Startup Marketing: Does the Competition Matter?

Startup Marketing: Does the Competition Matter?

I have heard people make the argument that startups shouldn’t think about their competitors. I agree that many spend too much time worrying about how their feature set stacks up against another offering’s feature set. On the other hand, prospects are evaluating your solution against alternatives (which may not be products) and communicating how you are better than those alternatives is a key part of great startup marketing. Simply put – you should care about competitive alternatives if your prospects do. Startups are not Big Companies I very rarely see useful competitive analysis done by startup marketers, mainly because they are trying to do it like big companies do it. The big companies I’ve worked for have had departments dedicated to creating large detailed check mark matrices that showed how our feature set compared to competitive offerings. These matrices almost never included any feedback from customers. Needless to say, the products and their markets were very mature. This approach completely falls apart within the context of a startup. Your competitors, from a customer point of view are almost never so easily defined. For startups, your offering is often competing with “do nothing”, “hire someone to do it”, use spreadsheets/documents/paper, or some other solution that might be completely unsuited to the task but is free/easy/what has always been used. Comparing features of one of these alternatives to your startup’s offering to makes absolutely no sense in this context. A More Customer-Centric Approach In the context of a startup the only competitive analysis that makes sense is the one that is happening in side the heads of your prospects. The more you...
Startup Messaging: Should You Differentiate Against Your Competitors?

Startup Messaging: Should You Differentiate Against Your Competitors?

Alex Goldfayn had a great post this week called Death by Differentiation that got me thinking about competitive positioning and startup marketing.  Alex, a marketing consultant, laments that many of his clients are too focused on differentiating themselves from their competitors: These companies have focused their marketing on smaller, peripheral features which differentiate them from the competition. So that instead of focusing their message on the 80 percent of the product or service that speaks to mainstream consumer interest, they instead focus on the 10 percent that makes them different from competition, which mostly matters internally. Thinking about how I would apply this thinking to startups, I found myself agreeing and disagreeing with the post.  On the one hand, I agree that vendors often care far more about tiny differentiating features than prospects do.  On the other hand, if all the solutions in a market deliver the same particular point of value, doesn’t that value become expected or assumed?  And (as is the case with many startups) if I’m entering a market with an established competitor, don’t I have to focus on what makes my offering different because my prospects will always be comparing us? In my opinion, how you articulate your value to customers should describe what makes you better, it’s just not always in the way you might think. Your messaging needs to: Take into consideration what the customer already knows about the market Highlight how your solution is better than what prospects perceive to be alternatives Be focused on value (not features) Diving into each of these – here are some things to consider: 1/ Test...

Should Your Startup Take on the Big Guns?

I was lucky enough to be part of a startup marketing panel at Startup Weekend Toronto (an awesome event) a few weeks back and someone asked if a startup could be successful going head to head against a larger competitor in an established market.   My response was that startups can compete by focusing on an under-served niche to establish a beach-head and then they can go after adjacent niches. One of my co-panelists, Mike McDerment, offered his take on it based on his experience as the co-founder of successful Toronto startup Freshbooks.  He reasoned that the existence of a big competitor proves there’s money being spent there and therefore makes it attractive.  Big companies, he argued often become slow and stupid, leaving the door open for smart nimble companies and startups shouldn’t be afraid to take them head-on.   “Find a big competitor and drive straight at them.” was his advice. We all know the stories of how Apple/Google/Facebook took on big competitors in established markets successfully.   We can also recite lists of companies that have attempted to take on Apple/Google/Facebook head-on and have failed.  The answer to whether your startup should do it is likely the same as the answer to most of life’s difficult questions: it depends. The reasons why you might not want to do it are obvious (they have more resources, a more feature-rich product, brand recognition, more/better sales channels, etc.), but here are 4 reasons you might want to take the ‘drive straight at them’ approach, based on my experience working at both startups and at larger companies: 1/ Established Products Get Bloated – What once may have...

Startups: 10 Reasons Customers Won’t Switch to Your Product

It’s easy for startups to fall into the trap of thinking that customers will switch when given the option of a clearly superior product.  The problem is that switching is often much harder for customers than startups realize.  Having a clearly better product is only one piece of the puzzle. Here are 10 reasons customers won’t switch to your product even though they understand the value of it: Migrating from the existing product is too expensive/time consuming – I put off migrating this blog from Typepad to WordPress for 6 months because I didn’t have the time to do it.  How much better would a photo sharing site have to be to get you to move your stuff off of flickr? I spent years marketing databases and data integration products.  If you want to give an enterprise IT guy a heart attack, tell him you need to migrate a gig or so of data from one platform to another. Skills – It took your potential customers a while to learn to use the stuff they have today and even if your product is much easier to use, the time investment required (even it it’s just their guess of what it might take) to learn it might be enough to turn customers off. Enterprise lock-in – Startups underestimate the power of an enterprise license agreement to stop even a small department from choosing to use a different tool from the corporate standard.  You may be able to fly in under the radar of a CIO that’s standardized on Microsoft or Oracle or IBM in a small department but the moment...

When Having No Competition is a Problem

I quite often talk to companies that tell me that they have no competition.  In my mind this statement doesn’t make a darn bit of sense.   After a longer conversation we usually end up talking about the competition in a more realistic way.  My conclusion is that having “no competition” is either a very good thing or a very bad thing depending on how much you have studied your competition, how honest you have been about your capabilities and those of your competitors and how compelling your value proposition really is.  Here’s what I’ve learned. What it really means when you say you have “no competition”: 1.  No competitive analysis has been done – Ignorance is bliss and as long as you don’t happen to run into a competitor then you can safely assume there isn’t any – right?  Right?  In fairness I have only seen a couple of very, very early stage companies that have had no knowledge of the competitive landscape at all. 2.  There are competitors but they “don’t count” –This one is more common for startups in emerging markets where the competitors are other startups or small initiatives inside larger companies.  The argument usually goes like this – “But competitor X only has 3 customers” or “Microsoft has a competing product but it sucks.”  Yeah well, you don’t have many customers either and the last time I checked Microsoft has an amazing ability to sell stuff even if it happens to be a little sucky. 3.  You have defined a segment where your solution clearly wins – Some companies have done their homework, understand and take the competition seriously, and...