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I am a big fan of 37Signals, and out of curiosity wanted to see the difference between their CRM app (Highrise) and SalesForce's app, in terms of google search rankings and general visitation.

Compete shows that 37signals highrisehq.com has 78K users compared to SalesForce's 1.2ML users, but highrisehq.com has a blog read by 100K users and SalesForce does not. More to the point, I get that SalesForce is a Billion dollar company and 37S is not, but I don't know of any content on SalesForce that people regularly go to. Or another way, it seems as though 37Signals never pays for advertisers and SalesForce only does paid advertising.

The question is: what is the best way to compete (i.e. build traffic) against larger companies in addition to building a loyal customer base as 37S has.

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2 Answers 2

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Can't say that I agree with everything he posts, but Seth Godin has a few things to say about niche businesses which address your question.

From his "An atomic theory of business size" post:

Want to go from freelance work as a programmer to running a business like Fog Creek Software? Totally different list of requirements.

This is actually a good thing. It's good because rightsizing allows you to be profitable and live as a human.

(Posts like Make the world smaller would speak more exactly to the point, but it's relevant enough given that you're using a Fog Creek product here)

More often than not, small and focused companies are better able to adapt to the needs of specific user communities than larger companies - smaller companies are (or at least should be) closer to the right size to respond to their user communities without the needless delays which often accompany anything a "gorilla" company might attempt. (Remember, any ideas or requests fed into most any big company will need to travel through a Kafka-esque bureaucracy before they are translated into products or services ... the same cannot be said for a small and focused company - at least not for the ones which will be around a year from now)

The problems of offering "everything to everyone" (or leveraging legions of salespeople to convince everyone that your product is the right one for their needs - even if cheaper and more appropriate options exist) are parallel to the problems of offering a targeted service or product which fulfills the needs of a specific group of people or businesses.

Where a "gorilla" will attempt to dominate all markets, (often resulting in sales commission largess which, in turn, confers an inflated price) a small and focused company will attempt to be the best solution to a specific problem ... and because a small company can devote more of its energy to solving the domain-specific problems of a niche, the small and focused company usually offers a cheaper &/or better solution for that niche.

If your competition has high sales staff and advertising overhead, the strategy is pretty simple: make a product or service which (though it may not be able to shoe-horn every potential client's needs into its feature set) does one thing and does it well enough that it becomes a standard within the niche which it serves.

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This is a great perl of wisdom about business. +1 –  Marco Demaio Nov 20 '10 at 13:01
    
Daniefree, I think this is a great response. Dominating a niche is great guidance. And you words about responding to customer needs in terms of changing a product are right on. Thanks. –  zkidd Nov 21 '10 at 3:39

As danlefree suggests, the trick is not to compete directly against a gorilla-sized company. First off, you can't. You don't have the marketing resources, the development resources, or the financial resources to compete feature for feature against a larger established company.

SalesForce and Highrise are both CRM apps, but they cater to different markets. Just look at the price difference in the most popular (and most heavily pushed) plans on each website: SalesForce Enterprise is $125/month PER USER; Highrise Plus is only $49/month for 15 users. So SalesForce's main product package is effectively over 3800% as expensive as Highrise's bread and butter.

While there probably are enterprise Highrise users, they are likely in the extreme minority. It's just not an application that is designed for enterprise-sized companies that need workflows/approvals, triggers, sales pipeline management, supply-chain management, a better security model, etc. Highrise's main selling point is price and simplicity. SalesForce's main selling point is that it does everything and integrates with everything. So the people switching from one product to the other are usually startups that outgrow Highrise, or businesses that thought they needed SalesForce when they really didn't.

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