All companies conduct competitive analysis. But in our work with clients, we at Crimson Consulting too often see clients engage in myopic self-deception. So to get real, the first thing companies must do is remove their bias from their analysis, which can be like removing enamel from your teeth. Product management and product marketing own this puppy … so, let’s talk about some best practices that will help bring your efforts into clear focus.
It’s all about me! (Not!)
Eating, and even liking, your own dog food isn’t a bad thing as long as you have an objective palette for how the other cuisine tastes as well. Everybody wants to have a glowing competitive analysis in hand and be able to report to upper management that “yes, we really are the best.” Your marketing department has gone to great lengths to show how your product line stacks up favorably against the competition.
However, potential customers won’t take your word for it – and they’ll get the real story. You need to get the real story and stay on top of what’s happening, whether or not you like what you hear (see “Compete Better, Use Your Competitors’ Products”).
Here are some tips for ensuring you discover your product’s true strengths and weaknesses so you can improve.
For deep-dive competitive analyses:
- Have practitioners interview practitioners. Seek out intelligent and experienced individuals who understand the real-life challenges your product is meant to solve. Since a deep-dive competitive analysis can yield results that may be unexpected, start by using the right type of personnel. Box-checkers will provide only superficial information.
- Design the interviews to be wide ranging and open ended, not structured. Surveys are best when they have an open-ended approach and allow for a lively give-and-take between the interviewer and the subject. An open-ended approach enables the interviewer to explore areas not previously considered.
- Conduct lab-based testing. Labs enable the testers to see what’s really happening and to carefully evaluate your product relative to a competitor. Lab results often provide irrefutable insights to your product management and engineering teams.
For competitive landscape assessments:
- Don’t overlook emerging markets. Emerging markets can sneak up and leapfrog you if you’re not watching out for them, so ignore them at your peril. For example, in Africa, mobile payments (via cell phones) are taking off more than anywhere else in the world. Why? Because not only is there no wireline infrastructure for communication (hence, such transactions must be done via mobile), but there isn’t even a banking structure in Africa.
- Include potential disruptors who can change the game. This is a big one and should make everyone nervous. Today’s age of rapid-fire development and innovation is the perfect breeding ground for disruptive disruptive technologies to come out of nowhere and change the market landscape virtually overnight. The iPad for example, changed the game for Netbooks, causing that once-decent market to go down in flames. VoIP has changed the game for telecom. Netflix blew away the DVD rental market. Such disruptors may be hard to spot way out in the distance, but be vigilant and keep your eyes on the horizon so you can be ready to act when one approaches.
For competitive pricing assessments:
- Examine the “whole solution” pricing, not just the product pricing. Many things come into play here — tiered pricing, volume discounts, site licenses, bundles and so on — making it extremely difficult to do a meaningful comparison. And that’s without even talking about VAR programs and packages. Point products, at “cheaper” list price, can actually be the most expensive when the overall package is
considered. Compare entire solutions.
- Compare based on the customer’s perceptions of an equal solution, not your own. Focus on what the customer needs to meet their objectives. If your product is perceived as more expensive and at the same time is perceived as offering more than the customer needs, then a less capable, lower-price product is a real threat. If, however, the customer values the complete solution you’ve created, then the lower-price competitor may be (correctly) viewed as significantly less valuable.
For competitive channel program assessments:
- What’s in a program? Determine what is used in the program, not what is designed into the program. If your program has features that never get used, then those features aren’t yet perceived as valuable by the channel. A competitor with a seemingly less robust program might be just what the channel needs.
- Your channel partners’ other vendors are competitors of sorts. Look at programs by companies that don’t compete with you but compete for your channel partners’ share of the wallet. Can you attract the best and brightest channel partners? Having better products and better prices alone won’t be enough. Find out who’s getting the lion’s share of your channel partners’ attention and take lessons from what they’re doing.
Keep your friends close and your competition closer. By stepping aside and removing your own bias, what you can learn from them about yourself provides priceless ammunition for tackling the marketplace.
Glenn Gow is CEO of Crimson Consulting Group, a strategic marketing consultancy focused on B2B clients, with a particular strength in technology marketing.