The “new normal” is here. The booming economy of the 90’s and the fall, followed by the rise and major decline of the 00’s have given way to slow growth and tight economic times. The last ten years of the stock market have shown us that prosperity can be fleeting.
Since spending has been cut virtually everywhere, companies are competing for fewer customer dollars. And this is exacerbated by many companies’ business model dependence on growth.
As a result, competition has become more intense. When everybody was competing for a piece of a growing market, there was plenty of room for everybody to succeed. But when that same market slows dramatically, the only path to growth is through increased market share – taking business from others. And many companies have forgotten how to compete in a tough market.
It’s tough to compete without knowing why customers buy. As we look at the competitive landscape, we see some troubling symptoms of the past, where customers were easier to attract. Companies have lost what it means to truly understand their customers and why they buy from one company versus another. This is manifested in their feature-laden marketing materials, and is deeply engrained in their feature-focused competitive assessments. In today’s tightly contested market, meaningful competitive assessments are especially critical.
Although it’s important to know what specific features the competition is offering and developing, features are only fulfillment vehicles to satisfy customer needs. Customers don’t care about products, services or features. They care about how these can change their lives. Companies must make this feature vs. benefit leap if they are to succeed in a tough market. They must fully understand their customers’ needs, and they must understand how the competition is addressing those needs, both today and in the future.
Would you like to understand the features and specifications that your competition will offer against your new product next year, or do you also need to know how each of those issues affects your customers’ purchase behavior? The difference is critical for two important reasons:
- Although companies may think they know why - or whether - each feature is important to customers, our experience is that this is not necessarily the case. We have found time and again that this connection is not well understood.
- Different companies may address the same customer problem in wholly different ways. You are not competing with others based on features, but rather you are competing with them based on how customers perceive you will improve their lives.
It is powerful to fully understand your customers and your competition. We spend a great deal of time talking with customers. These in-depth conversations help us understand customers’ challenges and goals and how our client might better address them. From this insight comes compelling value propositions that address true customer purchase behaviors. We find that further work is required to develop an understanding of how competitors address those same customer issues – not simply feature lists for the next generation of any competitor’s product line, but market-focused insight into how these other companies will solve customer problems. Generating this insight requires as much discipline as the customer insight, and it’s essential to development of a market-focused value proposition. Bottom line, a value proposition is a complete articulation of a business opportunity only if it clearly articulates how an offering compares to competition on each customer issue. Customers buy based on comparisons among their alternatives, not on absolutes.
Having developed strong value propositions from these market-focused insights, you now have a framework around which to build products and services that fulfill customers’ real needs more effectively than the competition. You also have a much stronger basis for powerful customer communications that address their needs rather than simply your products and services.
In today’s tight market, success demands that companies understand their competition as well as they do their customers. You can improve your chances of success if you employ this market-focused approach to competitive intelligence.
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