I am not afraid of competition.
By my own experience and observation the successful companies are not either. I’m not saying that this is how they became successful, but it sure is an interesting coincidence.
I think competition is great! Sure, they’ll take some market share, but the fact of two or a handful of competitors in a market segment is a benefit: it establishes an evolving market or makes an existing market bigger.
One supplier gives customers a choice of “Do I buy this solution or not?” This is at best a 50-50 proposition. If the question becomes, “Do I buy company A’s solution or company B’s solution?” then the need for the solution becomes embedded in the customer’s mind. That 50-50 proposition just went up to the 75-80% or better range and I believe I can out-perform and out-sell any competitor in a head to head battle. The result? I’m performing better than that 50-50 proposition.
The back and forth between two rivals generates interest and attention, and the focus is on “which is better?” instead of “is this any good?” The cola war between Coke and Pepsi helped both companies. The question was no longer, “Should I drink Coke?” or “Should I drink Pepsi?” Instead becoming, “Should I drink Coke or Pepsi?” The customer became predisposed to drink a cola product and the question became, “which one?”
There’s only two scenarios where I can imagine being afraid of the competition:
1. They’ll use their massive financial reserves to squash me like a bug, either with marketing spend, PR, slashing pricing, legal attacks or any combination.
2. A technically inferior product that cannot compete.
To eliminate #1, if you’re going up against an entrenched competitor with deep pockets, the business plan needs to account for that possibility. If the competition is contemplating the bug-squash method of removing you as a competitor, it’s a pretty good indication that your product is a direct threat to the deep-pocketed goliath. If you’re that much of a threat to them, you have leverage in the marketplace that you can take advantage of.
In other words, you must be doing something right to scare the heck out of a bigger player—so use that to advantage!
By elimination, the only thing that really scares me with a competitor is having a technically inferior product.
A technically inferior product means I’m ripe for a competitor to steal my business away. A technically inferior product means I can only grab fringe business. A technically inferior product means less customer demand. A technically inferior product means slow growth at best, more than likely declining sales and inevitably out of business. Going viral is out of the question.
If my product is roughly the same as a competitor, I can beat them with Marketing, PR, incredible customer service and a great sales team. The rivalry will generate press and publicity and customer awareness, which is beneficial to both companies.
I say embrace the competition. Take advantage of the inherent dynamics that drive growth in the entire market segment. Get passionate about winning, build a better product, then market, sell and service better than anyone.
If you’re afraid of the competition, what you should really be afraid of is your own inability to build, market, service and sell great products.
The software business isn’t rocket science. There are enough success stories of what consistently worked and what didn’t that the formula is pretty straightforward. Don’t be afraid of your competition—know their strengths, know their weaknesses, know what the customers want, then build a better product and beat their pants off. And have fun going viral!