Your main competitor probably isn’t who you think it is
Never ignore the power of the status quo.
What is your product’s main competitor?
If you’re anything like me, you could write a list as long as your arm of companies — from start-ups to juggernauts — vying for the same group of customers as you.
Competitive analyses and comparison websites pit us against our opposition on a feature-by-feature basis, and the pressure to keep up and get ahead can be unrelenting.
In the melee, we can forget that our arch nemesis — the one that can match us feature for feature — is often not our biggest competitor. Most of the time, especially when we’re innovating, our largest competitor isn’t a company at all.
Your Product’s Biggest Threat: The Status Quo
While we worry about our direct competitors, our customers are choosing the cheapest option: nothing. One Forrester analysis found that 43% of lost IT deals went not to another vendor, but to ‘no decision.’
In other words, the customer decided that their current solution was just fine, thanks.
The status quo could be a spreadsheet, an intern, or an email (as it often is for enterprise products). It could also be simply putting up with some frustration. Either way, these status quo competitors (SQCs) often have a larger market share than any of our traditional competitors.
This isn’t just a problem in B2B sales. In fact, humans seem wired to avoid new solutions whenever possible. One 1988 study found strong status quo bias in the decision-making of university faculty. This bias has been observed in even the most important decisions, like choosing healthcare and retirement plans.
Product managers rarely disregard direct competitors in the marketplace. This article is about the too-often ignored alternatives that can make or break a new product: status quo competitors. You’ll learn why companies systemically underestimate SQCs, what happens when we ignore them, and how we can turn the tables.
Dangers of Ignoring the Status Quo
It’s easy to get caught up in racing our direct competitors: they are very visible, and it’s easy to compare them to our own product. Ignoring the status quo, though, has dangers of its own:
Taking Your Eye Off The Ball
Your job isn’t to match your competitors’ features; your job is to solve the customer’s problem. Following your direct competitors is tempting — you never know which of their features will lose you a customer — but spending your resources blindly imitating the work of others is a risky strategy. You wouldn’t let them come into your office and prioritise your roadmap, so why let them do it implicitly?
Implementing a feature offered by a competitor can be the right move, but only if it serves your customers.
Money on the Table
Depending on your market, the number of prospective customers using a Status Quo Solution could dwarf the number of customers who are actively looking at you or your competitors.
By spending your energy chasing customers who are already looking, you could be ignoring a huge group using SQCs — and who aren’t aware how your product can improve their lives.
Does My Market Have a Big Status Quo?
Not all industries have large SQCs to contend with. The size of your SQCs largely depends on the extent to which market participants already believe a product like yours is necessary.
Car companies don’t worry much about the status quo. A 2015 Pew Research Center study found that 88% of Americans live in households which own at least one car. For most of us the question is not whether to buy a car; it’s which car to buy.
eScooter companies, on the other hand, are selling a much newer concept. Unlike car companies, they are mainly focused on the status quo. Lime isn’t trying to lure you away from Bird, they’re trying to convince you not to just walk.
When trying to figure this out for your own market, ask: “is this something everyone already buys, or am I trying to convince them to buy something new?”
If you’re trying to enter an established segment, your focus should be on the established players. If you’re creating a brand-new segment — as many tech companies are — you may have no direct competitors at all.
Finding Your Status Quo Competitors
The first step in tackling your Status Quo Competitors is finding out what they are.
This can be a difficult process, because SQCs are generally more diverse and harder to find than your direct competitors.
A list of Jira’s direct competitors might look like this:
- Monday
- Basecamp
- Productboard
- Trello
Conversely, a list of their status quo competitors will be more complicated:
- Planning in MS Word, roadmapping in Excel, assigning tasks using email
- A daily meeting where everyone reports their progress and the PM hands out instructions
- Keeping teams under 5 people so everyone can keep up using brainpower alone
The Power of the Internet
If your product solves a problem, chances are pretty high someone’s already written a blog post about how they solve it. Search the web for blogs in your industry, and try to find out how different sized companies currently tackle the problems you’re trying to solve. Some may pay an existing competitor of yours, but many won’t, and it’s those techniques you’re looking to identify. These are the SQCs you’ll have to beat.
Ask “How Do You Solve This Now?”
Interviewing current and prospective customers can be a gold mine for product managers, and this is no exception.
Ask current customers “How did you solve this problem before you used us?” and potential customers “How do you solve this problem now?” to get a sense of your product’s SQCs.
Talk To Your Salespeople
If your company has them, salespeople are often a treasure-trove of valuable insights about customers. They usually have more experience with fighting status quo solutions than anyone in the company, and will be more than happy to share that knowledge with you.
Overcoming Status Quo Competitors
Now that you know what you’re up against, it’s time to start competing. Just as with direct competitors, it’s important not to get so caught up in fighting feature-by-feature that you forget the customers’ problems, but you’ll still need to be better than the status quo if you want to create a space for yourself in the market.
Understand Their Advantages
Take the time to understand what your SQCs do better than you. Perhaps people from multiple organisations need to work on the task, and an Excel spreadsheet is something everyone can open and use. Perhaps the task requires interfacing with existing systems, which can import and export Excel files easily. Whatever the advantages of the SQC, you need to understand them and (depending on how prevalent they are in your market) prioritise your roadmap to match them.
Explicitly Position Yourself Against Them
Depending on how large a threat they are, you may want to position your product as a better alternative to your prominent SQCs explicitly. In other words, your customers need to know how you’re better than a spreadsheet. If your messaging doesn’t convey that clearly, status quo bias will kick in and your customers will play it safe.
Answer the “Why Now?” Question
Product positioning expert April Dunford recommends answering the “why now?” question to combat SQCs.
“To fight the status quo you have to give buyers a real reason to act right now. Strategic use of trends in your positioning can help break through this. It helps buyers see how your product lines up with bigger initiatives, and the downside of not acting right now.”
If you help your market understand why the status quo isn’t going to continue to work, you motivate them to make a change.
Conclusion
As product managers, it’s easy to get distracted by competitors who are easy to identify to the detriment of non-obvious alternatives, even though they may be stealing a great deal of our potential market.
Understanding your customers’ status quo solutions is key to converting new customers and to comprehending their needs. Ignore status quo solutions at your own risk, especially in new market segments, where they will have entrenched, dominant market share.
By discovering our SQCs, we can target them explicitly and prioritise our work to make sure we’re better than the alternative.
If we do that, we can help our customers leverage technology to the fullest, grow our market, and create happier stakeholders.
