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Put Your Competition in the RearView Mirror

Companies have to think for themselves, not like their competitors

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

While I don't believe the competition should heavily influence a company's strategy, I do believe competitive knowledge is key in better understanding your market. Yet IMHO few companies actually assess the important aspects of the competition. 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. We compare pricing and discounting and facts and figures.  

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 your customers believe about your competition IS their reality.  It's their truth.  You may be able to change some of that belief with facts and figures and demos - but much of it is pure perception based on opinions and experience.

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?  If a customer perceives the competition's products or service or expertise to be superior - it is.  At least until you find a way to change that perception - usually through real world experiences with this customer or others who are like them.

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 with some expansion planning.  These guys were great technologists and had some interesting solutions in the B2C business arena.

When I asked about 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. One was an online provider of hosted solutions that were probably the best overall fit for the SMB space. The client believed that their rather large R&D budget was necessary since these 3 competitors had ‘everything'.

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 and were viewed as too complicated. Plus, what kind of support could an SMB expect from vendors whose bread and butter came from the big enterprise accounts?
  • The Hosted vendor? Well, these SMB folks weren't ready to put their precious business data out  at someone vendor's location, much less access it through the public web. To them, that couldn't be secure. Since they were just moving off of paper systems, they really wanted their solution to be tangible. Turned out that the 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.And BTW, the same feeling they were starting to get from my client's solutions with all their Chinese menus of features.
  • My client really didn't need all those features they were adding like rabbits. They needed to focus on delivering what customers wanted most - simplicity of solution focused on specific needs and the feeling that they mattered.

We realigned the client's resources to bundle the simple solutions these customers wanted against target use cases. We focused our marketing around stories of other customers - using a 'Just like them' approach. We highlighted my clients' commitment to the SMB marketplace ONLY - and showcased their experience in key SMB areas as well as customers sharing their responsive support stories.

Most importantly, 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%.  The company grew around 30% in the nine months following our work.

A few things to think about when defining 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. Ask your customers who and what they perceive as alternatives. You may be surprised what you learn.
  • Go ahead and look at the technology or product: You're dying to check under the hood, so do just that.  But ask your customers about their experiences, ask other partners. Go beyond the specifications on the competitive website OR the perceptions your own engineers or specialists carry.  What matters is what the customers perceive to be reality.
  • Take a look at qualitative and 'social' aspects of the competition. Never underestimate the power of soft aspects.  How competitors present themselves, how they are perceived is often the reason they win, and not their technology. Make sure you know exactly how your audience perceives your competition on multiple fronts: technology acumen, experience, customer savvy, customer responsiveness, market knowledge, corporate viability - look at ALL the soft aspects, and stop focusing on the technology alone. Also - look at the 'buzz' about this competitor in the market - find out what your audience is saying about them out on the social web.  That's where true perception is often created in this networked age.
  • 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 products (imagine that!). It's in the market's perception of their expertise, the quality of their support, their ‘caring' factor when there is a 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 will win - and stay far away. As a  matter of fact - give them that space. You're better off focused on available opportunities. If there isn't enough market for you to give them their space and still have a viable opportunity for yourself - then you might just think about your choice of target.

Understanding your audience's perceptions of you and other alternatives is a key step in creating a flight plan for your company growth. So the next time someone knocks on your door with a feeds 'n speeds competitive analysis - ask them what the customers think.  That's what really matters.

More Stories By Rebel Brown

Rebel Brown guides organizations and individuals to harness the power of their minds to step into their ultimate potential. A masterful agent of change, for over 25 years Rebel Brown has inspired, coached and empowered individuals and businesses to unstoppable performance and results. As a recognized market strategist and turnaround expert, Rebel guided over 200 global organizations to step beyond their status quo perspectives to create profitable market advantage. She also worked with US and European venture firms to successfully fund and launch their portfolios. She also ran a consulting practice in Paris for three years, working with European clients. Fascinated by the power of our human minds to limit ourselves and our business results, she began her study of neural science. Her core question was simple. What could we do if we had no limits? Today, she brings the power of neuroscience to business (NeuroBusiness),fueling limitless thinking that drives powerful bottom line growth for her executive and corporate clients. Rebel’s work has been featured in media including First Business TV, Forbes, Inc, Entrepreneur, Business Insider and Business Week. She is a Vistage International speaker and workshop leader as well as NSA speaker. She’s also been named one of the Top 100 Women in Computing. Rebel is also the founder and director of the Unstoppable U Foundation, a non-profit program committed to guiding kids to know that they are born to be Unstoppable!

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