yet. When the industry is writing about you, whether it’s analysts, press, or your customers, you probably have achieved a level of market penetration, if not leadership. The ultimate proof here is market pull. When prospects are calling you on a regular basis to solicit your advice, input and products, then you have leadership.
- Technology leadership. Now, I know you believe in your product. If you don’t believe no one else will, but have you clearly articulated the benefits, value proposition and competitive differentiators in a way that makes it obvious that you are the leader? Have you validated your position with customers and industry experts? Is your position documented in a way that is consumable by prospects? If the answer is no, then you might have the best technology, but you are not a market leader because nobody else knows it. Investors buy technology all the time, but they pay high multiples for established, proven, documented technology market leadership.
OK, so maybe you don’t quite qualify as a market leader today by this definition, what does this mean to your exit strategy? The question here is not about what you have not achieved, but instead what you have achieved; where you are on the journey to achieving recognizable market leadership and what you can do quickly to improve your position. Regardless of your position today, a bit of thought and timely investment can help make you a more recognizable market leader.
If you would like to read more about the market leadership and how it applies to developing your exit plan, you might be interested in reading more in our report on “How Have You Matured Your Business Lately” at http://merger.com/so-matured-business-lately/. If you would like to talk more about this topic feel free to contact me at firstname.lastname@example.org or give me a call.