How to create waterhole strategy
Whom is the waterhole strategy for? Can it be used in the same result in each business in each branch?
1. Segmentation. The first element of waterhole strategy.
The rule is that: if your offer is more general, then you have bigger competition. If you sell CRM application, you have enormous competition, which operates of huge budgets. Your chances for entering on the market instantly decreased. Each auction service with bidding for 10 PLN per user states competition for you. It takes with success the part of your potential customers.
The CRM applications have existed on the market for 90th of XX century. When you enter to the market you meet with existing and big competition, which has famous, recognizable brands. The results of Google explorer on popular phrases: CRM, CRM system, CRM applications have been using by your competition since years.
Creation, in short time the www website, which will be on first page in results, is very hard, costly and sometimes impossible. What is important, is the fact, that for this position you have to take care all time, do many activities, which maintain the company`s website on a good position on first page.
The activities, which most of companies take in this situation are determined of marketing budget for SEM and SEO activities.
Monthly marketing activities, which aim is gaining a position in results of explorer or it`s correction. The activities from SEM, SEO areas never finished. As long as a company wants to gain customers it has to invest in different activities.
The challenge for each company is its competition. Activities and costs for SEM, SEO are addicted to similar competitive activities all time.
The important is also understand, that the effects are often visible with delay. What means that your companies, besides realization of activities plan in range of SEM, SEO, react on competitive activities, which had place some time ago, and you are seeing these effects now. Your activities are concentrated on copying of work effects, which others already have done.
What solutions of the problem can you have?
Please note that you decide to limit your offer. Instead of selling generally CRM system.
In this way you make a market segment. It has to fulfil several conditions:
- The segment has to be profitable. There is no sense to invest in segment, which does not have money or customers are not willing to pay more for good quality service. What is more important: it has to be as big as to ensure the profit. Check, how many companies or private people can be interested in your narrow offer. It often will be a few, several, even several dozen of thousands subjects.
- The segment has to have mutual features. Find mutual features both demographic and behavior, which connect customers, but – caution – may it not be features connect directly, but indirectly with product which you offer. In choice of features is important to choose these, which are important for all segment`s representatives. The features should not be directly connect with product, which you offer, but in some way should go around it, should be on very far borders.
You can also create a segment based on mutual features which are not connected with your product. However, in this situation will be harder for you `undergo` from waterhole side to your product. It is possible, but it requires more work and engagement.
Maybe your customers commonly are interested in for instance golf play or depend on publicity? In your own market analyse you set, that it is modern through them - even from image attention. You have mutual feature: aspire to environment causes that they are interested in the game, which is modern in group of people who are in good place and they care of bigger number of positive comments in the Internet. It is only an example, but believe me – good chose segment will have mutual features.
- The segment has to be able to communication. Imagine that you work on world market. You distinguished two groups of marketing directors from IT branch of small and medium companies segment. Both groups are profitable, both have the same values. The only one feature, which differs them, is fact, that one of them is in Poland but the second one is in Vanuatu. Can both groups state one market segment. No, because they cannot communicate each other. The third characteristic of market segment is ability of people to communicate each other. Without this factor you do not create market segment.
In conditions of waterhole strategy the company for one product can create many different market segments. Some of these segments can be totally separated others can overlap. Important is only one thing, in order to each choose market segment has three following features: size, characteristics and communication.
The example of market segment for CRM system for event agency.
The event companies gain interest for their offer via Internet. For this companies segment existing in the Internet is very important and critical. The owners and managers of event companies rely on building the brand and recognition their company in the Internet. It is one of the important factor of creation company`s value, how can you help these kinds of companies? One of the simplest idea is making a portal which publishes information from event branch. The portal, on which event companies could show-off their successes and achievements. The portal, through which event companies representatives could contact with new interesting people.
To get the idea of creation a portal for event companies firstly you have to limit yourself. Currently there are not many people (in small and medium companies nowbody) who have money for creation of waterhole which has general topic, waterhole, which will contain many different issues. Even general business topic of waterhole. Currently there is a place for creation a branch waterhole which is narrow topic. For sure also in your market segmentation you find this branch, which is able to accomplish all assumed parameters.
2. Value. The second element of waterhole strategy
The essence of waterhole strategy is value creation. Values, which:
- are not directly connecting with product, company`s brand
- are directing to selected segment of people
- determine essential for target group areas
It is not about customers value, simply to say – how much can you earn thanks to customer. It is about what kind of value you and your company can create for customers. What can you offer them, which is really need. This rule appears in many modern marketing strategies. It is also absolute marketing content. In waterhole strategy it is early stage, but very important.
The crucial is understand, that company has to discover value. Value, which is the most important for selected segment of people. It is not about that the company thought up a new value, but about that it discovered value, which has been existing all time till now. And what is the most important: it will exist in the future. The key to achieve success is build waterhole around this value.
- What can you offer you customers?
- Convert this question: what do your cusotmers look for?
- Who are users?
Look at the customers, as a people:
- What are their hobbies and interests? Do they create an environment or work individual? Are they willing to change, develop, invest, to find in this environment?
- What kind of lifestyle they have? Are they open or introversive? Do they like spending money or saving it? Where do they like spending time?
- What is their education or occupation? Who is their authority? Whom do they show respect? Who has influance on them – whom do they trust?
- What do they dislike? What kinds of problem do they protect themselves for?
- What do they impress the most? What cause, that they are willing to change? What is their motivation?
Based on these questions you can reconstruct a picture of your customers, as a community. It is the situation as you gather them in one place. To one group, which is in some respect cohesive, it is easy to direct advertising message, is it?
The key to create waterhole strategy is value, value for selected customers segment.
It is a time to answer for question, what is the value, which attracts customers to waterhole? In our example will be a portal and forum about golf. If you create a place, in which you start publish interesting articles about golf, relations from prestigious parties, advertisements about new golf courses, and even guidelines or instructions for beginners – the mine of knowledge about interesting domains for them.
And you do not mentioned about your company`s offer. Only one advertising element can be for instance small, modest banner on the top of website, which directs on your product website. (For sure a good product website you have, because you have already started your business from it and you have promoted it, spent much money on it).
Thanks that – without obligation – banner your customers get to service about golf (waterhole), and if they want, unconstrained go to product website determines your product. Whole crowd, which in traditional world you have to look for by your own, comes to you, accumulates in one place and natural, alone goes to your business.
Waterhole strategy is variant of pull strategy – relies on encouraging customers to come to you. It is more interesting, that customers firstly come in not for cusines offer, but for value. Value, which can but does not have to be connecting with your branch. On this way you build your relation. Hermawan Kartajaya, Iwan Setiawan and Philip Kotler in a book `Marketing 3.0` pointed out that the aim of company should be creation of value in the broad sense of this word. The key term of marketing activities of the company should be creation of value, but not development of product or creation different version of it as was in earlier marketing activities.
I gave an example of hobby (play golf), but there are more possibilities. During searching of value which will be for customers the most important, take into account different needs. Below there are several inspirations:
- Knowledge: what kind of information would they like to achieve? What kind of scope do they learn? What kind of advice, clues can they want? What kinds of skills would they like to achieve or improve?
- Tools: What kinds of programs, tools, and methods would they like to use? Do they need some certificates?
- Interests: What are their hobbies? What are their interests? Where and how can they realize them? Can they develop in terms of these interests for example achieves new titles?
- Aspirations: What is their aim? What position would you like to achieve? What can they do to achieve it? What do they need?
In Waterhole Strategy you create a value: place, where the people get it, what they want.
3. The time. Third element of waterhole strategy.
Now you have two the most important information:
You know what is your target group. You chose the market segment to which you want to go – so (in our example) companies, which works in event branch. You know also how do you have to narrow your own offer (CRM system) to gain selected market segment.
You know what is states value of target group. It can be information about the best golf courses in Europe, styles of playing golf or the ways of trainings of famous golfer.
It can be information about organizing conferences, building and arrangement of scenography, creating unforgettable impressions for event companies.
It is time to dig up a waterhole. It is not a run for 100 m – it is marathon. Prepare as for the marathon.
Waterhole strategy was inspirited directly by nature. In my activities in business I like reaching for nature metaphor, because nature is perfect mine of ready `schemes` action.
In waterhole, which you will build have to be exactly the same. You have to fill it by `water` - it is valuable content (nobody does not expect from you, that you become to be specialist from golf or creation of event for company, you do not have to do this alone, but about it will be for the moment). What is the most important – you have to disappear from view as `a company with offer`. Waterhole is not a place for presenting the product of your company. To fill of waterhole in advertisement you become to be predator, which deters customers aiming to waterhole. Your task relies on creation the place for them, where they will find exclusively valuable, interesting content – completely irrelevant with your offer. Clean water, without marketing addition, you create community for them. Waterhole is a place, where they get, what they want. The customers in waterhole receive value, on which they rely on, which they look for, which they natural need.
I wrote above, that it is a marathon, but not a run for 100 m. The creation of waterhole till the time, when it will become to be famous among all people has to take some time. A comfort is that everyone zloty which you will invest in creation of waterhole will pay during long time.
It is not an advertisement, which customer sees only once, and you have to pay for it. In typical marketing strategy, if you want that customer see your advertisement again, you will have to pay for it again. Building of waterhole is a strategy, thanks that every investment bears fruit for a long time.
When you start your waterhole, remember about it, that it’s develop requires a time. You do not have to arrange a big advertising campaign, but take care of high position in Google and a big base of information in the beginning. In case of portal for golfers prepare:
- The list of all golf courses which exist in Europe, with their description, unique characteristics, addresses?
- The base of coaches of golf play?
- The list of occupations and other golf parties
- an area to creation own golfers rankings, monitoring of own achievements in particular age groups and degrees
In case of portals for event companies, you can prepare:
- a dictionary of terms used in event branches
- base of event companies
- base of conferences localization
- base of companies which offer event attractions
- the place for publishing timeliness of event branches
This base of knowledge is first value. Beside of position building among receivers, increase also position of website in Google, and it influences on visiting number.
Remember also, do not instantly focus on advertisements. Do not place any advertisements for first year, hyperlinks to your products. Build of waterhole is a marathon. For first year your internet portal does not gain a big audience. It will not be on first positions in results of Google explorer. The aim is to build community selected by your customers segment.
Remember about one more thing, which is very important. It is not important what kind of portal will you build, in what discipline – in the vast majority of cases, you enter in area which is developed by someone. It will not a first portal for golfers, and also it will not first portal for event companies. Waterhole Strategy is follow-on innovation. So you do not create new solution in the Internet. You create better needs satisfaction of customers.
Waterhole strategy for you will be new, unknown experience. Due to its realization you do not create new discipline in the Internet. When you will start the process of build your own waterhole for sure you will meet on your way many other interesting solutions. You will not first in your discipline.
Creation and development of waterhole do not require a big amount of money or much time (you do not have to dedicate 8 hours per day for project), but for affects you have to wait. Waterhole strategy can be (and for sure it will be) realize in the same time with your current activity, with this difference, that each hour of your work, each invested one zloty and each material published on website will be `work` for you for a long time.
4. Community. Forth element of waterhole strategy
I mentioned one minute ago, that waterhole does not have to be fulfilling by water. Of course, first step is for you, but in next activities you can encourage community. You have to take care of creation of technical possibility and atmosphere to create a community. The community does not create itself. Build the community around your waterhole is the hardest factor in strategy. But without community your waterhole will be dry in the course of time. During a long time nobody in your company will not want to invest these activities and realize waterhole strategy.
The users of portal about golf want to talk, change their comments, notice their successes, argue and learn. Their interviews are normal – it is enough if you give them a possibility to speak out. In this way all community, which you will create, gains value itself (talk, change of knowledge, build an image), and in the same time creates value for you – because increases information reserves in your service.
In case of service for CRM companies need place to present their achievements, advertisements, press release, and other materials about event companies or for them. All this information, which can help to manage a business for event companies.
Waterhole strategy allows companies maybe not to stop compete, but move a competitiveness area in different dimension. On own field, on which the company can set rules of game itself – these rules which will be profitable for it.
You do not have to create waterhole to be first.
Let`s not deceive you the vision of being the first in branch, in the issue. Some years ago occupation of new areas in the Internet was really very important.
Currently a priority is not important; distinguish competitive advantage in the Internet. This is the most important, is ability to conform to changing of customers’ expectations. Providing more value for customers. Realization of needs and expectations of customers in connection with UX and CX, they are factors which ensure success during a long time.
Let`s take an example which is currently the biggest community portal – Facebook. You know this portal, when you still were not there, you for sure heard about it. But was Facebook the first community portal? No, did you hear about mySPACE? This portal had multimillion community, when Facebook was starting on Harvard University in the USA. Was mySPACE first community portal? Also not, did you hear about Friendster? What kind of portal had been before community portal Friendster? I heard that before community portal Friendster had been only blog platforms in shape for example AOL Messenger. Who remember about Friendster or mySPACE today? Who does not use Facebook today?
Other companies from branch stop count for you, because you create no fleeting value, but you build constantly relations with customers. You can get to customers in other way – this way on which nobody is competition for you.
Substantial managing and development of waterhole you can entrust to specialists. After some time representatives of communities will join themselves as authors. In this way – like without your participation – there will create unique, hard to copy value. In the same time there will create community.
