How Underdog Entrepreneurs Can Overpower Bigger Software Competitors

Trying to kickstart a tech business in 2024 is like trying to calculate the exact value of π — definitely no walk in the park. Every niche, big or small, is already overflowing with already established players, making it tough for newcomers in the software scene to emerge and reach their customers.

If you’re tired of losing potential users to industry leaders, you’re not alone. When you’re not a venture-backed startup and operate with limited resources and a tight-knit team (or solo!), competing with established SaaS leaders can really feel like a David vs. Goliath situation.

But, if you know how that story ended, you know there’s still hope!

In our conversation with Justin Ferriman on the Plugin.FM podcast, we examine the specific strategies and tactics he used to take on bigger competitors with significantly more resources and emerge as the victor. Justin is the founder (and former CEO) who transformed LearnDash, a simple blog, into a leading LMS platform. Today, he coaches WordPress founders at his company BrightGrowth, guiding new generations of entrepreneurs with his vast expertise.

Through Justin’s “guerilla tactics” and strategic know-how, Justin will equip you with the tools you need to outsmart the competition.

The Challenge (And the Advantage) of Being an Underdog

We get it — the struggle is real and you lack the resources the giants have.

But that doesn’t mean you can’t overpower them. It means you can’t do it with brute force (or, better said, a huge budget and team in this case), but you can outplay them with carefully thought-out strategies.

Because underdogs, despite being perceived as disadvantaged, can hold some surprising advantages:

  • Stronger motivation: Facing seemingly impossible odds can fuel an underdog’s determination. They often have a greater hunger to prove themselves and achieve victory, which helps them maintain high focus.
  • Creative problem-solving: Underdogs can’t rely on simply outmatching their opponent. This forces them to be resourceful and think outside the box. They may develop innovative strategies and tactics to overcome their limitations.
  • Resilience: Underdogs are accustomed to facing challenges. This adversity builds mental toughness and the ability to bounce back from setbacks. They are less likely to give up in the face of difficulty.
  • Lower pressure: Unlike the favorite, the underdog doesn’t need to deal with external expectations. This freedom from pressure allows them to perform with less anxiety and potentially surprise everyone around them.
  • Underestimated advantage: Being underestimated can be a strategic advantage. The opponent may overlook the underdog’s capabilities, creating an opening for an unexpected victory.

Samir Nurmohamed, assistant professor at the University of Pennsylvania, conducted several experiments that proved that underdogs are perfectly capable to outperform favorites, especially when no one is expecting them to.

“I found that those who experienced underdog expectations performed the best — above and beyond those who received high or neutral expectations,” says Nurmohamed in an article for Harvard Business Review.

Feeling motivated yet? Now, time to learn how to strategically use these advantages in your favor.

Get to Know Your Competitors to Strengthen Your Positioning

Your customers look into your competitors when comparing their options — so why wouldn’t you, too?

Understanding your competitors’ offerings, messaging, and approach to customer acquisition and retention can help you uncover their weaknesses and play against them. Knowing in which segments of business your competitor struggles allows you to position your product as the better solution.

You may have heard from certain people that they’re building their business without paying any attention to what their competitors are doing. According to Justin, that’s not the way to go. He believes in healthy competition and staying informed about what your competitors are doing. Because you don’t want to react to your business competition, but be proactive.

“You have to relentlessly watch the people in your space — the ones slightly above you and the ones right on your heels — and make sure that you’re always positioning yourself in the best light possible compared to them”, says Justin.

He shares two possible approaches for underdogs:

  • Examine your competitor’s features and value proposition to understand how it compares to yours, then try to nullify their advantage
  • Call out what you’re currently doing in terms of features and convince people that it’s actually more important than your competitor’s value proposition

Take Wendy’s, for example. Justin gives this fast food chain as the perfect example of persistent positioning. This smaller businesses positioned itself as the fresh alternative to a larger, established competitor — McDonald’s — by opening a restaurant across the street from them. This way, Wendy’s became appealing to customers looking for something different.

Justin suggests using competitor analysis to uncover areas for improvement. But don’t forget — it’s about listening to what your competitors are revealing to discover opportunities to capitalize on, not blindly copying them.

Feature development should always be driven by customer needs, not just mimicking the rest of the market.

Communicate Your Message Every Chance You Get

Trying to find your place in a crowded market is not the time to be shy. Underdog businesses need to constantly get their message out there to build awareness and establish themselves.

Justin says you need to be loud about your product. “I was on every single comment section, on blogs, […] I was over-communicating and talking and shouting my value proposition from every corner.“ And even when an article was about a competitor, Justin was there to make sure the audience noticed him as well:

“Whenever there was an article written about Sensei and I couldn’t get in the article, I was in the comments. If there were forums, podcasts, or any conversations, I was always reaching out and networking with folks that were maybe gravitating towards Sensei or talked about Sensei in any kind of way.”

It’s highly unlikely that you’ll literally stand at a corner and shout about a new, cool data security plugin — so what does Justin actually mean by this?

  • Consistent content creation: Regularly create blog posts and post on social media, or choose other formats your audience will be interested in (like a newsletter). Consistency is key to staying top-of-mind!
  • Be almost everywhere: Be present in online communities, forums, and discussions relevant to your niche. You’ll get an opportunity to interact with potential customers and be there to answer their questions.
  • Embrace the “Building in Public” mindset: Share your journey, struggles, and successes openly. This transparency builds trust and allows potential customers to connect with you on a more personal level.
  • Speak up whenever possible: Contribute to podcasts, guest blog on other platforms, and generally, use every opportunity to share your message.
  • Over-communicate: Maybe you don’t want to spam people — and that’s valid. But, it’s better to be overly communicative than disappear from your potential customers’ minds.

And speaking of Discord’s approach, it’s worth mentioning that niches often foster strong online communities. Make it a part of your strategy to participate in discussions with your target audience and you’ll build relationships with potential customers and gain valuable insights into their way of thinking.

Remember, the goal is to constantly remind your target audience about your product’s value proposition and why they should care.

And speaking of your target audience…

Pick a Niche and Double Down on Your Expertise

If you’re wondering whether you should target a broader market or focus on solving a specific audience segment’s problems, we believe the latter is a more viable option for underdogs.

Instead of struggling to be heard in a crowded market, you will be able to direct all your resources into a product that will likely have fewer competitors and allow you to develop deep expertise in the area.

Justin also advises focusing on a specific niche where you can become the go-to solution — this is where you can leverage your agility as a smaller company. You probably still don’t have robust processes to go through, can make quicker decisions, and adapt to market changes faster than larger competitors.

These bigger companies, in my opinion, were kind of a big cruise ship and I was a speedboat, so I could turn really quick. They had the momentum and they were big and they had the following, but I was, you know, right in the waters next to them.

Here’s an example of a new solution in a market with established players — tapping into an untapped niche.

Remember Discord?

The social platform focused on a vertical niche — gamers — by fine-tuning audio and video call features and focused on the community approach rather than doing what established players like WhatsApp, Slack, or Facebook. Over time, Discord gained more and more popularity, and now it’s a favorite place to hang out virtually not only for its initial target audience but for a growing number of diverse users.

Now, how can you too pick a niche and double down on your efforts to become to go-to solution for that specific problem?

Answering the following questions will help:

  • Of all the problems your software can solve, which problem does it solve exceptionally well? Maybe it resolves data security concerns or caters specifically well to businesses in the eCommerce industry.
  • What is an underserved audience segment within your target market? Can your product successfully tackle its needs and pain points?
  • Does this market segment have enough potential customers for your sustainable growth? (Because, you know, some niches may be too saturated already.)
  • Who are the current players in your potential niche? What are their strengths and weaknesses?

While researching the demand and viability of your niche, look for gaps you can fill with your unique offering. When you get the hang of your niche’s specific needs and challenges, you’ll be able to modify your message to resonate deeply with them. This targeted communication is far more effective than a generic message aimed at a broad audience.

Focus on Customer Insights

Another aspect of agility that may tip the scale into your favor is the fact that you’re more likely to have time to dive deep into individual customer conversations and learn about very specific needs, motivations, and value drivers.

Think about it. While the tech giants are busy crunching numbers from thousands of users, you can get up close and personal with yours. That’s your superpower. You can actually talk to John from accounting who uses your invoicing app, or Sarah the freelance designer who swears by your project management tool.

Why does this matter? Because when you really get your users, you can build stuff that makes them go, “Wow, it’s like this app read my mind!” That’s how you stand out in a sea of generic software.

You can collect valuable customer insights (and feedback) in several ways:

  • Hop on calls with your users
  • Add a quick poll to your next email newsletter
  • Set up a simple typeform survey and offer a small incentive for responses
  • Use a customer support tool to chat with your users in-app
  • Monitor mentions of your product and your competitors on Twitter, Reddit, etc.

And what to do with all these insights? Prioritize what your users (or potential customers) clearly want. For example, if half your users are begging for an integration with a tool they dominantly use, maybe that takes priority over introducing dark mode (or vice versa!).

Sometimes, you may be surprised by what people need — that particular feature may not be in your product roadmap. Which is what makes active listening that much more important. Justin confirms this has happened to him, despite having great intuition as an entrepreneur:

“You have […] that ability to point out something in the market that you know people want. You have to evaluate that specific feature one against your whole vision for what you’re bringing to the market and if it makes sense and then if people are actually asking for it,” says Justin and adds that users tend to be “very vocal” about features your software may be missing.

“There’d be features in the past that I was like, ‘I’m not going to develop that,’ and then so many people were asking for it, it was like, “Dang, we kind of have to.”’ 

Top tip: Don’t just add a boring ‘Send Feedback’ button. Get creative! Maybe a playful pop-up that asks, “How’s it going? Love us? Hate us? Spill the beans!” People are more likely to respond when it feels casual and fun.

Double Down on Content Marketing

Content is (still) king, at least for software businesses. Or, as Justin puts it — “if you’re not creating content, what are you doing?”

The goal is to use helpful and relevant content (blog posts, videos, or podcasts) to educate potential customers about the challenges they’re facing and show how your product can solve these challenges to establish yourself as an expert, even among big competitors.

Justin recommends several strategies and tactics for content creation:

  • Creating topic clusters
  • Being where your competitors are
  • Leveraging low-hanging fruit

Building Your Expertise

To get traction from Google and become visible to your target audience from the very first moment they become aware of their problem, it’s critical to put content out there almost daily.

Justin recommends creating “content spokes” with a shared theme: “You need three posts, or at least 1,400 words a day, to create content spokes — and that means you have a theme. […] I had articles that were all related to market research and I linked them to the market research pillar article,” explains Justin, describing what a topic cluster looks like.

Topic clusters are a web of informative articles and resources all centered around a main theme. Think of it like a choose-your-own-adventure for your target audience. Say you’ve built a project management app. Your main topic could be “Agile Project Management,” with branching paths for “Sprint Planning,” “Scrum Meetings,” and “Kanban Boards.”

This in-depth approach establishes you as an expert and positions you favorably with search engines. They love well-organized websites, which can boost your ranking and make you as visible as those bigger competitors.

And here’s the beauty of topic clusters: they keep things organized for you too! No more scrambling for content ideas. You have a clear roadmap (just like for your product!) that ensures all your content connects and works together. The more valuable content you create, the more trust you build. People start to see you as the reliable source in your field, a game-changer for small businesses competing in a dog-eat-dog world.

Head-to-Head Competition

We mentioned above that you shouldn’t ignore the competitors — but learn from them. A part of it is because they already know where your audience hangs out and what type of content they engage with.

So, it’s key to start appearing in places where your competitors are. Maybe you’ve been building a blog and investing in SEO, but the key industry players all have great YouTube channels. Time for you to build one, too.

That was the case with Justin’s business.

“So LearnDash was built on the blog, right? That was the only marketing strategy I did for years. […] At the time, LifterLMS had a YouTube channel, […] that was kind of their main customer driver. They were doing interviews and podcasts, their LMS cast, and I realized that they had an advantage over us by having a presence there.”

And what did Justin do?

He went directly to the field that his competitor was leveraging to acquire new customers. His approach was: “How do we compete with them on YouTube? I’m going to create my own videos with a spin, leveraging my expertise as somebody in e-learning.”

Something similar happened with LifterLMS’s Facebook group. Justin built his own for LearnDash and started actively promoting it. It took time, but this move resulted in a group with over 20,000 members! As the group grew, Justin also leveraged it to promote the YouTube channel, cross-pollinating different channels to get more subscribers and reach more people through their preferred platform.

The key is — don’t just research your competitors; play where they play! Mirror successful competitor content formats and add your uniqueness to the mix to reach the right people. Building an audience takes time and consistent effort, but by strategically mirroring successful competitor content formats and cross-promoting your channels, you’ll be well on your way to attracting a loyal following.

Quick Wins with SEO

Although SEO is a long-term game and might be a while until it brings you any notable ROI, it’s still a viable channel for software businesses. Primarily because it significantly affects how people perceive you and your brand — especially important in this industry, where the decision-making process to buy is much longer than in many other sectors. Software often means long-term commitment, so it’s critical to position yourself as a trustworthy expert, which is where SEO can help.

To start getting traction, Justin recommends going after “easy pickings” — keywords you know your audience is searching for that have:

  • Low ranking difficulty
  • Decent monthly search volume

What does this mean exactly?

As for keyword difficulty, look for scores below 30 (out of 100) on tools like Ahrefs or SEMrush. This indicates less competition for those keywords. For volume, aim for keywords with at least 300 monthly searches. While not massive, it’s enough to generate some initial traffic.

And here’s an extra tip. Focus on long-tail keywords — the more specific phrases with lower competition and higher conversion rates, for instance: best project management software for remote teams. Sometimes, these keywords may not have the highest search volume, but are highly relevant to your audience and match the search intent perfectly, so they shouldn’t be ignored.

Top tip: Outsource when you can! Hiring a writer who can quickly produce content may require training them on your industry specifics. This may lead to some technical inaccuracies, but the trade-off can be worthwhile (and you’re there to review the content, after all).

Want to learn how to market your WordPress product better? Get a complete Marketing Handbook for software makers.   

Use Guerrilla Marketing (But Carefully)

When you’re the scrappy startup taking on the software giants and lacking a big marketing budget, you need to get creative. That’s where guerrilla marketing comes in — those unconventional, high-impact tactics that can level the playing field.

However, as Justin puts it, guerrilla marketing has lots of gray areas.

Once LearnDash became the market leader, its competitors adopted similar guerrilla marketing tactics to attract LearnDash customers — just like LearnDash did when it was the underdog.

Which was fair!

But Justin emphasizes the importance of respectful competition. He disapproves of tactics that exploit a competitor’s vulnerabilities for personal gain — and it happened to him when he faced security issues in LearnDash. A competitor used this vulnerability to instantly create a campaign where they promoted their own software as more secure.

“That was something I’m always big on: respect. If you’re going to compete, be respectful,” says Justin.

It’s similar with price wars based on competitor pricing. That’s a questionable tactic because it may put you in a difficult situation later on when you want to increase your prices:

“I’ve seen people do that,” says Justin. “That’s like an instant gratification campaign. I never did it for that reason because I thought, ‘What if we raise our prices and what if they go higher than this competitor’s?’”

When using guerrilla tactics, consider how they might reflect on you in the future, as you might end up in a similar situation. There’s a fine line between creative and shady — so watch out for banana peels.

So, what you can do is:

  • Think outside the box and brainstorm unique ways to grab attention, like sponsoring a local coding competition or creating a mind-blowing infographic related to your industry
  • Focus on value, not price, as much as discounts sound tempting, and instead, offer free trials or highlight the unique value proposition that sets you apart
  • Build relationships, not enemies by targeting potential customers, not your competitor’s base (poaching customers may get you a quick win, but it can create bad blood in the industry)

Leverage the Underdog Reputation for Success

Being an underdog in the software industry can feel like showing up to a party where everyone’s already formed friend groups. But don’t be discouraged! Despite the sector being fiercely competitive, with the right strategies, you can be the innovative leader leaving established players behind.

With a dash of creativity, SEO knowledge, and a determined attitude, you can carve out your niche and become the go-to software solution for your target audience. So, the time to act is now! Develop your strategy, showcase your software’s value, and establish yourself as a force to be reckoned with in the software market.
Like what you’ve read? Explore more on the Freemius blog or get in touch with our team for any questions about monetization for WordPress and SaaS products.

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