Is Competition Killing Your Business? 5 Analytical Tips
Updated: Jan 2
Competition gives birth to innovation. That’s a fact. Without competition iPod, iPhone, Windows, and Google would probably have not been part of our lives today. Without competition, humans on the moon would still be remembered as a chapter in Jules Verne’s famous book.
If competition is a good thing, where's the problem?
We (humans) are always looking for new products, new experiences, new features and new capabilities. When businesses compete, consumers (like ourselves) get what they want, and that works the other way as well: it's actually the consumer that defines what competition would look like.
Competition sets higher standards for others to either meet or to beat. Higher standards lead to market recognition and that leads to an increased revenue. When a new player introduces a new idea, they raise the bar, get the recognition and revenue, till another player shows up.
This competitive whirlpool may be well heard during calls when prospects are after a better product for less money, and not handling it well could have a direct impact on our performance:
The Sales Cycle extends when competition is present
Lower probability through the funnel
Prospect go dark, reps waste time chasing them
Win rates decline
Executing on a well-engineered GTM strategy coupled with a solid competitive selling system can shorten the sales cycle despite high presence of competition, and can even improve your win rate.
So, what would it take to accomplish a comprehensive and solid understanding of the competition and its impact on my business?
Project Moneyball defines the What & How for Sales Leaders and Enablers. Here's a snapshot of the idea:
STEP #1: WHAT
In order to understand the impact of competition on your business, the first step you need to take is extracting the data from your CRM and re-assembling it in a way you're able to visualize the impact across verticals, teams, segments and product line / SKUs.
You need to be able to answer the following questions: how much are we losing to competition? per team? per product? per vertical? per region? and so on.
STEP #2: WHERE
Next, identify where does each competitor show up and portray relevant patterns & trends. For the sake of this exercise I will share my own personal experience: a few years ago a certain business with a local branch in France reached out to me asking for a "Seek & Destroy" surgical assistance:
"We see this new competitor more and more recently....suddenly prospects mention their name on every call....could you help us find out more about them and what would it take to handle that?..."
So I did. I found out that the new competitor who was based in France at that time raised a few tens of millions of dollars and surprisingly, they were actually expanding their business across the Atlantic. Using conversational analysis, I was able to dig out calls where reps in the US where handling objections associated with this French competitor.
A few moments later I reverse-engineered whatever worked for those reps in the US and shared a replicated Talk Tracks with the French team. Et voilà!
STEP #3: WHEN
Identifying competition and quantifying its impact on our business is important but your work does not end there. The next milestone is identifying when does competition show during the sales cycle and customer lifecycle (CSM/AM).
Once you are able to visualize the competitive presence in each of the sales cycle stages, you can then shift gears and delve into the behavioral & professional reasons for which competition is either handled well or not.
STEP #4: WHY
Here’s an analysis I managed for a certain business in the cyber space:
At that time they already had a solid idea of how much money they were losing to competition and they wanted to improve on that area, so a new task was assigned to the enablement team to make sure that every rep is familiar with the competitive landscape, battle cards and playbooks.
In other words - they were losing X millions of dollars because of competition. The obvious solution was to re-train everyone on the competitive landscape, and (crossing fingers...) that would help the teams to handle better competition.
What I found out after a few hours of investigation was amazing ! The main reason for which they were losing to competition was actually behavioral:
Reps preferred to cruise through Discovery, presentation and demo without proactively addressing possible competition or even worse - they ignored prospect's comments on other tools there were evaluating at that time.
STEP #5: THAT WOW MOMENT
Let's go back to the process of visualizing how, when and where competition shows up during the sales cycle.
Imagine a bell shaped graph. When everything works by the book, the bell would show on your left side of the graph, meaning - reps are handling competition proactively or as part of mitigating objections.
This Competitive Discovery process can start earlier as part of your prospecting process as well (the bell would start at the extreme left side).
When the bell moves to the right - that means you’ve got a ticking bomb waiting to explode in your face.
In simple words - your reps are forced to give away discounts because competition passed undetected under their radar and then it surfaced up when reaching Proposal, Negotiation and/or when discussing final commercial terms.
When competition is not eliminated early, it would most likely appear later during Technical Evaluation (PoC, Sales Engineering Demo). When that occurs, prospects would tend to focus mostly on feature comparison rather than focus on fitting your solution to their specific use case and top priority business issue.
When competition is not handled well during the early stages of the funnel, it will create a negative impact on whatever happens later: longer sales cycle, lower probability, prospects go dark, more time spent on ridicules follow-ups, worse win rates, lower ASP, and in the long term - impact on your brand and positioning.
Quantifying the impact of competition starts with establishing a baseline idea extracted from your CRM (as explained earlier).
The real challenge resides in the process of understanding and visualizing the behavioral reasons & patterns that lead reps to cruise through the funnel without confronting competition.