The four categories of competitors: which is the most dangerous?

Most of us know who we compete against. We run into them at industry events and we see their materials on the desk of our customers. And while we smile and exchange pleasantries when we see them, we know they are dirty rotten scoundrels. Sometimes when I talk to clients about competitors it resembles the locker room talk in high school about the arch rival. We have to beat them, we don’t like them, and we know we are better–even if they are a lot like us and clients can tell the difference.

But these competitors only comprise one category of competition and may not be the toughest to compete against. There are four categories of competitors and you should be aware of all of them and which one is the most dangerous to your business!

Traditional: The traditional competitor is the one we described above. You know who they are, you know some things about them and you KNOW you are better. However, you are a lot alike with respect to offer, services and even pricing. They win some, you hopefully win more. Your goal here is to win the RIGHT ones–the most profitable customers who respond favorably to YOUR value proposition. To do that, you cannot be “me too” but rather need to be different and better in some relevant and valuable way to the RIGHT customers. You need to know enough about them to know how you can be unique–not just claim to be better.

Low Cost: This competitor scores by underbidding. I have had clients say they can’t figure out how they stay in business. If they don’t have a highly efficient supply chain, they probably can’t. Unfortunately, they can steal business. The question is, can they keep it. Unless you are also competing on price (and even if commodity businesses there are ways to differentiate and price accordingly), if customers want the low bid and you know they can’t match your service, you should be fine. They will eventually come back, so stay in touch. If they don’t come back, were you really better?

Nothing: This is the one we fear the most because it seems hard to compete. The truth is most of us don’t sell against it. If we don’t do a good enough job painting the value we deliver such that is becomes a “must have” putting off the buy or not buying at all becomes a viable alternative. If this happens to you, accept the challenge of selling against it.

Alternative: Most of us never see this one coming. Or if we do, we write it off as “out there”. It is how Blockbuster felt about Netflix, Hallmark about the internet, Realtors about Zillow and printers about email. It may be new but it is not what we do. But what happens if it is what customers want to do? The most dangerous competitor is the one that can blind side you–take away your business and leave you with no way to compete. The only way to beat this competitor is to see it in time to adapt. Usually it is a result of changing technology. We must realize that we are about meeting needs of our customers, not about what we sell, not how we deliver it (Blockbuster was about access to movies not renting physical videos in bricks and mortar; printers are about improving communications not about ink on paper). If our strategy narrowly confines us to how we do something–the day is coming we too will be outdated. The best way to compete is by being proactive! Plan strategy now!

Who is your toughest competitor and how do you compete?

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