Should You Focus on Your Competition?

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You've got the questions,

and we have the data.

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This is the ProfitWell Report.

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Hey, Neil.

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Landon here, cofounder of

User Feed and Ad Reform.

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Just had a quick

question for you.

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Should you focus on

your competitors?

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Thanks. Focus on your customers.

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Don't even think

about the competition.

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Being in product,

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I've heard this advice consistently

for the past couple years.

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Yet when I dig into why,

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the responses are pretty

lukewarm and appeal to a time

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of tech companies past when

there were only a few companies

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in existence for each space.

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What does the data actually say?

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Well, to answer this

question around competition,

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we're gonna look at two and a half

thousand subscription companies.

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Denying competition has

increased is a fool's errand.

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When surveying executives

and founders around how many

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competitors they had in

their first year of business,

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we find that those who started

their business five years ago

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were looking at two

to three competitors,

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where as those that started a

year ago were looking at double

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digit competitors.

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The rise in competition though

doesn't mean that you shouldn't

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focus on competition.

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Yet, when we explore

marketing data,

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it turns out that some level of

competitive focus does in fact work.

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Customer acquisition cost or

CAC is roughly fifteen percent

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lower for companies with

a competitive focus,

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which includes comparison pages,

competitive ads, and the like.

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When done well, the data suggests

that competitive comparisons can

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actually help buyers

make a decision.

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Right?

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Because they're already doing

research in a competitive market,

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so it stands to reason that

you should help them with the

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research and respectfully show

the differences between you and

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your competitors.

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Product is a whole

different issue though,

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where those companies with

a competitive product strategy

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are actually doing worse

from a customer satisfaction

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perspective when measured

through Net Pro order score.

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These competitive focused

product teams are seeing

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roughly fifty percent lower NPS

scores compared to their non

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competitive focused

counterparts.

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And note that this trend

has actually remained fairly

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consistent over the

past number of years.

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So should you focus

on your competition?

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Well, it's hard to say. Right?

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You never wanna do anything

that sacrifices product quality,

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and and the data does suggest

that these companies who are

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focused on competition are

presumably good at lowering

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their CAC, but not so great

at defending their NPS.

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Another possible outcome here

is that these companies aren't

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disciplined enough to focus on

competition in the right places

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and ignore competition

in the other places.

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Like most cliches,

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this comes down to the

situation and your discipline.

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Well, that's all for now.

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If you have a question,

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send me an email or video

to neil at profit well dot com.

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And if you got value here or

any other week of the report,

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we appreciate any and all

shares on Twitter and LinkedIn

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because that's how we know

that we should keep doing this.

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I'll see you next week.

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