Google this phrase or buy the book:

http://www.amazon.com/Differentiate-Die-Survival-Killer-Comp...

My favorite passage:

"The best way to really enter minds that hate complexity and confusion is to oversimplify your message. The lesson here is not to try to tell your entire story. Just focus on one powerful differentiating idea and drive it into the mind. That sudden hunch, that creative leap of the mind that "sees" in a flash how to solve a problem in a simple way, is something quite different from general intelligence. If there's any trick to finding that simple set of words, it's one of being ruthless about how you edit the story you want to tell. Anything that others could claim just as well as you can, eliminate. Anything that requires a complex analysis to prove, forget. Anything that doesn't fit with your customers' perceptions, avoid."

with particular emphasis on:

Just focus on one powerful differentiating idea and drive it into the mind.

Why should anyone choose you?

It's early days yet, but we're getting some good reviews from sites that have tried our app out with various mobile phones and found it fast and intuitive.

From here we scale up traffic and drive conversions, and oh, BUST YOUR ASS FOR YOUR CUSTOMERS.

Differentiation is good and all, but the #1 thing I've read that helped grow a business is being there for your customers when they need you most. Answer emails ASAP, fix your product ASAP, offer discounts, extended trial time, everything you can to make your customers super-happy.

As developers this is the polar opposite of how we are required to think in order to do our job, therefore it stands to reason that for tech startups this would be easier to achieve then in more marketing-heavy industries.

Back when we started on Thymer we considered the market. In fact, we asked ourselves: "do we want to enter a saturated market?". But then we realized that we just assumed the market was saturated, but we think the evidence points to the contrary.

True, there are a lot of competitors. But surely the number of competitors alone doesn't mean the market is saturated? The market isn't saturated until you can choose between 4 or 5 products that are all great, and that all suit your needs well. There may be hundreds of email services, but Gmail put them all to shame. Sometimes taking just a slightly different approach can make all the difference.

At this point only few of our competitors have great products, and even fewer are truly successful. Or to put it another way: in another 5 years we expect all the products to be radically different. The market hasn't matured yet (like Word Processors have), which means the market leader of tomorrow probably hasn't incorporated yet.

Or we can look at it from another perspective. Because task & project management apps attract the GTD (Getting Things Done) crowd, people will happily try out your product, blog about it, and so on. So in a way entering an established market makes life easier for us. We don't have to explain what we do, or what software as a service is -- people know what to expect. We just emphasize what we're good at and we get people to give Thymer a test drive. If they love Thymer they may buy it or recommend it to others.

So people know roughly what to expect when they hear of "another task and project management app". From that point on we just have to exceed their every expectation. That's of course easier said than done, but we don't expect it to be easy.

Contrast this with marketing, say, a new search engine. People would ask: "Why do I need this?" or "What's wrong with Google?". Even if your search engine _is_ objectively better people will still compare what you do to what Google does at every step. "Why don't you have a translate link?", and so on. Because there are a good number of competing task and project management services the comparison becomes much more nuanced. "So you have tags like Gmail, projects like X, and teams like Y. That's nifty!". That makes our life pretty easy. Imagine what marketing something entirely new would be like. I wouldn't know where to start.

If you're interested we could write some more on our blog about this; explain our point of view a little better.

We entered what you might call a "saturated" market about 10 months ago. What we did was:

1) We made our product much, much better than the competition, who were all pretty stagnant.

2) We marketed our product directly. Like, calling potential customers on the phone.

3) For each customer that we won, we rolled out the red carpet and tried to give them everything we reasonable could.

4) We taught some of our customers to be evangelists.

Although we're just barely ramen profitable, we have piles of opportunities. Our sales cycle can be anywhere from 2 to 6 months, and we have lots of potential customers that we think are almost there.

This is obviously not an issue for all products, but how do you teach customers to be evangelists if most other potential customers are their competitors?

In fact, scrap that. Can you expand a little on how you accomplished this, in general?

1) We're honest and super-fast in responding to problems. This is huge, even if you say, "whoa, we have no idea what's wrong but we're working on it" that makes them feel like you care.

2) If anything does break, we're quick to give discounts. I firmly believe that if our product doesn't perform as advertised then our customer shouldn't have to pay for it.

3) I take any chance I can to "wow" them. For example, once an employee of one of our clients had to do a bunch of extra work to make our product work on their platform, while on the phone I had overheard her talking about how excited she was to go see New Kids on the Block in concert and so we had a NKTB shirt sent to her the next day. It cost us $50 but we have that client's love forever.

4) We send letters. Real letters. (In the mail.) When you send someone a hand-written note in the mail, they know you took the time to make that happen--little things add up to big things.

5) We ask our clients for suggestions, and work with them to make the product work better for them. It's very important that our client is making money with our product--not just paying us for it.

6) I try to understand how their business works and uses our product. For example, if I know they are usually busy on Wednesdays, I'll write that down and call them on another day.

When you sit down with a client, talk about their problems, and try to build products that solve those problems they get really excited--when you use their ideas, they feel like they have ownership of your product.

How does this pay off? We have clients who go to events and speak to others in their field about our product. And most of our clients are happy to receive calls from others about our business.

Our self-appointed evangelist clients are probably worth more to our company than the code we write.

I'm not sure if there's a magic formula to turn a customer into an evangelist. For us, a big part of it was being responsive, trying to find out what they wanted and giving it to them. We've found that most newspaper publishers have a secret ideas that they've been kicking around about how they would like to change advertising, and some of these ideas are quite good.

Of course, this doesn't scale forever, but we will do it as long as we can. So far, customer evangelism has been key to our growth.

The best-best is to have a unique workflow or feature and market it with a simple message. Speak to the userbase that would appreciate your unique position.

However, I think the most important thing to remember is that even if your feature set is identical (or less), there are other points of differentiation, even from a pure marketing point of view.

Here's an article that generalizes the problem from a perspective of a burger joint: http://www.yudkin.com/advantage.htm (yeah, I know, that site is ugly)

Every burger joint sells the same basic product, but you probably have an affinity for one over the others. Sometimes it's the flavor, but it can also be the price, the environment, or the personality of the business that you like.

Try to be unique, memorable, or remarkable in some way. Study your market,- plot it out if you have to - and find where you belong in the spectrum.

Step #2: Get covered in blogs and get 100,000 visitors.

Step #3: Get 1% signups(1000 paying customers), get paid your subscription fees. Bam you are making $5K-$10K/yr

It's basically the "there are a billion people in china, if 1% buys our product...we'll be rich!"

But it is an encouraging way to look at it: if you're a one person team, and you can keep your expenses pretty low (storage, bandwidth, credit card processing, etc. + cost of living), ramen profitability can come with just a hundred paying customers. That doesn't seem like such an overwhelming out of reach goal, even in a crowded market.

2) Bad news, as others mentioned you may not even get 1%.

Also, everyone tries to get covered in blogs. That's the standard tactic. Since most companies fail, you need to do something more than standard in order to succeed. Now, that may just be having a fantastic service, but you're unlikely to achieve that before you have customers to help you define "fantastic".