Creating a category (not what you think)

How Drift created and owned three SaaS categories (and what you can learn from it)

Mar 05, 2024

👋 Hey, I’m George Chasiotis. Welcome to GrowthWaves, your weekly dose of B2B growth insights—featuring powerful case studies, emerging trends, and unconventional strategies you won’t find anywhere else.

It was Wednesday, February 14th, when I decided to do some research for this note.

The date here matters because just the previous day, a very popular SaaS company was acquired (but another very popular SaaS company).

I started my research by visiting Drift’s Twitter profile.

I wanted to write a note on Drift for some time now.

The first tweet was announcing the acquisition of Drift by SalesLoft.

“Nice,” I thought.

After all, this was one of the two potential outcomes I had in mind for Drift. (The other one was an IPO.)

“But that doesn’t change what I wanted to write,” I concluded.

And so, I started the research on the topic I had in mind.

Key lessons

Traditionally, before jumping into the hows and whys, let me share the key findings I’ve learned while researching Drift’s story.

Category creation is a business philosophy. David Cancel shared that Drift was launched with category creation in mind, which ultimately became the company’s nature.
A category’s success depends on the timing. For instance, the launch of Revenue Acceleration came when revenue operations were gaining momentum in 2020-2021.
Category launch impacts your brand’s positioning and messaging. When Revenue Acceleration was launched, Drift reformatted its website and social media accounts and invested in content to ultimately rank #3 in SERPs for the search term revenue acceleration.
Traditional marketing approaches won’t work to promote a new category. Drift consciously invested in unpopular marketing strategies at the time of category launches (events, billboards, placing ads on trains and vans) to get clout.
Creating and sustaining a category is rather costly. Aside from investing millions in the initial phase, Drift raised $60 million to support its Conversational Marketing and Sales categories.

Intriguing?

Let’s break down Drift’s category creation story.

Creating the ‘Revenue Acceleration’ category: A timeline

The story behind launching Revenue Acceleration is rather long and is better described with words than dates, but I managed to compress it into a short graph.

Let’s unpack these events and discuss what preceded them.

How it all started: Conversational Marketing and Conversational Sales

Drift started devising categories early on in its inception.

In fact, David Cancel, the former CEO of Drift, shared in his interview with Wynter that the company was created with this concept already in mind.

“Pretty much from the early days, it [creating categories] was part of the idea of starting the company. … The reason we wanted to create a category … had to do with the change we tried to point out to people.”

What was this change?

Basically, it hid behind the growing marketing trends topical at a certain point in time, which urged the need to change the general perspective and approaches to marketing.

David Cancel explained it perfectly in his keynote speech at the Hypergrowth Conference in 2017.

“The way we’ve been taught to work is perfectly suited for the world that no longer exists. So, the way that we’ve been taught to market, sell, and even build a product is perfectly suited for the world that has vanished.”

He continues to explain that the tools we usually armor marketing teams with are no longer effective for the new generation of consumers.

They no longer reflect how consumers want to converse.

So, Drift’s attempt to reforge traditional customer interaction methods turned into the category of conversational marketing.

Here’s a little backstory and functions of this category in one graph.

The creation of this category was followed by the launch of the book called Conversational Marketing—a guide for marketing and sales teams on generating better leads and closing more sales.

Basically, it’s a research-based, in-depth look into how different companies reach higher revenues through chatbots, with insights on how you can do it, too.

Since Conversational Marketing enabled new ways of communication with consumers, making qualifying leads easier, creating the Conversational Sales category was a natural consequence.

The launch date of this category is not known.

However, according to VentureBeat, Drift raised $60 million to grow its conversational sales and marketing platform in 2018, so this category had already been created by then.

What purpose does it serve?

Here’s an overview.

How effective was the creation of these categories for Drift’s customers?

Forrester did a TEI study of Drift based on the three-year analysis (around 2019-2021 since the study was issued in August 2021), and the results were staggering.

Companies investing in Drift’s platform can potentially see a 670% ROI.
Lead-to-pipeline conversions through Drift’s tools can increase by up to 100%.
Sales rep efficiency can improve by up to 50%.
Sales velocity can potentially increase by 30%.
The average increase in win rate can get as high as 20%.

It’s also worth mentioning that, at the time of its launch, Drift’s Conversational Marketing platform ranked #1 on G2, according to the Revenue Acceleration landing page (#10 as of February 26, 2024).

Given such immense success, it’s no wonder why Drift decided to move forward with its third category—Revenue Acceleration.

The launch of Revenue Acceleration

Revenue Acceleration (now—Revenue Orchestration since Drift’s acquisition by SalesLoft) was launched on August 4, 2020.

This category covers the organizational level.

There were several drivers behind creating Revenue Acceleration.

First and foremost, this category is a natural evolution of Conversational Marketing.

Here’s what David Cancel shared in the press release regarding the launch of Revenue Acceleration.

“We thought what we were doing was helping marketers drive more leads, but what we found is that when companies adopted Conversational Marketing, it wasn’t just about marketing. In fact, what it was doing was unifying sales and marketing and directly impacting revenue. And not just revenue from new business, but revenue across the entire customer lifecycle.”

In other words, Revenue Acceleration links Conversational Marketing and Conversational Sales to create a more unified experience by covering all stages of the customer journey.

The creation of this category also came at the right time.

I will go into this in more detail later, but the general idea is that, back in 2020, when the COVID-19 pandemic governed the world, companies were striving to achieve growth and revenue at any cost possible.

Thus, Drift capitalized on this narrative by creating this new category that coincided with the digital transformation businesses were going through.

So, what is Revenue Acceleration about?

Is it any different from the first two categories?

Here’s a quick overview.

You can see that Revenue Acceleration brings revenue teams together, powering them with tools already existing in Conversational Sales and Marketing and adding more functionalities along the way.

A great deal of work also went into marketing the launch of Revenue Acceleration.

It started with the announcements made by the top management that Drift shifted to being a revenue acceleration platform.

They also disclosed that with this launch, Drift presented the Prospector tool.

Below is an example of such a post by Will Collins, the VP of operations at Drift.

However, the marketing campaign took it way further than standard social media promotions.

David Cancel shared interesting insights into Drift’s promotional strategy during the interview with Wynter.

“We would do LinkedIn takeovers. … We would get everyone in the company to film their own videos, and when we announced something, there would be hundreds of these videos that would get deployed organically.”

Indeed, just by scrolling through some profiles of Drift’s employees, I found a few videos of them talking about the Revenue Acceleration platform in a very organic, not forced way.

For instance, here’s one of Elizabeth Hilfrank, Drift’s Head of Content, talking about this category during a morning run.

David Cancel himself made a LinkedIn post using Drift’s video recording tool to announce the launch of the new category.

As you can see, both posts got solid engagement.

So, if we imagine hundreds of such posts going out in one day, they will indeed overcrowd people’s LinkedIn feeds, delivering great brand awareness.

Drift also resorted to some approaches native to traditional marketing.

During the interview with Wynter, David Cancel shared that Drift would buy billboard spaces to promote the category launch or show up at big events (he gave an example of the Saastr conference) in a very creative way.

“We deployed vans that we had or took over trains people used to get to the conference and wrap them [in Drift’s ads]. We would just go for weird things like that to stand out in people’s minds.”

So, one can’t deny that Drift chooses to stay out of the ordinary, not just in category creation but also in marketing those categories.

At this point, you might be thinking.

“All of this sounds really inspiring. But what were the repercussions of creating all these categories outside offering value to Drift’s customers?”

Let me elaborate on that.

Results of creating a category

Companies using Drift’s Revenue Acceleration platform to influence over $2.1 billion in sales pipeline only in the first three months of 2021 already indicate the huge success this category had at the time.

However, the financial gain was only a superficial aftermath of the category launch.

Some of its repercussions had far more long-lasting effects.

Let’s take a look.

Riding a wave

First, let’s dive deeper into the reasoning behind creating all three categories.

As I mentioned, the launch of each category coincided with the impactful marketing trends.

With Conversational Marketing and Sales, Drift linked the demand for these categories to the necessity of adding more consumer communication touchpoints to personalize customer journeys.

To be precise, according to Drift’s press release, back in 2015, only a fraction of customer journeys could be personalized, and chatbots were the only solution to reduce this friction.

A similar logic went behind creating the Revenue Acceleration category.

If you recollect the events from 2020-2021, many changes were going on in the digital world, and businesses had to quickly adjust to them.

On the one hand, we had changes in consumer behaviors, especially in the way consumers interacted with businesses.

This graph from McKinsey perfectly reflects these changes—for B2B decision makers, the demand for remote human interactions or self-service replaced in-person interactions.

On the other hand, we had businesses with mostly siloed marketing and sales teams, which hindered effective remote communication with consumers.

To bridge this gap, companies started looking more into revenue operations, hiring RevOps managers to tackle collaboration and communication failures.

The growing demand for revenue operations and RevOps (a bit less popular) in 2020-2023 is visible in Google Trends.

So, there formed a trend that would help businesses drive revenue by uniting the forces of marketing and sales teams, thus fine-tuning the interactions between them and consumers.

Drift’s creation of Revenue Acceleration was a timely response to this trend, as this platform promised exactly what businesses needed.

It was the third time Drift rode the trend wave and did it quite successfully.

Consequently, the company’s name became synonymous with these categories, which had its own repercussions.

Let me elaborate.

Owning the category

A category is a valuable asset, and as Drift created three of such assets, it became the front-runner and the owner of ideas behind them.

Take Conversational Marketing, for instance.

Drift, in fact, coined this term, is known for it, and has been popularizing it ever since.

Eventually, Drift’s positioning and messaging (which we’ll discuss next) led Conversational Marketing to be listed as a standalone category on reputable online resources.

For instance, there is a Conversational Marketing category on G2 that initially listed Drift as the #2 platform in this group.

However, since Drift coined this term first, I have all reasons to believe that it would have owned this category until other platforms started adopting conversational marketing to describe their solutions.

There’s a more global effect of Drift creating and owning categories, too.

Many companies followed the company’s path and started launching their own categories as a way to single out their products.

Examples?

The closest to Drift in idea and function is Gong.io, which took the term conversational marketing and turned it into real-time conversation intelligence, thus creating its own category.

Later, as Drift evolved into a revenue acceleration platform, Gong reformatted into a revenue intelligence venture, which became another category owned by the company.

But Gong is more of a competition to Drift, and it’s another repercussion of creating a category we will discuss later.

What about businesses from other niches?

My search took me to Wisepops, the first onsite marketing platform, which actually created this term to differentiate itself from competitors.

Basically, Wisepops’ platform is built around the idea that all the marketing communication with website visitors should be based on their shopping behavior and not on traditional, in-your-face strategies (e.g., product discounts based on customer behavior vs. traditional discounts).

Consequently, owning a category is also a differentiation strategy involving unique positioning, messaging, and value proposition.

Let’s talk about that more.

Positioning, messaging, differentiation, and UVP

Category creation, as Christopher Lochhead, the author of Play Bigger and an avid supporter of this idea, puts it, is not just about coming up with a breakthrough idea.

It also involves business model transformation.

Thus, it’s also about taking an innovative approach to positioning and messaging.

All three categories launched by Drift have a unique value proposition, visualized in the graph below.

To support its unique value proposition, Drift, of course, needed to tune its messaging and positioning to make sure the ideas of Conversational Marketing, Sales, and Revenue acceleration catch on.

The interesting thing here is none of the traditional means of messaging and educating the target audience about these categories wouldn’t bring attention at scale.

Obviously, Drift made every necessary step to distinguish itself as a revenue acceleration platform.

First, they optimized the website to support the messaging that Drift now was a revenue acceleration platform.

Next, Drift adjusted social media messaging.

Another necessary step was to create informational content educating the public about conversational marketing, sales, and revenue acceleration.

For instance, in 2021, Drift’s efforts to create awareness around revenue acceleration put it in the top three of Google results for the respective keyword.

But beyond that, any common ways of spreading the word, like advertising on social media and Google, wouldn’t be enough to build more clout, and David Cancel mentioned it in the interview with Wynter.

“We were trying to spend time and invest in areas that marketers were either ignoring because they were small and hard to measure or had fallen out of favor. … We had to get a disproportionately large amount of mindshare in the way that would be as low-cost as possible … [but would get us the attention].”

He goes on with an example of writing a book on conversational marketing and launching an event—something that wasn’t considered arbitrage at the moment of creating the Conversational Marketing Category.

Drift did the same with Revenue Acceleration.

All those examples I mentioned about overtaking LinkedIn or wrapping trains with ads were a unique way for the company to position, differentiate itself, and establish the right messaging.

Of course, thinking out of the box and not taking the beaten path inspired a lot of competition to copy Drift’s path.

Let’s discuss that.

Inviting competition

If you visit G2’s sales acceleration category, you’ll see just how many companies are doing now what Drift set out to do in 2020.

I already mentioned Gong.io and its revenue intelligence category.

Another company not included in the G2’s list above is Albacross.

Back in 2020, it positioned itself as a revenue acceleration platform, stating so on its website.

Now, to differentiate itself, Albacross changed the messaging to a “platform that drives revenue using real-time buying intent.”

Yet, the idea stays similar to what Drift offers with its revenue acceleration platform.

Drift was prepared that the value proposition it offers would eventually get commoditized and invite copycats.

During the interview with Wynter, David Cancel shared that the company would invest in branding early on to establish its UVP in the market (think all those promotional methods mentioned in the previous sections).

Then, as more competitors appeared, the company started to patent its creations.

For instance, in October 2020, the company patented its AI-based chatbot solution which is based on events rather than using the reactive intent-driven model.

“[We did that] because every single feature and every single value proposition would be commoditized quickly.”

On a broader scale, David Cancel mentioned that Drift keeps investing in technology that would help the company maintain its position among leaders in conversational marketing and revenue acceleration niches.

Now, judging from Drift’s experience, we can already deduce some factors indicating that the time is right to launch your own category.

Let’s discuss them next.

When to create a category

To create a category, you need to have some things in place for your plan to work out.

There are also some prerequisites without which the launch of a category cannot happen.

Let’s review all these factors in detail.

Factor #1: You have reach and brand awareness

As I mentioned before, creating a category goes hand-in-hand with educating the market and spreading the word about the concept you’ve devised.

Of course, it is imperative here to have enough reach and brand awareness to popularize your new category.

But what if you don't have that kind of influence yet?

Remember, Drift was launched in 2015, and category creation was at its foundation.

The Conversational Marketing category appeared in 2016, so Drift wouldn’t have gained that much industry clout just yet.

Nevertheless, the company invested in brand awareness tactics that would ensure the reach it needed:

Writing a book;
Launching a conference (Hypergrowth);
Doing LinkedIn takeovers;
Buying billboard spaces;
Wrapping trains and vans in ads.

From the get-go, Drift also invested in podcasting, informing the public on conversational marketing, sales, and revenue acceleration later.

As of now, the company owns seven podcasts.

In Drift’s case, resorting to non-traditional (less favored) promotional strategies worked well, as it let them quickly get the necessary mindshare to make the concepts behind their categories well-known.

But we’ll discuss that later.

Let’s move on to the next factor.

Factor #2: Want to differentiate yourself in a saturated market

Drift was born into a rather competitive industry.

When Conversational Marketing appeared, few platforms could compete with Drift, save HubSpot, Intercom, and some others that had a similar solution.

Yet, they didn’t use this term to describe their products at that time.

So, the launch of this category distinguished Drift from its rivals.

With Revenue Acceleration, high competition was already there.

In fact, at the point of its launch, Drift’s latest category already had some serious contenders.

Here are some insights based on G2’s sales acceleration category.

However, Drift still managed to differentiate itself by putting emphasis on revenue acceleration, which was a hot topic in 2020 (as shown in the Google Trends graphs mentioned earlier).

So, it’s safe to say that operating in a saturated market pushes you to differentiate yourself, and category creation makes sense in these circumstances.

Let’s see what we have next.

Factor #3: You want to capitalize on a market/industry shift

Basically, you need a wave to ride.

David Cancel, in the interview with Wynter, highlighted the crucial role of the right timing to launch the category.

“Creating a category has to do more with the change that is happening rather than with you and your product. … But not only has the change to be true; your timing also has to be perfect. You have to be the first to spot it, and not too early in the cycle when it doesn’t matter [yet].”

In other words, you have to catch the moment when the trend wave hits its crest, which is a challenge on its own but still a crucial prerequisite to launching the category.

The cost is another factor at play.

Factor #4: You have the budget to support category creation

In David Cancel’s words, creating a category is painful and expensive.

When asked by the interviewer, David shared that it’s a matter of not one or five million dollars—the costs go way higher.

“In that order of magnitude, it’s [the cost] greater than five and less than 20 million.”

These calculations sound about right.

You don’t just have the investments in technology that would differentiate you from the competitors.

Educating your way into existence, as David puts it, is another costly factor.

Given that Drift chose a non-traditional path to position itself on the market, the expenses on messaging and popularizing the category could go as high as several million.

Speaking of Drift thinking outside of the comfort zone, is also a necessary factor in successful category creation.

Factor #5: You feel comfortable going out of the norm

Popularizing a newly created category is its own art that cannot conform to the widespread tactics.

So, to spread awareness about the category, you need to be willing to experiment, even if it means stepping away from checking the metrics and measuring your success.

Here’s how David Cancel puts it.

“For a long time, digital marketing has taught us to focus on the tools, metrics, and numbers. It’s more about operating systems, channels, and platforms than it is about marketing in the old sense.”

In other words, it was a conscious choice for Drift to divert from the safe but oversaturated road and take a risk.

Was it smooth from the start?

No, and it can’t be.

David shared that they faced many challenges and failures along the way, but they knew that commonly used strategies just weren’t an option.

Such experiments, of course, are very costly, but so is category creation.

That’s why the launch of one should be properly thought through, given all the possible challenges.

Final thoughts

Category creation is a powerful growth strategy.

But with its power to differentiate your business and put your company’s name in stone comes significant risks and a lot of responsibility.

Choosing the right moment when the emerging trends clash with the growing demand to address them is a significant challenge on its own.

Furthermore, educating the public and popularizing your idea requires all your creativity and a fearless approach in the wake of a possible failure.

Ultimately, creating a category changes the essence of your business and becomes its nature.

But is all of this worth it?

I guess it’s one of those ambiguities.

If you fail, it can be painful, but if you win, you win big.

See you next week!