Agile Insights Blog

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Shhh! Don’t Tell Our Customers We Have Competitors!

Jul 6, 2016 9:51:57 AM

“I’m not sure about naming competitors in our customer survey. Isn’t it risky to name potential replacements for our products?

This question has come up from not just one but multiple customers over the past year. At first, I was somewhat surprised and thought it may be a unique aspect of certain industries. But the more it came up, the more apparent it became that this was a fairly widespread concern.

At Vennli, the first things we do with new clients is to learn about their business – their products, services, customers, and competition. When we’ve identified the top strategic question to be answered, we can uncover the customer choice at the heart of it. Then, we design a survey to capture customer choice insights. This process of building the survey is straight forward because the platform does most of the heavy lifting. We enter in the competing offerings and the choice factors we will test, and we are off.

The mechanics of building the survey may be simple, but making the decision about what to write in the “Competitor box can be surprisingly complicated, especially when we consider this is something customers will see. Hence, one common question:

"If we talk about specific competitors, are we introducing the market to other options out there? Would we be planting seeds of doubt about our offering?"

I have taken time to think about this question as it has been repeated. Should we be worried about giving the names of our competitors to our prospective customers? The answer hinges on two additional questions:

  1. How familiar are the customers in the market with the existing competitors already?
  2. How much of the market will be influenced by the survey?

If customers are familiar with the competitors, dive in. Check the ego at the welcome page, and glean as much information as you can about customers’ perception of your competition.

Even if customers may be less familiar with competitive options, if you only survey a small number of the total market, then the upside of learning about your competitive position will almost always outweigh greater familiarity with your competition for a small fraction of the market.

On the flip side, if you are a small professional services firm with only 10 customers, it is worth carefully planning how you will approach the topic of competition. For one, we must consider how much information customers already have about the competitive market. Usually, the answer is “more than we think.

Back in the good ole days, companies had more control over the flow of information (including access to competitors). Now we exist in the Age of the Customer, where businesses must adapt within a customer-led market. In most situations, it’s naïve (or just wishful thinking) to believe that customers are not aware of other alternatives in the market.

One piece of evidence for this is that buyers have access to an amazing amount of information on the internet. We're hit with hundreds of ads per day, and our understanding of the options available to us has greatly increased.

The vast majority of customers conduct some form of online research before even talking to a salesperson (B2B) or purchasing something (B2C). In fact, several studies show that as many as 94% of consumers search online before purchasing in B2B and 81% in B2C environments. Another stat shows that 70% of Americans specifically seek out others' opinions before purchasing, learning about their options directly from the people they already trust (not the company!).

A huge portion of customer journeys start on the web these days. Most web traffic is indirect, meaning that consumers aren’t searching for you by name, they are searching for some type of solution and your name comes up as an option along with others.

Have you tried searching for "Best (type of our product)?" Chances are someone has already compiled information to make a side-by-side comparison easy for your future customers.

Even when consumers are searching for you directly, the lovely Google algorithm is smart enough to pull in commonly searched alternatives to your solution, and even savvier competitors are smart enough to purchase ads for the same keywords as you.

In other words, there aren't many markets where a quick online search would only show one company, and most consumers don’t buy the first thing they see without looking around a bit. Therefore, companies can either recognize this uncomfortable truth and gather the competitive intelligence data they need to win in their market... or they can tiptoe around it and end up being less effective.

What’s in it for me?

If the customer behavior patterns mentioned above are not enough to sway you, think about the upside that comes from seeing your competition from your customer’s eyes.

To make effective business decisions, you need to understand how customers and prospects are likely respond to your efforts. But customer perceptions are only part of the information you need to assess how your efforts will influence customer choices. Your competitors’ actions are the other piece of the puzzle. It’s not just about the value you offer. Your customers’ choices are based on the perceived relative differences between you and your competitor.

Since it is customers that are making the choice, asking customers about competition is one of the most effective ways to learn who your competition is, how they influence your customers’ choice, and how you stack up compared to the competition.

But what do we really mean when we refer to a “competitor? A competitor is any alternative (other than yours) that a customer considers when making a choice. The competitor may be a company that sells the same products as you. Alternatively, it might be an activity, very different from yours, that competes for the same time or money. In either of these cases, it is your customers who define your competition because they are the ones making the choice – not you.

Asking customers directly about your competitors may go against all of your natural instincts. You should certainly avoid free advertising for your competition. However, avoiding the topic, especially when you need to make tough business decisions, is one instinct that can do more harm than good.

I think I’ll sit this one out. I’d like to avoid the risk…

So, the hard truth is that most of your customers are already aware of your competitors. If you don’t gather this type of competitive intelligence, you are likely taking on more risk by not asking about your competition. When you avoid asking your customers about your competition, you take on these risks:

  1. You may underestimate your customers’ awareness of competitors and may overestimate how loyal your customers are to you.
  2. You may underestimate your competitors’ influence or misjudge the key factors that are driving customer choice.
  3. You may actually completely miss your true competitors from the viewpoint of your customers.

But… what if….?

Let’s just say that by listing competitors in the survey, a fraction of your customers are actually introduced to these alternatives for the first time. It’s not as bad as you think. Really!

Unless you are a small B2B organization sampling 100% of your clients, your research will only touch a small fraction of your total customer base and therefore only has the chance of influencing a fraction of your market. AND, only a fraction of those customers will likely be previously unaware of a particular competitor (especially if that competitor is significant enough for you to be asking about it on your survey).

But what if your competitor is brand new and no one has even heard of it before? Well, if the competitor has a good idea and a good marketing strategy, it's just a matter of time before your customers learn about it. Companies are often much better off gaining the insights they need to proactively build their competitive advantage rather than waiting until the competition has more momentum.

If you are the one introducing a new offering to the market, competition research becomes even more important. You may need to do some customer interviews before fielding a survey to better understand the category of products or activities that you hope to displace.

But what if I already know that my customers are at risk for exploring other options? If you are still concerned about advertising for your competitor, you can make sure that you perform your customer research at points in the customer journey where it is most natural to ask about competition. For example, when a new customer joins, you can ask them what they were doing before. When a customer leaves, you can ask them about where they are going.

But what if we have a really small sample or exist in a really unique market? Sometimes this is legit. If you truly have a small customer base, or your research is likely to touch a large percentage of your customers, all of the above points still apply. You can mitigate your risk further by asking about competitors in an open-ended way.

When a client of ours is nervous, we often recommend doing a couple qualitative interviews with their customers to explore their understanding of the competitive market and confirm what they know already. This can be especially effective when speaking to a customer face-to-face or over the phone. Examples of questions are, “What have you done in the past to solve this problem? or, “If you weren’t using us, what do you think you would do instead? These are good ways to have your customer tell you about the competitors on their mind. Then you can ask more detailed questions about the competitors they name without introducing any new ones.

We have run into a small number of situations where it doesn’t make sense to capture insights about specific competitors within the customer survey. We can get creative. For example, we have utilized a workaround approach where we asked customers to imagine their “top alternative or something of that nature.

In almost all cases, even when customers are not aware of specific competitors, they are generally aware that they have alternatives. When you ask about competitors, it communicates respect to your customers, because you demonstrate that you recognize that they have options and that you appreciate their business enough to ask how you can be better.

Topics: General

Bart Frischknecht, PhD
Written by Bart Frischknecht, PhD

CEO, Cobomba, Vennli strategic partner
Bart is all about building marketing technology to help business leaders achieve growth goals. He is passionate about using data to put customers’ needs and choices at the center of strategic decision making. Bart’s background is a blend of design, marketing, and engineering, which provides a unique perspective on a company’s role to create, communicate, and deliver value to its customers.

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