Put the Competition in the Rear View Mirror
Put the Competition in the Rear View Mirror
"If you pay too much attention to the competition - you'll always end up following them."
At the time I actually think I thought he was nuts. After all, as a young idealistic marketing consultant, competitive analysis was one of those B school standards near and dear to my heart.
Now, some twenty something years later, I see how brilliant he was. Companies have to think for themselves, not like their competitors.
I'm not saying that you have to ignore your competition. That'd be kinda silly, now wouldn't it.
What I am saying is that companies have to stop focusing on what their competition is doing as the baseline for defining their future direction. Following the competition's lead won't help you be a leader.
Leveraging the competitive information you have to think differently, now that's the key.
As my grandpa used to say, "The view never changes unless you're the lead cow."
Competitive Assessment That Works
Competitive assessment is one of the most powerful tools we have in our quiver. Yet IMHO so few companies actually assess the competition in a way that works. We spend time evaluating our competitor's technology foundations, comparing feature against feature. We look for every detail that we can use to prove that our technology is far superior to that of others. Too bad that having the best technology doesn't mean you win....or that having the most features doesn't guarantee customer success. If the best technology won, then today's industry giants wouldn't be so, um, giant, now would they?
Don't get me wrong. Understanding your competitor's technology and its capabilities is a worthwhile exercise. As long as you don't fall into the trap of defining your solutions based on their features - and become a follower.
So what is the most important thing to assess about the competition?
That's easy. Customer perceptions.
What customers believe about you and your competitors will trump technology breadth and depth every time. At the risk of repeating myself - the best technology doesn't mean you win, remember?
Case in Point
One of my clients was in the SMB software space. They had a feature rich software suite and were doing well in the market. I was hired to help them expand their opportunity. When asked about the competitors, they gave me detailed analysis of the features/capabilities of the top 3 ‘big' guys. Two were well known leaders at the enterprise level - who were moving into the SMB space -and one was an online provider of SaaS solutions. The client argued that their high allocation of R&D expense was necessary since these 3 competitors had ‘everything'.
You can guess what happened, right?
When I asked to speak to 10 or so customers - I learned a different truth.
And we stopped following the competition with all those features that customers didn't really want.
The results? Well, we increased sales (and more importantly margins) in the top 4 opportunity markets we identified, while reducing the overall product Plan of Record by about 25% - which saved significant operational dollars. The company grew over 30% in the nine months following our work.
Things to Think About for Competitive Assessment and Positioning
Put the Competition in the Rear View Mirror - To learn more about this author, visit Rebel Brown's Website.
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One of my first CEO clients - a leader in the early days of the Search industry - gave me a great piece of advice about the competition. I still follow it.
"If you pay too much attention to the competition - you'll always end up following them."
At the time I actually think I thought he was nuts. After all, as a young idealistic marketing consultant, competitive analysis was one of those B school standards near and dear to my heart.
Now, some twenty something years later, I see how brilliant he was. Companies have to think for themselves, not like their competitors.
I'm not saying that you have to ignore your competition. That'd be kinda silly, now wouldn't it.
What I am saying is that companies have to stop focusing on what their competition is doing as the baseline for defining their future direction. Following the competition's lead won't help you be a leader.
Leveraging the competitive information you have to think differently, now that's the key.
As my grandpa used to say, "The view never changes unless you're the lead cow."
Competitive Assessment That Works
Competitive assessment is one of the most powerful tools we have in our quiver. Yet IMHO so few companies actually assess the competition in a way that works. We spend time evaluating our competitor's technology foundations, comparing feature against feature. We look for every detail that we can use to prove that our technology is far superior to that of others. Too bad that having the best technology doesn't mean you win....or that having the most features doesn't guarantee customer success. If the best technology won, then today's industry giants wouldn't be so, um, giant, now would they?
Don't get me wrong. Understanding your competitor's technology and its capabilities is a worthwhile exercise. As long as you don't fall into the trap of defining your solutions based on their features - and become a follower.
So what is the most important thing to assess about the competition?
That's easy. Customer perceptions.
What customers believe about you and your competitors will trump technology breadth and depth every time. At the risk of repeating myself - the best technology doesn't mean you win, remember?
Case in Point
One of my clients was in the SMB software space. They had a feature rich software suite and were doing well in the market. I was hired to help them expand their opportunity. When asked about the competitors, they gave me detailed analysis of the features/capabilities of the top 3 ‘big' guys. Two were well known leaders at the enterprise level - who were moving into the SMB space -and one was an online provider of SaaS solutions. The client argued that their high allocation of R&D expense was necessary since these 3 competitors had ‘everything'.
You can guess what happened, right?
When I asked to speak to 10 or so customers - I learned a different truth.
- Customers and prospects didn't view the 2 enterprise vendors as viable choices - they were "overkill" had "too many features we don't need" and were viewed as "too complicated for us". Plus, they reasoned, what kind of support could they expect from companies that were focused on enterprise companies for their bread and butter?
- The SaaS vendor? Well, these SMB folks weren't ready to put their precious business data out at someone else's location, much less access it through the public web. They didn't perceive it as secure. Since they were just moving off of paper systems, they really wanted their solution to be tangible. Turned out that server they could see in the back office made them feel more comfortable.
- We learned that the real competition fell into two camps -the status quo (and comfort) of remaining on a paper system OR moving to a much simpler software solution with limited features - something the customers could view as 'manageable' vs the overwhelming feeling they got from the big guys' products.
- My client really didn't need all those feature to compete. What they needed was to focus on delivering what these customers wanted most - simplicity of solution and the feeling that they mattered.
And we stopped following the competition with all those features that customers didn't really want.
The results? Well, we increased sales (and more importantly margins) in the top 4 opportunity markets we identified, while reducing the overall product Plan of Record by about 25% - which saved significant operational dollars. The company grew over 30% in the nine months following our work.
Things to Think About for Competitive Assessment and Positioning
- Start by creating a market landscape that focuses on your true competitors - defined by customer perception. Forget about who you think you compete with - which is usually based on chest thumping and ego. Ask your customers what they perceive as their alternatives. You may be surprised what you learn.
- Take a look at qualitative and 'social' aspects of the competition. Never underestimate the power of customer perception. How competitors present themselves, how they are perceived is often more important than their technology. Make sure you know exactly how your audience perceives your competition on multiple fronts: technology acumen, experience, customer savvy, customer dedication, market knowledge, corporate viability - look at ALL the soft aspects, and stop focusing on the technology alone.
- Identify their Achilles Heel. In the above example the very technology breadth that my client envied (and chased) was one of the Achilles Heels of the competitors. When it comes to weaknesses - you have to look out of the box. Often I find that competitive weakness isn't in their products (imagine that!). Rather, it's in the market's perception of their expertise, the quality of their support, their ‘caring' factor when there is a customer problem. Look hard for those soft areas - for they are the areas you can exploit. And remember, for the market majority too many features or too-rich technology can be a weakness and not a strength.
- Identify their core value and what they do well - and let them do just that. Know their strengths and where those strengths apply - and stay far away. If there isn't enough market for you to do that - then you might just think about where you are focused.
Put the Competition in the Rear View Mirror - To learn more about this author, visit Rebel Brown's Website.
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