Archive for June, 2015


Understand who is your real Competitor

Understand who is your real Competitor

Every single business is susceptible to competition. In fact if there is no competition, then you can safely assume there is no real business. If someone is not trying to copy your idea, it’s better you fail fast and go and figure out something else.

Competition is something you don’t need to be scared of, it’s healthy in so many ways. There is a famous saying if Pepsi is not there, Coca Cola probably would have invented something similar. People always need a reference point, before they commit to buy something. They want something to compare against, to validate the pros and cons before they make up their mind. If you are a lonely warrior in your business area, you probably will have uphill struggle selling your product or service.

You also need to understand however good your product or service is, you are never going to have 100% of the market share. There will always be a vertical or horizontal split your product could cater for, example you are targeting medium sized business, or cost advantage, location advantage etc

Once you understand there will always be some competition, next thing is figuring out where your competitors are? It’s very easy to simply overlook or assume the guy who keeps you busy at Twitter, LinkedIn and other social channels and constantly bump across you in common industry conferences and speaking to the common partners as your main competitor. They may be your competitor (direct) at the face of it, but your real competitor may be somewhere else.

I’ll give you a practical example from our own product BizTalk360, a operations and monitoring solution for Microsoft BizTalk Server. There are few competing products in the market, not exactly like for like, but they can easily confuse customers (remember, customers do not have all the time in the world to evaluate all the available products). There may be few instances where you lose potential customers to these competition, probably due to market segmentation or due to geographical preference. But I believe the real competition is somewhere else.

Recently I was chatting to a close friend of mine who does consulting work in the same area. I asked him this questions “why he was not able to sell our product in the past 3 years to his customers” and his reply was “most of my customers are cost aware, they don’t want to spend so I just create some custom applications to monitor basic things…” there are 1000’s of similar consultants out there who could all be your potential competitors (indirectly, may be unintentional) and silently killing your growth. In this case if my friend insisted to the customer “you must buy this product…it’s more cost effective and more richer solution…”, it’s very likely the customer would have bought the product.

The other scenario I’ve witnessed is from consulting firms. On the face of it there is no competition between a company who sells product and a company who sells services. The good ones will understands the value proposition of the product, put their customer interest first, recommend your product and become your close friend/partner. Recently we were trying to sign a contract with a consulting firm to become our partner. This partner was trying to negotiate an unreasonable sales incentive in order to recommend our product, the reason they gave just blown my mind “our customer have problems your product will solve, when there is a problem they call us to fix, for which we charge. If we recommend your product, then we lose that revenue, to compensate that we need xx%”.

Now you can spot another set of indirect competition from 100’s of such companies potentially blocking your growth. In this case the ideal scenario for that consulting firm will be recommend the right product to the customer, become a good citizen, earn the trust and get more business out of that customer. It’s your responsibility to explain the value proposition and win over such consulting firms.

Sometimes you also need to keep an eye on products that do not do exactly what you do, but can cover portion of what you are offering. In our case there are bigger enterprise monitoring solutions, that can monitor pretty much anything in your organisation, but has limited scope for Microsoft BizTalk (in some cases it’s for name shake) . If the potential customers are already using one of those products, it’s going to be a challenge to convince and win over them.

As a summary, do not get too carried away looking at just your direct competitors, be vigilant and do your research to understand the potential threats from different angles. In my opinion the competition from indirect sources are way bigger than your direct ones. The direct ones are easy to predict, understanding the value proposition and defend, but the indirect ones are mostly out of your control and requires deep planning to over come.