From the Blogosphere
Put Your Competition in the RearView Mirror
Companies have to think for themselves, not like their competitors
By: Rebel Brown
Jul. 16, 2009 03:00 PM
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.
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:
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.
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