When you start a business, everyone and their mother seems to offer (sometimes unsolicited) advice. We’ve heard the classic “Your only competition is yourself!” while we’ve also been warned “Always keep your eye on the competition.” Both sound wise, yet they are completely conflicting schools of thought. So, which is right?
The notion that you should only focus on bettering yourself and not concern yourself with others - though inspirational, is also impractical and frankly, short-sighted.
Some people will argue that studying your competition is a waste of time with diminishing returns, while others argue that competition doesn’t really exist, or even going as far as assuming we can all do business in perfect harmony. That might be an appealing utopia-like vision, but in reality, turning a blind eye to the competition is a mistake. Hear us out.
Sure, by why fight when we can love? ♥️
We’re not saying you need to undercut the competition to be successful, you just have to understand them. Let us first define the word ‘competition’. The term gets a bad rap right out of the gate and makes people nervous because it implies a winner and a loser, and nobody ever wants to be on the losing side of things. Competition assumes two or more parties going head-to-head and battling it out. But this definition of competition is flawed because it leaves out THE most important element of your business – your customer. So we are going to challenge you to view the concept differently, and embrace the competition for everything it can teach you.
Your competition is in fact, important to know and understand. Why? Because your customers do. Your competitors are your customers’ options – the options from which they can choose. In essence, if the competition is a part of your customer’s decision-making process, then by default that competition should be important to you. A client could come to you to solve their problem or pain point, or they could choose someone else.
But I don’t need to compete – I’m one of a kind!
Don’t be fooled, that someone else does not have to look like you, or even sell the same product or service you do. Of course, you have direct competitors that look and sell a very similar product or service to you. If you own a bakery, your direct competitor would sell baked goods too. But you also have what are deemed secondary competitors, and these are easier to forget about out. These are the products and services that may not be the same as yours, but solve your customer’s needs just as well as you do, but differently. Think about someone looking for a housewarming gift – they could bring a box of organic cupcakes, they could hit up the wine store, or could pick up a candle at the giftware shop right beside that. These would be secondary competitors, so you want to be aware of your full competitive landscape.
If you change the way you look at the ‘competition,’ you realize that your competition actually isn’t about you at all - it’s about your customers. It’s about choice and options, and the position your client finds themselves in when they potentially need your product/service. What will make your business truly superior is how well you know, understand and can walk in your customers’ shoes. And you can’t do that without knowing the fully journey of their purchase decision. Turning a blind eye to this can leave you out in the cold.
Ok, I get that.. but how do I use this competitive analysis to my advantage?
To further illustrate this, let’s look at an example. In the city of Powertown, there are two interior design companies. Both operate with a similar model of visiting their clients in their homes, building a design plan and then installing the furniture. A few years later, the city’s IKEA store started to offer interior design services right in their store, providing much the same services as companies A and B. Company A subscribed to the ignore the competition philosophy and focused on their customer service and low pricing. Company B was curious to understand why IKEA was attracting so many new clients and what the appeal was. After some probing, they discovered that IKEA did not have anywhere near the expertise in design, but what customers loved about IKEA model was the ability to actually see the furniture. They needed help visualizing what a space could look like and IKEA was able to provide that. So company B, armed with this new customer insight, purchased new software that allowed their clients to view a redesigned room virtually, with the advantage of not having to leave their homes. Company B didn’t compete with IKEA, they learned from IKEA, and ultimately built a stronger proposition based on their own strengths.
To Know Your Competition is to Know Your Customer
The customer is at the core of everything you offer and every action you take (or should be!), so knowing how they make decisions and what they are considering is vital and should inform every piece of your marketing strategy. So don’t look at the competition as a battle, look at it more as learning and living through the eyes of your customer. At Powerhouse, this is a guiding principle. But don’t just take our word for it – Steve Jobs corroborates our mantra:
“You can’t look at the competition and say you’re going to do it better. You have to look at the competition and say you’re going to do it differently.” – Steve Jobs, founder of Apple
To ignore the competition is indirectly ignoring your customer, and no one can argue that that is a good idea!
Agree? Disagree? Have something to add? We love a good discussion - hit us up below!