Hey, startups: your competitors aren't who you think they are. (Sorry, not sorry)
The attitude some people have about conducting a competitor analysis for their startup can be really, really weird.
You’ve got those who believe their product is unique; it has literally no competitors.
Then, you’ve got those who believe that they shouldn’t be spending any time looking at the competitors because they’ve got bigger things to focus on.
In my experience, these startups:
assume that the customer is product-aware (i.e. knows the product they need to fix their problem)
think that their customers ‘get’ their product immediately
forget that there are multiple solutions - in a customer’s eyes - that could actually do the job as well
Sorry, but these are big mistakes you’re making. Here’s why, based on some super quick theory.
The types of competitor you didn’t know you have
You’ve got three types of competitors: direct, indirect and replacement.
Direct competition is where your competitor offers pretty much the same product as you, bar a feature or two.
Indirect competition is where your competitor offers a similar product to you but they may be operating in a different category
Replacement competition is the competitor you didn’t see coming. The totally different angle that your customer thinks can do a great job.
Now, here’s the REAL kicker - they are all competing for the same jobs to be done.
(You know, jobs to be done - a theory that assumes you hire products to help you to achieve a bigger goal or solve a problem.)
They are all competing to be hired to help the customer to solve whatever challenge they are looking to face.
They are all being classed as the same, lumped in the same bucket.
In fact, here’s an article on direct and indirect competitors from Intercom that explains this concept very nicely. And, if you want to dig even deeper learn how to talk to people and actually land your first customer.
Let me give you some examples to illustrate my point.
I recently presented a session for Barclays EagleLabs on marketing for startup founders, and competitor analysis was one of the many points I tried to highlight the importance of.
Take Netflix. What job is someone hiring Netflix to do?
Let’s do a quick competitor analysis on this and how you’d get to this point.
A direct competitor is likely to be Amazon Prime.
> I can stream programmes, many of which are on both platforms.
An indirect competitor could be BBC iPlayer.
> Again, I can watch programmes on-demand, not necessarily the particular shows I want, mind.
And a replacement is sleep.
> Maybe one evening I don’t want to be in front of a screen, and I think I deserve an early night.
Yep, that’s right. Let’s pause a second to think about the fact Netflix’s CEO said that its competitor is sleep.
Still think conducting some competitor analysis for your startup is a waste of time?
Okay, let’s try a more within reach example. Take Careercake, the startup I work with. Careercake is a video learning platform, offering content for young professionals.
What are we competing for? What job are we looking to be hired for?
One job could be: a promotion at work.
Therefore…
A direct competitor could be: another online course provider ;)
An indirect competitor may be: an internal department recording and filming their own content for employees.
And a replacement competitor: YouTube. Perhaps someone’s got a quick question about how to act in a promotion interview, for example.
(Heck, another replacement competitor could be a new job at a different company.)
Have I built a case yet, founders, to start thinking differently? Of course I have!
Where do you get this information from?
Customer interviews and customer surveys. It’s the only way you can really learn who is competing to get hired.
Try asking questions like these:
When searching for a solution like ours, what else did you also look at?
When searching for a solution like ours, what were you trying to get done?What other solutions have you tried? To what level did they help you achieve what you set out to do?
The emphasis each time is on the bigger ‘thing’ the customer is looking to achieve.
These conversations aren’t about features, it’s so much bigger than that. It’s about what your product is helping your customer to become.
Re-framing your conversation this way changes up the conversation.
Very quickly, you’ll be able to group your customers into problem-aware and solution-aware segments.
Problem-aware customers are those right at the start of the process - they’ve got an issue, and maybe have started to look into how to fix it.
Solution-aware customers are those who know a bit about the products and brands out there that may be able to help them.
(Your strategy and positioning will be dictated by which of these customer segments you want to target.)
Want to learn more?
Get serious about conducting competitor analysis with these resources:
How to actually talk to people and land your first customer (a guide)
Positioning to help your startup take on big brands (looks at taking on the ghosts… you know, if the sale has gone quiet)
