Your competitive set may be a lot different than you think.
Years ago, when I was young and stupid and working for a big advertising agency, I was a junior ween on a team pitching a big campaign to a packaged goods company. We spent weeks on a flashy presentation, packed the room with black turtleneck-wearing hipsters, and did the elaborate agency tapdance. We had feelers out at the 3 other shops we knew were in the running and were certain we’d totally outperformed them in every way.
We didn’t get the business. Neither did any of the other agencies. It went to a couple of guys we’d never heard of who’d done some super-creative spec work and offered the client a whole set of commercials for less than we’d budgeted for a single spot. The client, sick unto death of high-octane presentations that always promised more than big agencies ever delivered, decided to take a risk with the unknowns.
These days, I’m on the other side of the equation: Half the time I get a new client, it’s because some marketing/design company pitched them on a website that was going to cost $30,000 and take 3 months to build, with an incremental $1500 tacked on for connecting their Twitter feed to their Facebook page. Sooner or later, the client expresses their incredulity to someone else, who says “Why don’t you just call Sarah, because she can at least tell you if that’s realistic.”
99.9% of the time, the other company – my competitor – has never even heard of me, let alone considered me part of their competitive set.
A different economy means different choices
People – clients, customers, employees, stakeholders – are all trying to do more with less, while trying to look like rockstars. So they have to make choices, and they’re rarely as simple as choosing one brand over another. If an individual has $100 to spend on something personal, for example, they’re not choosing between one brand of jeans or another – they’re choosing between jeans or an evening out. If an organization has $1 million to spend on growing sales, they’re not just choosing between one marketing partner and another. They’re choosing between marketing, infrastructure, new CRM software or even a whole new product offering.
And customers may not see your competitive set the same way you do. In the situation I described above, we naively assumed that the client was only going to consider other ‘big agencies’ – but they were looking at a much broader set of possibilities.
Defining your competitive set
Fully understanding just who and what you’re competing against for your customers’ time and money has a lot to do with your industry, price point, and proposition, but asking these questions will help you get a better handle on what your competitive set looks like:
- Are you selling a commodity where customers can compare apples to apples? Or a service which has all kinds of different variables?
- What do your customers have to give up in order to purchase your product (i.e. if they spend money on your product/service, what will they have to forego buying)?
- When you lose business, who are you losing it to? Is it the same couple of companies, or a wide variety?
- Who do your customers see as your competitors? Are you sure about that?
- What is the end result/benefit of buying your product? What are the other ways a client could get to that result/benefit?
BONUS TIP: Try pretending you’re a potential customer and Google some of the search terms you’d use if you were looking for a supplier. The stuff that comes up that you thought had nothing to do with your product or service is a good way to start thinking laterally about your competition.