Over 2500 years ago Sun Tzu, a brilliant military leader who lived in ancient China, wrote a book named “The Art of War” – a fascinating classic work that remains valuable today. This book is not only relevant for military officers and politicians, but also for business and marketing leaders. One of Tzu’s insights is related to strategy that creates victory, “All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.”
Most companies know how to leverage marketing tactics to some extent, but only a few know how to build and execute a winning strategy. I find this behavior quite often when I collaborate with forex and binary options market leaders. Most companies compete head to head, they use similar technology and similar tactics to attract new traders, have almost identical offerings and the trading experience is inevitably the same.
This behavior increases confusion among traders and most find it hard to make a decision because they receive comparable offers from different brands. Traders’ confusion required more mental effort, which leads to increased bounce rates. There are many implications from head to head competition, for example:
- A larger marketing budget is required.
- Conversion rates decrease.
- Profits decrease.
- There is a sharp increase in frustration for sales teams and managers.
An increasing number of brands today are launching their activities by using head to head tactics. However, the smartest way to increase profits is to learn how to create real breakthroughs and to create something far better – value innovation for traders. Read on and discover how to move from head to head competition (Red Oceans) to Blue Oceans.
How can you create value innovation for traders?
When I talk to CEO’s and CMO’s about Blue Ocean Strategy (BOS), most of them have an idea about the concept, but they just don’t use it. Some of them think that it’s a nice idea, but claim it simply doesn’t work. Just a few weeks ago, I spoke with the CMO of one of the top binary options brokers about BOS and he told me “I read about BOS and it only works in retrospect. It’s a nice way to tell stories about different companies and how to sell books, but it can’t help me at all with my current marketing challenges…” Then I asked him how he thinks he can beat the competition said he replied, “We have a strong brand that traders like, they will come to us, we know how to sell better…”
Like most people, marketers suffer from “the illusion of knowledge” – meaning C level executives feel over confident about the way they think and act, and are overly-comfortable with the methods they already know, BUT in a highly competitive landscape, this is not enough. Marketers tend to work with UI/UX experts on a conversion funnel and that’s not enough today either. If you want to convince more traders to work with you, you must come up with something more convincing – something that contains real value and excites traders. As Albert Einstein once said, “Insanity is doing the same thing over and over again and expecting different results.”
In 2005, two INSEAD professors, W. Chan Kim and Renée Mauborgne published their new theory about Blue Oceans. They analyzed 150 different companies over more than one hundred years and developed an amazing tool to create groundbreaking strategy. One of their most fascinating stories is about how Cirque du Soleil has become the most successful circus in the world.
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Cirque du Soleil was a game changer and its new model became a huge hit around the world. Over the last 20 years, their value innovation has generated more revenue than the world’s leading circus (Ringling Bros. and Barnum & Bailey) achieved over a century. Cirque du Soleil created new market space, a new approach, and a new way to entertain people. The new concept made the competition irrelevant; it was appealing for circus customers and non-customers alike. The founders of BOS recommend utilizing this framework: find factors in your industry that you can eliminate, factors that you can reduce, factors you can raise and new factors you can create.
Elon Musk, founder of PayPal, the online payment system (sold to eBay in 2002 for $1.5B), gave us an outstanding example on how to create and execute BOS in the highly conservative payments industry.
Go beyond industry boundaries
I have been successfully utilizing the BOS model with market leaders in forex and binary options industries for the last two years. The process is based on deep analysis and research, creativity, collaboration and execution. The thorough analysis and research need to include an examination of your current marketing activity, SWOT analysis, segmentation and target audience analysis, and competitive analysis. I highly recommend adding and leveraging neuromarketing and the wisdom of crowds.
In a fast moving world, I suggest applying the BOS process at least once a year. Every step in the process is essential to achieve great results. Once you complete the process you will gain new marketing space and an outstanding offering that suits traders’ needs far better than your main competitors. When BOS was tested, we achieved remarkable results – in some cases conversion rates increased by hundreds percentage points, competition became irrelevant and we strongly impacted sales, revenues and profits.
Do this now
Think more about your traders, what they really need. What kind of value innovation can you create? Be creative and imagine how you can you drive new demands, invest more in market research, learn more about your competitors in every market, create blue oceans, and finally, test and optimize your new value innovation.