What are Table Stakes in Business?

Table stakes are the minimum offering it takes to be considered a player in the market.

Have you ever heard your colleague or a business pundit, like Jason Calacanis, use the term “table stakes” and wondered what they meant? I researched it, and have the answer for you. Table stakes highlight an essential concept in branding: meeting minimum customer expectations.

Table stakes are the minimum offer to be considered a viable player, whether you are at the poker table or the boardroom table.

What does table stakes mean in a business context? The term table stakes in business refer to the minimum offering on any aspect of a product before it is considered for purchase by a customer.

For example, a backup camera is now table stakes to compete in the pickup truck market. Where once it was a luxury, now people looking to buy a pickup truck will not consider one without a backup camera.

Now, backup cameras are table stakes for trucks. Customers wont consider buying a truck without one.

There are many examples of table stakes that are common to many markets; table stakes may be a maximum price, a product feature, or service time. Some aspects of your product can be considered table stakes, while others can be opportunities to differentiate your product. All differentiators become table stakes in the market over time.

Table stakes can be a useful shorthand for the minimum expected offering when planning out products and services. People often use “cost of entry” or “points of parity” interchangeably with table stakes.

If an aspect of your product or service is worse than the table stakes of the market, then your brand will fail to grow. For example, a dine-in restaurant will fail to get return customers if their time between the order and receiving food is more than 25 minutes.

We go into all these aspects of table stakes in greater detail below.


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Where does the term table stakes come from? Poker.

Table stakes is a term of art from poker. Many business executives play poker, and it was a natural way for them to describe the minimum required to get a seat at the table.

In poker, the term table stakes means the minimum amount of chips you have to buy in with to get a seat at the poker table. The table stakes set the maximum amount that they can bet in a single hand.

If you have a friendly game with your buddies, the table stakes may be as low at $20. But a high stakes game of poker may have table stakes of $100,000.

Table Stakes in Business

Table stakes is analogous to poker, but has it’s own unique meaning and uses in a business context.

Examples of common table stakes.

The individual markets for different types of products have their own set of table stakes, but some are common across industries.

Table stakes can be:

  • Maximum Price
  • Product Feature
  • Technology
  • Delivery Time
  • Warranty
  • Payment Terms
  • Interoperability with another product.

Table stakes can be unique to your industry, so don’t feel limited to this list when defining the table stakes for your product or service.


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Synonyms

The term table stakes is often used interchangeably with a few words when discussing a product offering in business.

Common synonyms for table stakes are:

  • Cost of Entry
  • Points of Parity
  • Fundamental Expectations
  • Setting the bar

There are some nuances and differences between these, but they all refer to investing in product features to meet minimum customer expectations.

Table Stakes vs. Differentiators

Table stakes are aspects of your product or service where you need to be above a minimum level to meet customer expectations. There is no significant benefit to customers or the business for going above and beyond in these areas.

On the other hand, differentiators are features of the product or service that customers will notice if your brand has an exceptionally better offering.

For example, good battery life is considered table stakes in the prosumer and professional-grade camera market. The battery life needs to be good enough for an enthusiast to get through the day, or a professional to get through a shoot.

The people in the market for these cameras do not care if a camera has exceptional battery life and can last for multiple days; in fact, they probably would prefer the camera had fewer batteries and was lighter.

Canon’s Duel Pixel Autofocus (AF) is a point of differentiation.

Autofocus is a different matter; an exceptional autofocus system is something that camera buyers take notice of. Canon’s Dual Pixel Autofocus (DPAF) has been the brand’s claim to fame for years. Sony Alpha’s Eye Focus is close, but the other brands have a hard time competing on autofocus, especially for video.

A good way to identify both table stakes and differentiators is Brian Chesky’s 11-Star Experience exercise. We discussed it here on BMB.


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Presenting Differentiators over Table Stakes

If market research or customer feedback has identified part of your product or service as a differentiator, then you would like to offer that upfront. Product features that are considered table stakes need to be communicated but do not need to be highlighted.

Differentiators should be communicated boldly. They are the focus of advertisements. They are in feature sections of product landing pages with big beautiful pictures. They are on page one of the brochure, if not the cover.

Table stakes can be left off advertisements entirely. They can be placed in feature tables and product comparison charts. They can be on the next to last page of a brochure.

Differentiators move to table stakes for every market over time.

Many product features start as ways to differentiate the brand, then become table stakes as competitors catch up.

The Tesla Model 3’s infotainment system is best in class.

For example, a well-programmed “infotainment” system was a novelty and a luxury only eight years ago. In the early 2010s, Ford, BMW, Mini, and Toyota were all differentiating their products by having a fun, easy-to-use touch screen that was essentially a computer in a car. Then Tesla blew our minds in 2012 when the Model S was introduced with a 17″ touch screen in the console.

Now, an excellent infotainment system is table stakes. Cadillac, Honda, Subaru, and Mitsubishi were all caught flat-footed; they did not have the technology developed to give car buyers the infotainment experience they expected. They needed to rely heavily on Apple Car Play and Android Auto to keep themselves competitive while they developed a better solution.

Many car features like keyless entry, panoramic sunroofs, and backup cameras started as points of differentiation and now are table stakes.

Technology, tastes, and expectations grow over time. This is part of the reason a company needs to be continually innovating if they want to maintain their position in the market.

We talked to Allen Adamson about the pace of market change. Check out our interview with the brand guru and his book, Shift Ahead (available on Amazon), to learn more about market change.


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Fail at table stakes, fail to build a brand.

If your product or service falls short on a feature or metric that is table stakes in the market, then your brand will fail to grow.

Fail to meet expectations, and you can expect an empty place of business.

For example, Ella runs a restaurant that gets a lot of foot traffic over lunch. She notices that she does not recognize many faces and believes that people are not returning. Her brand loyalty is weak.

It turns out that Ella’s staff is, on average, serving food to people 21 minutes after they order. The table stakes for restaurants at lunch is 10 minutes or less.

While everything else about Ella’s restaurant is excellent, the corporate lunch crowd cannot wait so long for their lunch. People do not return to the restaurant, so sales will stagnate and eventually taper off unless the restaurant staff serves people quicker.

If your brand is failing to grow, then you ask your customers if there is some part of your product where you are failing to meet expectations.

Conclusion: Winning brands meet or exceed table stakes on most things, but excel in what people care about.

Table stakes should be parts of your product or service where you meet expectations. They are essential to meet, but not the focus of your brand. Your managers should nor let them slip, but executives should not spend much time with them… unless they’re failing to be met.

A sophisticated brand builder knows where to hang their hat. They understand the market, both their competitors and their potential customers, and choose where to invest strategically to better their offering. They make sure their product checks all the appropriate boxes and then goes above and beyond in a few key areas.

If a brand keeps hammering home their exceptional performance of things people care about, then they maintain their advantage as the market keeps up. For example, we all think of Toyota as reliable because they were reliable at a time when many import cars were not. Now, more cars are far more reliable, but we still associate reliability with Toyota.


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Colin Finkle

Colin Finkle is a brand marketer and designer with ten years of experience helping Fortune 500 companies tell their story at retail. You can see his work at finkle.ca

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