Recently, I delved into the marketing dynamics of a **10-figure B2B SaaS company** with an impressive **eight-figure marketing budget** and a top-tier team. On the surface, everything seemed to be thriving: regular product updates, a solid reputation in the industry, and solid revenue performance. However, beneath the polished exterior, a troubling trend emerged: they were **losing ground to startups** with far smaller budgets. While the decline wasn’t catastrophic, it raised eyebrows and sparked concern over job security if the situation didn’t improve.
**So, what was driving this paradox?** The deeper I investigated, the clearer it became: the company had pointed its marketing engine in the wrong direction. Instead of pursuing new customers, they had fortified their castle as the market leader, prioritizing the defense of their status over growth opportunities. The market felt this shift, and it was starting to take its toll.
The Castle and Moat Strategy
In the world of business education, we often learn to identify a **rare and valuable core competency** and build a strategic moat around it—whether through partnerships, unique products, or robust branding. This approach resembles constructing a castle to protect valuable resources with defenses like **archers, catapults**, and a moat. While this defensive strategy was solid in the past, it’s time to reevaluate its effectiveness in today’s fast-paced market.
In our current environment, business evolution occurs at lightning speed. A central flaw in the traditional castle-and-moat mentality is that it blinds companies to new growth opportunities right under their noses. Consider Google: by **October 2022**, they were the unrivaled giant in search. Yet just one month later, OpenAI unleashed ChatGPT, shifting the landscape dramatically. With simpler, faster solutions, users began favoring generative AI for straightforward questions. Google missed this pivotal moment because they focused on protecting their dominant position, effectively allowing **OpenAI** to create irrelevance where once there was invincibility.
How the Moat Mindset Shows Up in Marketing
This “moat mindset” permeates mature marketing teams. They establish **defendable brands**, well-defined Ideal Customer Profiles (ICPs), and meticulously crafted marketing campaigns, all while turning inward. The focus shifts away from attracting new buyers to reinforcing the company’s prestige, resulting in stagnant marketing performance.
In this defensive posture, messaging often transforms into self-aggrandizing declarations: “We are the market leader in industry X!” or “We’re a trusted brand!” Such verbiage does little to assist potential customers in understanding their problems or finding suitable solutions. Consequently, brands lose their agility and neglect the very people who matter—their customers.
Meanwhile, market dynamics continue to evolve. Emerging competitors introduce **sharper technologies**, clearer value propositions, and heightened awareness of what customers demand **right now**. Expectations shift, and decision-making criteria evolve. Incumbent leaders suddenly find themselves outmaneuvered, akin to a record label fixated on dwindling CD sales.
This isn’t a resource or talent issue; it’s a **trade-off between agility and authority**. While the world transformed around them, their fortress became a self-imposed prison, restricting innovation and responsiveness.
Why Goliaths Lose and Davids Win
Look back to early **2020**—Skype was a titan in the realm of communication, boasting **100 million monthly active users** and a staggering acquisition price of **$8.5 billion** by Microsoft. However, the global pandemic shifted dynamics, leading to an urgent need for reliable work-from-home solutions. Skype could have captured this momentum, but instead, two critical missteps hindered its success:
- Microsoft cannibalized its own offering with Microsoft Teams.
- Skype’s marketing adopted the tone of a category leader, merely talking at customers, rather than engaging with them.
Conversely, **Zoom** stepped in, honing in on what users truly needed: **stability, ease of use**, and cross-platform compatibility. This straightforward messaging, “We’re here now, and it just works,” resonated deeply with customers. Zoom listened intently and capitalized on the moment, ultimately outmaneuvering a behemoth like Microsoft to triple its revenue and valuation. Customers care less about your status as a market leader and more about who genuinely understands and meets their needs at any given time.
For deeper insights, check out this article on how marketing’s broken promises are sinking your renewal rates.
3 Tests to Challenge Castle Thinking
Today’s pattern is all too common: well-funded, well-staffed teams fallen victim to a sort of paralysis. Instead of driving new customer acquisitions, these teams focus on **defending their turf**. Their messaging is laden with justifications and maturity signals, yet lacks the aspiration to propel movement.
This isn’t merely bad marketing; it’s **defensive marketing**—a quiet shift from recruitment to protection, gradually eroding ROI, market perception, and overall vitality. Often, teams don’t even notice this drift until their numbers plateau and remain stagnant.
Exceptional marketing thrives on momentum, **not moats**. It hinges on the ability to swiftly engage and win over customers. Here are three strategies to liberate yourself from castle thinking:
1. The Car Ad Test
If your marketing resembles a car ad—filled with technical specifications and boastful brand mentions—you risk losing your audience’s interest. Instead of pitching your product, narrate how you solve customer pain points. Agility means focusing on their needs rather than feeding your ego.
2. Find the Friction Others Ignore
Many established companies tie their strategies to pipeline stages, while agile marketers prioritize understanding **purchase friction**. Instead of simply questioning why potential customers aren’t buying, they inquire, “What’s preventing customers from making decisions right now?” This pivot builds **trust**, and trust drives sales.
3. Test for Terrain, Not Tactics
Often, incumbents double down on tactics that were successful last year. Agile marketers, however, remain flexible, continuously evaluating tactics for relevance as customer needs evolve. This isn’t just about A/B testing; it’s about listening deeply to audiences and adapting swiftly.
Sticking with a moat mindset sets the stage for irrelevance, especially in the rapidly changing landscapes of **SaaS and other industries**. Irrelevance can be a death knell; while you defend your territory, your competitors are seizing opportunities.
Shifting Your Marketing from Protection to Customer Acquisition
The danger of constructing castles is that organizations risk stagnation while the market roars ahead. Every day spent fortifying your defenses costs you ideal customers, who instead flock to competitors that genuinely comprehend their needs. This disconnect translates into millions in lost deals and a rapidly deteriorating reputation.
Firms that adapt and align themselves with customers don’t just survive; they flourish. Reflect on your marketing approach: is it genuinely **recruiting the right customers**, or merely guarding a rusty throne? In a world that keeps evolving, agility is the key to victory.
For further reading, explore this piece on the hidden costs of ignored competition.
