Afraid of the Competition?

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!

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Chase Revenue or Market Share?

There has been an ongoing debate since the beginning of business: “What’s more important, market share or revenue?” In other words, do you go after market share or go after revenue?

One theory is if you focus on revenue, you only do business that is nicely profitable and you discard any business that is not profitable and ignore market share. The other theory is that if you grab all the market share you can and corner the market, revenue will automatically follow.

I have a different view. If you want to go viral, you concentrate on satisfying the customer, every customer in your target public, and own that segment of the market. If you take care of the customer and your product is priced right, you get BOTH revenue and market share.

I came across a quote from Aristotle Onassis many years ago. (Some of you are probably wondering who that is. Greek shipping magnate, married Jackie Kennedy.) He said, “Money isn’t the game, it’s how we keep score.”

If you focus on revenue as your primary goal, you tend to lose sight on what MAKES the money: customers buying your product in ever-increasing numbers. The best way to get customers to buy your product is to make great products priced right, marketed right, supported well. The focus is on SATISFYING the customer.

What prompted this post was a salesman proposing a particular solution within his company “so we get more revenue.” If all of the particular transactions with a customer were captured by “Company A,” they would generate more revenue. Company A was already on track to process 80-90% of the customer’s transactions. Should they try to force a minor competitor to pass transactions through Company A’s pipeline? His focus was on monopolizing every transaction, whether the customer was well-serviced on the additional transactions or not.

What would be the cost of that extra business? Not just the fixed cost of hooking up more software “plumbing” and managing the details of that extra segment, but what about the problems and headaches of that extra business? What about the customer satisfaction? What about the tussles and turf wars associated with inserting a solution between the customer and a minor competitor? Would it really be worth it?

Could Company A give excellent service and results to their customer by forcing the competitor to use this solution? (The alternative was to let the minor competitor pass transactions directly to the customer, a potentially more efficient process.)

My focus is on providing the customer with the best solution to their problem. Revenue and market share follow and are only two measurements of how well I’m satisfying the customer. When I lose sight of customer satisfaction and focus on revenue and market share, I’ve just put the brakes on the Going Viral curve. I may grab more market share and revenue in the near term, but over several years I’m going to see that market share and revenue erode as competitors bring elegant solutions to the market and customers migrate towards them.

How does that happen? I’ve lost sight of satisfying the customer and focused solely on revenue. The result is a degradation in quality of service, a degradation in quality of product, a degradation in satisfying the customer. Can you say Lotus 1-2-3?

Focus on satisfying the customer. Focus on delivering the best product or service possible to the customer. Certainly, pay attention to revenue and market share and paying your bills and all the other things that are good business practices.

In the case of Company A, if passing the competitor’s transactions through their pipeline is better for the customer, then by all means do it! Do it for the right reasons, not because it increases short-term revenue while providing lousy service to the customer.

The keynote is take care of the customer. Give them the best solution possible. Do a better job of taking care of them than the competition and success is assured. Do a MUCH better job of taking care of them than the competition and you’ll be amazed at the growth curve.

Focus on that as your mantra and Going Viral is in your future.

Drive For Perfection

Too often I see companies working hard with no tangible result. There’s no substitute for brilliance, that technical genius (or six!) who can solve any software problem and come up with a great solution in seemingly no time at all.

But geniuses are hard to find. If you’re the technical genius AND the guy trying to build the company or product, you’re overworked and hard-pressed to get it all done.

What’s the alternative?

The drive for perfection, the drive for excellence. That drive starts at the top, becomes infectious and spreads throughout the team.

Don’t mistake this for the over-doing of engineering, where an engineer or developer works to get the perfect code for the sake of perfection and never gets a product out the door.

Rather, that drive to make a product that is excellent from the viewpoint of the user experience.

Couple that with a deadline to avoid the constant and endless “improvement,” and that drive to create a great product and get it to market will overcome the lack of genius. Because that drive results in you or your team becoming a genius. Figuring out how to make something work, simply, elegantly, drives you to become better.

Genius has many qualities. One of those, and perhaps the most under-looked, is hard work.

I am a fan of racing. There are a couple of adages that come to mind. “To finish first, you must first finish.” Having the fastest car on the track doesn’t do you a dang bit of good if it blows up five laps into a fifty lap race, or on the forty-ninth lap. You’ve got to finish to be able to finish first.

In the business world, this means delivering product.

The second adage is, “Winners never quit.” If you do a case study of the top racing or sports teams or athletes, for that matter, you’ll find that hard work, drive, dedication to detail, knowing your business and doing it, never giving up, these are the common denominators of every winning team. Budget helps, but budget by itself won’t get you there.

History is loaded with small, start-up companies that took on the status quo and broke through barriers of every type to be successful.

On the other hand, delivering mediocre products that take a long time aren’t going to take the market by storm. It’s almost as if the intensity and fervor in creating the product translates into the market penetration of a product. Modest dedication, modest product releases, modest product acceptance.

Sure, you’ll find some people and companies who didn’t do anything special and got lucky—but getting lucky is not a great formula for success. Drive, dedication, never quitting, these are the hallmarks of success.

Behind the drive for perfection there needs to be passion. Are you going to work through the night, around the clock, skip the grand opening of Star Wars or Star Trek, to get your product out the door? Will you do “Whatever it Takes” (quoting from Grant Cardone)?

It takes that Drive for Perfection to make it. This fact cannot be understated. If you want your product to go viral, underlying all of the points covered (great product, great Marketing & PR, great support) is the Drive for Perfection.