A little competition can be a good thing. It motivates us to spend those extra hours on a funding pitch, follow up on every lead, and stay up-to-date on the latest tech trends.
But in our experience, many B2B startup founders are a little too obsessed with their competitors. This is a problem because it takes away focus from what matters most: your own customers and the unique solution you have to offer them.
To be clear—we’re not saying B2B startups should ignore the competition. After all, successful positioning comes from a deep understanding of the competitive landscape. But there’s a difference between being aware of your competitors and obsessing over their every move. If you find yourself awake at 3am scrutinizing a competitor’s website or LinkedIn page when you should be sleeping, this post is for you.
How competitor-focused should B2B startups be?
Well, that depends. Let’s use Startup A as an example. They sit in a well-established category. Lots of companies have a set budget for what they offer, and they don’t need to spend much time educating their customers. When winning customers is a game of market share (played out via price wars and feature checklists), keeping tabs on the competition is a smart move.
Now, let’s look at Startup B. They’re in a new category that didn’t even exist a year ago. They’re not alone—there are 2 similar seed-stage companies—but they don’t need to lose sleep over that fact. This is because, for Startup B, the top reason they don’t land sales is because the prospect decides to do nothing. In essence, their primary competition is not another company, but the possibility that their customers will disengage. The takeaway? Startup B needs to focus more on educating buyers, and less on other companies in the same category.
If your company is more like Startup A, you should be thinking about your competitors. But you still need a healthy, controlled approach to competitive analysis.
Healthy competitive analysis for B2B startups
Competitive analysis helps you anticipate market shifts and zero in on strategies to reach your audience. But be careful: the process involves a close inspection of your competitors. It can be easy to get distracted and discouraged if you don’t approach it with the right mindset. Here are three strategies to keep you on the ball:
#1 Remember the goal is to differentiate, not imitate.
What’s the point of competitive analysis? Hint: it’s not to understand what your competitors are doing so you can imitate them. The point of competitive analysis is to understand where you fit into the competitive landscape. This means getting a grasp on who your audience is and how your product solves a specific problem for them.
When it comes to your marketing strategy, the same concept applies. You might look at competitors and think: “They’ve hosted 2 webinars this quarter… we need to do the same thing to keep up.” But keep in mind that their audience and channels may (and often should) be different from yours.
Another common mistake: focusing on the competitor’s tech instead of simple (and more memorable!) thematic differences. Your pitch should tell a story, not overwhelm your audience with technical information.
#2 Be methodical and set boundaries.
Approaching competitive analysis in a systematic way takes some of the emotion out of the equation. It also keeps you focused on the critical path. Because meaningful research on your competitors requires time and effort, it works best when you set a cadence and stick to it (e.g. 1-2 times per quarter). To spot competitors in unexpected places, you need fresh eyes and an open mind, something you won’t have if you’ve been obsessing 24/7.
Another strategy is to let someone else do it (your co-founder, your advisor, or any other trusted team member), and have them share their findings. This cuts out the noise and helps you zero in on the most important competitors: the ones who present the most threat or you have the most to learn from.
#3 Channel the spirit of “healthy competition.”
Instead of discouraging you, your competitors should motivate you. It may be a cliché, but healthy competition really does encourage good customer service, quality products, and fair pricing. Plus, the fact that your competitors exist at all means the problem space you’re working in is a real one with value for your customers (read that last sentence again).
The bottom line
Early stage B2B startups shouldn’t let an obsession with the competition distract them from what matters: reaching and providing value to their target audience. Competitors should be a source for information, not instructions.