What constitutes a competitor, and what is the goal you have in mind when you conduct competitor analysis?

The competitive set is defined by your audience, not you. And it changes all the time. At Square, we compete against anything that enables anyone to participate in our economy, not just other POS companies. The "Jobs to be Done" framework is helpful here - anything (tool, company, resource) that enables one of these critical jobs, or COULD, enable it in the future is a competitor. Make sure you look at your audience and what they are trying to achieve from different angles, not just from a "share of wallet" or "share of mind" standpoint. In my experiences, these blindspots are big opportunities for disruption.

Here is the competitive intelligence mission statement I've used for several years (repeat from previous post but will add more detail). 

“Define ourselves based on problems we solve and value we provide, not your competition. But also equip ourselves to stand out from competition and win against them.”

Sales: Equip teams with knowledge and tools to win against the competition.
Product: Equip teams insight into competitive product sets so we can build better, differentiated product.
Marketing: Deep knowledge of competitive brand, message, and product so we can raise above with best in class product marketing and demand campaigns.
Executive: Provide regular updates on competitive landscape to inform strategy

For the most part, all vendor comparisons do is create confusion. If buyers have 3 conversations, they come away more confused. Shift the focus to ‘If we can show that we can do X for you, would that be valuable? And we’re great to work with, proven by our customer base and success.’ I often see buyers that see vendor comparisons as a big turn off. You also are going to be wrong a lot of the time. Your intel from a company’s website probably wasnt accurate to start with and it has changed. Vendor comparisons frequently slow down sales cycles.

Thanks for asking this question. The exercise of defining your competitive set is a critical, but at times under-emphasized aspect of conducting research. There are three primary modes for competitive research: 1) optimization, 2) growth and 3) exploration.

1) Optimization is the most narrow mode. This is meant to identify how you are positioned relative to direct competitors, who are in the same industry and product family as your company. This is where your win/loss interviews become important.
2) Growth mode is where you would look at direct and indirect competitors, who may share an industry, but are in a different product family or vice versa. The goal here is to understand how to expand your addressable market and seek product adjacencies.
3) Lastly exploration mode is the widest lens. Here I focus on the customer jobs to be done. Anything that enables the customer to achieve that job (the substitutes) can be informative on customer barriers to entry for the most difficult prospects to acquire and provide a source of ideas for exploration of new business verticals. These substitutes may be in the informal economy (such as borrowing from a friend or hitchhiking) depending on the industry that you are in.

All of these are important. Depending on where your company is in its growth cycle it may need a different balance of each. For example, very mature companies may focus on exploration and growth mode, while new entrants may focus primarily on optimization and growth.

"Competitor aware, customer obsessed" is something that I've internalized when thinking about competitors. Competitors are a good thing - it validates your space, your product-market fit and the market opportunity. The key is balancing the focus on competitors and the focus on customers. It can be really easy to go down competitive rabbit holes and chase every organization in your space but the best way to prioritize top competitors Is by looking at the impact they are having on your organization's growth (I.e. sales growth, win/loss rates, etc.). I've found attributing dollar amounts of competitors is a great way to drive alignment on focus of competitors. 

My goal varies but it usually is about education and enablement - really understanding the competitor and being able to build out collateral that will help level the understanding of the competitor across the organization. From there, the goal changes to changes in strategy, messaging, etc (the action taken from competitive intelligence). 

I think competitors are important, but developing your own unique perspective of who you are, what makes you different, and who you serve is 10-100x more important.

A short-ish anecdote: I used to work at AdRoll, which helps small businesses advertise on Google, Facebook, and everywhere else (e.g. Bing, Forbes, etc). Advertising is one of the most competitive markets ever, with Google and Facebook on an endless conquest for power.

And yet, AdRoll was able to reach hundreds of millions of dollars in revenue. How? They had a unique perspective: some small businesses don’t care where the ads show up, they care about making money. They had differentiation: strip back advanced features on FB/Google that scare off solo entrepreneurs and make it dead simple to advertise. And they had an audience: small business owners who want to advertise but need it to be fast, cheap, and effective.

It gets tricky because what constitutes a competitor can vary a ton. At Retool (low code app builder) we focus on a developer audience, so our biggest competitor is someone coding an app from scratch using React or Angular or Vue. If we were trying to solve for every audience in the world, our competitors would include spreadsheets, docs, wiki tools, and so many other types of software. Most software is composed of UIs and databases, so if you’re targeting too broadly everyone is your competitor.

When I conduct competitive analysis, I try to keep this in mind. If we’re winning, are we winning our audience? Are they choosing us because of what we think makes us different or something else? If we’re losing, are we losing our audience or an audience we don’t actually serve well? In order to have a really useful competitive analysis, you need to have an audience in mind.

Depends on how competitive your market is. You can create a list of competitors and create segments based on different variables that are important for your product or business. For instance direct competitors vs indirect competitors, Or competitors by vertical, or competitors by use case, etc.

Secondly, If you have a LOT of competitors, I would do a prioritization exercise to identify the top 3-5 that you track more regularly vs others that you passively track, as needed. For instance, prioritize the ones that come up during sales deals most often! Or if this competitive intel is to drive your product roadmap, prioritize the ones that you are trying to differentiate from.

Lastly, don’t forget the “status quo” competitors - for instance at Unbabel, one of the things we compete with is companies hiring customer support agents that speak multiple languages - it is also important to also build messaging around that!

For smaller teams that may not have a built out CI team or CI PMM it can get tough to manage competitive research, positioning, creation enablement and dissemination of assets on top of everything else that you're doing as a PMM. This is why my philisophy is to really prioritize your top tier competitors and maybe even limiting it to the top 2 or 3 max. That doesn't mean you shouldn't stay on top of your industry and trends and what other players are doing, but that does mean that you aren't going to dive as deep or create as many assets for the majority of competitors in your space. Some techniques:

1. Pull a salesforce report to look at who you're losing the most deals to. Take a yearly view and see which competitors are gaining traction Quarter over Quarter. Likely 2 or 3 will emerge as the clear ones. Focus on them first. 

2. If you serve different segments and industries, think about the competitors that are coming up across those segments and industries. Maybe there's 1-2 additional competitors in your SMB segment or your Healthcare vertical that have started to come up. If these are different than your primary competitors identified in step 1, put them on a backlog and get to them when you're able to, don't try and do all at once. 

My primary philosophy around competitors is a little different than most: focus 80% of your energy on what makes you great as a product or service, and the rest on what anyone else is doing. 

I've worked in duopoly markets (speech IVR in the contact center), highly fragmented markets (enterprise content and collaboration), and mature markets (enterprise networking). This approach works in all of them, because no matter how many competitors you have, you'll never have enough resources to properly track every move your competition is making. And that's a good thing, because if you spend all your time looking over your shoulder at what others are doing, you'll miss the opportunity to see what you customers need most now, and what they'll need next.

To your second question, a competitor is any product, solution, or priority that delays or affects your customer's buying decision. In many cases, this is the status quo - how they're solving the problem today. The good news is that if a prospect is comparing your solution against another new solution, you've already won the hardest part of the battle, convincing them to make a change. 

This might be a question in its own right, but competitive analysis can have multiple goals:

• Understanding a new capability or announcement a competitor is making
• Understanding an orthogonal threat in the market (an unexpected solution to a customer problem)
• Learning which segments of the market are choosing competitors over you
• Equipping the field with effective lead with / defend against talking points for negotiation

There are a few types of competitors to think about:

Tier 1: Prime Competition - Those who compete for the same dollars for a very similar product. You often end up in feature battles with them and eat each other’s lunch. They look very similar to your offering in the eyes of prospects. They end up copying your features or vice versa.

Tier 2: Patrial overlap - They have one or more similar products, common verticals, or solve the same problem in different ways. They are sometimes point solutions if you have a more comprehensive offering, or maybe your product is the point solution - which isn’t necessarily a bad thing.

Tier 3: Budget stealers - These are typically distinct products that may solve part of the problem, but you are essentially competing for the same budget. In many situations, they end up being complementary products. The challenge ends up being how to convince the prospect to spend their money on your product first.

Alternatives - These are other ways to solve the problem without buying a product at all… like using a spreadsheet, or having an intern do it. Or they could choose to simply endure the pain and going BAU (business as usual).

Noise tier - These providers use similar words and positioning, talking about the same problem, but your product offerings couldn't be more different. In some cases, you could be partners. This causes confusion for the prospect, which can typically be cleared up quickly.

In the most simpliest terms, a direct competitor is solving a simliar or same pain point as you are. One goal in conducting a competitive analysis as part of your market research is to identify points of differentiation and keeping a pulse on what's working (or not) in market. You can produce helpful reference docs such as a competitive market landscape to competitive messaging frameworks to sales battle cards!

Here is an example from Patti, our Head of Consumer PMM, from her past life: think about both share of wallet and share of mind. At Leapfrog, core competitors are the ones that also make electronic learning toys; larger set of competitors is every company that makes toys.

The goal of our work is to help our company build and express our competitive differentiation. A competitor is anyone who has a similar value prop for the same audience. Not necessarily the same solution. Even if a customer could feasibly use both, we might still be "competing!"

1. Revenue impact

2. Product innovation

I used to only focus on the first point. That's an important one—and if you have limited bandwidth, I'd recommend you start there first. These are the vendors that are impacting your sellers' win rates. They're likely the more well-known vendors in your category, are easy to discover, are brand names, and are the largest in size (headcount, annual revenue, etc.).

The second point is important, as well, though. Especially for businesses that are wanting to maintain a long-term view in a category, it's critical to understand what the innovation looks like in your category, who it's aimed at, and who's building it.

Are all of these startups impacting business today? Usually not by a lot (if at all). But these are the big competitors of tomorrow. And even though you don't need to make battlecards that focus on them for your sales team, you should still have a pulse of who these vendors are and what the innovation looks like.

This is a great question because: fortune favors the focused. In our world, there are thousands of SaaS offerings on the market. Many offer competitive products and capabilities to us. However, only a select few come up frequently in head-to-head deals where win-rate meaningfully impact our performance. That's where we focus (for established, rep-assisted SKUs). For newer, product lead growth (not reliant on a sales team / without win-loss data) this is more of a GTM strategy question. What does the market look like, who dominates share, what are you trying to disrupt. Fewer competitors in greater focus will help organizations far more than trying to cover all possible alternatives. Focus (and win) where it counts. 

A competitor is anything that can be substituted for the value that your product offers. Sometimes, that's a product with a very similar feature set. Sometimes, it's a product that is designed for a different purpose, but people are using it (poorly) to solve for your product's value prop. And in some cases, a competitor may be nothing at all—the status quo. When you're trying to sell a product to customers that's in a new category, requires a new skill set, or is rooted in people doing things differently, it's easy for a customer to stick with the status quo. It's also something that's much more common in today's market with companies really tightening the purse strings when it comes to their tech stacks. The status quo is often the cheapest alternative, especially if a customer doesn't see the potential business impact/ROI of your product. 

I've found that there's a tendency in B2B SaaS to have some people in the org get concerned over every new "competitor" in the market. You can't allow this to affect your strategy because most SaaS tools and solutions today have a lot of competitors. 

When I think about who my true competitors truly are, I look at a few metrics or types of data:

• How often does this vendor win deals from us?
• What is our win rate compared to this vendor?
• How many of our existing customers are leaving for this vendor?
• What is their growth rate? Number of enterprise customers? Annual revenue? (These are just a few of the metrics you can analyze to see what kind of momentum they may have).

Ultimately, you can't be worried about every company that may be in your space. You either believe in your product strategy or you don't. Find the 4 or 5 who are actually winning deals most often, taking customers from you, or growing like crazy and focus on them as your primary competitors. The others are secondary and shouldn't be viewed in the same way. I'm not saying ignore them, but don't get too caught up in worrying about them too much.

'I think a competitor is anyone who is in or adjacent to your space. Said another way, a competitor is a vendor that can cause confusion or slow down your sales cycle for some reason. There are a few different types of competitors:

• Main competitors - the ones who you are competing with head on and can materially impact your revenue if you dont win. Spend most of your time on these. 
• Ankle biters - these are competitors that only impact part of your TAM. Ie a vendor who only goes after SMB. These are the ones you need to pay attention to because if you don't, all of a sudden you will be losing in that market and playing from behind. In that SMB example, plenty of competitors went after Salesforce down market in SMB then slowly crept their way up market (looking at you Hubspot).
• Adjacent competitors - these are vendors who overlap part of your product functionality. They won't kill your revenue but will be annoying and slow down deals. They can also reduce the overall value of your solution if they take functionality away. 
• Frienemies - these are partners who you also compete with. Sometimes you have multiple products and partner on some, and compete on others. These are the trickiest relationships. Don't let down your guard, especially with your internal playbooks. Always make sure you are ready for a competitive throwdown if needed. 

I typically think of direct competitors as being other players in the same category of my org that are going after an overlapping share of wallet with an overlapping group of target customers. You may also spend time on your indirect competitors or even substitute products, but you're much less likely to hear about them from your sales team day to day.

There are actually a few possible goals of competitor analysis, here are some common ones I've seen in my career so far:

• Create battlecards and talking points for your sales team

• Help product better understand how to compete with an existing product

• Provide your board, executive team, or strategy org with context for decision-making

• Inform company or product positioning

I think of competitors in two ways. 1. alternatives. Excel the classical example here. An alternative way of achieving the same 2. similar / same product offerings targeted at the similar / same buyer. This last part around targeting and segmentation is important. Tesla and F150 are both electric cars. But do they really compete? They focus on different market segments. Further when it comes to specific insights there is a short-term and a long-term perspective. Long-term, take a look at balance sheet and asset changes. short term who are they hiring, how is messaging changing over time (note: check out https://moat.com/advertiser/. Add to that internal data around win/loss at price points, by geo, by rep, by use case etc. These are all sources of input which you then need to aggregate for the goal. Which could be a battlecard or market share analysis or sales training or negotiation skills. Most importantly, a CI program is proactive. You need to collect data over time to address the goals set.

Interesting question about how I define "compeititor" in and of itself. I tend to look at competitors as barriers that keep people from buying the product I'm selling. Sometimes its a comparable product, sometimes it's an alternate type of solution and sometimes it's nothing at all. The question driving competitor analysis is always: Why? Why is it that customers are gravitating towards buying/staying with an alternative (including doing nothing new/different)? 

I hate feature-for-feature comparisons when it comes to competitive analysis and do whatever I can to avoid them. The exception is when one specific feature is clearly a driver for purchase, and only specific players offer it. 

In general, the ultimate goal is to figure out one of two things:

1. How to have a more important conversation with customers than competitors are having, so my product is associated with solving a more important problem. This is for when customers are choosing a new product and considering two or more options.

2. How to reduce switching costs and justify needed behavior change, so that a move to my product is less unsettling. This is what I need to figure out if attempting to unseat an incumbent.

There are any number of ways to get there from a research standpoint, but this is what I'm typically seeking to accomplish.

This one is tricky because I think there's a tendency to want to boil the ocean and do everything for every competitor. Some combination of market research and competitive win/loss analysis should help you create a few different tiers of competitors. My rule of thumb is no more than 3 competitors should be in your first tier and this is where you should really focus your efforts and train sales. 

Everyone else can fit into a category of competition, and if your core brand/product positioning is differentiated enough, you can position against them more generically. Super important to be open to sales feedback though, especially as your buyer/segment changes or market evolves.