We Have No Competition

BUSINESS PLANNING SERIES

Last time, we wrote about the importance of “True Competitive Advantages” and how the lack of at least one will likely condemn your business plan to the reject pile. Today, we will look at another common fatal error – Incorrect Positioning vs. The Competition. The most common errors that we see (frequently in the same presentation) when talking about competition are, amazingly enough, total opposites:

 “We have no competition”

 “We combine the ‘best features’ of four competitors.”

This is not just a pitch problem. It says that you don’t know WHO your customers are or WHAT they want or WHERE you stand in the marketplace. Let’s look at how this error shows itself and what it says about you and your plan: “There are no competitors.” – Either you have failed to recognize direct competition or you are ignoring alternatives such as “build it yourself.” “No one is doing this the way we do.” – Of course not. You offer a unique product, exclusive features, different pricing, revolutionary sales strategy, blah, blah and blah. However, uniqueness does not mean lack of competition. “We have no competition because this is an industry/market that has never used XXX to solve this problem.” – This sounds good but it also means that you must convince people to trust your XXX. Your competition is the status quo which puts you at a disadvantage. “We have no competition because people don’t know there is a problem.” – If potential customers are not feeling the pain, your product will be a tough sell. If you want to become an evangelist, this is the way to go! Preach your gospel if you wish, but people will hear “Time and Money Sink.” OK, those are pretty obvious. You can fix those, right? Good! Now lets look at one that is not quite so obvious:

Defining your company in terms of your competition

Your company is uniquely defined by its own strengths, ideas, values and products, not by how it compares to others. You need a strong position – one that would be clear and compelling even if competition doesn’t exist. Here’s how this error shows itself: “We combine the best features of our competitors, letting them show the way to our success.” – It’s nice that you have learned from the mistakes and successes of others, but “combining the best” is not the key. Each of your competitors has made tradeoffs to make their products the “best” for their target customers. Things that you see as “not the best” may, in fact, be the best for their market. What makes you so sure that enough people will not only agree with you but will be willing to switch to your product? The Feature Comparison Graph – This is the chart with rows listing all of the features and columns listing all of the competitors. It’s full of X’s and check marks everywhere except in your column, where it is all check marks. What baloney. (Actually, that’s not exactly what we think, but this is a G-rated blog.) “We’re just like X, only we’re Y.” So you are betting that Y so monstrously cool that customers will flock to your product. Well, Y had better be super-awesome! And it better be impossible for X to copy – or even to copy one-half of Y. Congratulations. You have just placed your fate in the hands of your competition. “We’re the same as X, only cheaper.” – Cheaper cannot be your only strategy. It might be part of your plan, but it will only last until the established competitors meet, or worse yet, beat your pricing. (Does anyone remember when people used to pay real money to buy a web browser? That lasted until Microsoft decided to give IE away for free.) A variation on this same theme: “We do 75% of the features for 50% of the price.” Less for less is NOT inspiring. OK. So how can you effectively contrast yourself against the competition, but not let them dictate your identity? Tune in next time and we’ll suggest some very effective solutions. -Steve Hogan