Home How Startups Can Use Their Competitors (Instead of Just Avoiding Them)

How Startups Can Use Their Competitors (Instead of Just Avoiding Them)

In the world of startup entrepreneurship, competition is a major problem. If there’s another business offering a product like yours — to a market like yours — it’s treated as an existential threat, and rightly so. If a competent competitor is capable of offering superior exchanges for consumers, they’re going to leave your company for theirs (no matter how loyal your customers may seem).

Accordingly, a major strategic element for any startup is figuring out a way to deal with competition. For the most part, this involves a series of strategies that can be broadly classified as self-improvement or avoidance.

In self-improvement strategies, a startup seeks to improve itself such that a competitor can no longer contend with it. For example, you may attempt to cut your prices dramatically so your product is more objectively favored by the logic-driven customers you share. You might also improve customer service, expand your offerings, or make things more convenient for your customers.

In avoidance strategies, a startup attempts to minimize competition altogether. For example, you might tap into marketing strategies that your competitor has never considered or target a completely different niche to avoid direct conflict.

In rarer cases, a startup may seek to undermine or attack a competitor in a sabotage-style attack. But aside from being borderline unethical, these tactics are often nowhere near as cost-efficient as straightforward improvement or avoidance strategies.

But what if there was another option? What if you could use your competition as a source of development and improvement?

The Premise

Let’s start with an outline of the basic premise.

Your competitors are powerful forces in the industry. As an illustrative metaphor, let’s consider them a powerful fighter in the ring. Traditional approaches encourage you, another fighter in the ring, to confront them head on, train to improve yourself as a fighter, or increase your agility so you can avoid their attacks.

But there are other ways to approach this situation, which derive their power from the strength of your opponent. For starters, you can use the opposing fighter’s momentum and strength against them; the “bigger they are, the harder they fall” style approach. You can also work together with your competing fighter against a bigger, even more powerful enemy.

A Merger

One straightforward, if rarely appealing, option here is a merger. If you and your competitor have a similar business model and you’ve split the market down the middle, why not join together and multiply both your strengths?

Mergers aren’t always possible, nor are they always preferable. In some cases, joining together can make you much more powerful than the sum of your parts. In some cases, a merger is the first step on the fast track to collapse.

And of course, there’s always the possibility that your competitor won’t want to consider a merger in the first place. But it’s worth considering – especially if you’re tired of trying to make the conventional paths of competition work in your favor.

Research and Understanding

Before you even launch your business, you should be using your competitors as a source of research, information and understanding. Competitors are your biggest lenses into the world of your industry, and they have much to tell you about how you should be structuring and supporting your business.

For example, consider:

  • Satisfied customers. How many customers does this company have? Are they satisfied? Why are they satisfied? What is it that this company does that makes people keep coming back to them? You can use this information to refine your own products, services, and customer offerings.
  • Unsatisfied customers. Even more importantly, why does this company have unsatisfied customers? When people leave this brand, what is their primary motivation? Are they looking for lower prices? Are they unhappy with the level of customer service? You can use this information to develop a better offer for your shared audience.
  • Sources of innovation. What are the biggest areas of innovation for this competitor? Where does their product or service out-compete other businesses in this industry? What are their areas of specialty?
  • Weaknesses. What are the biggest weaknesses of this competitor? Is it possible to exploit these weaknesses in the course of your business’s development?

Brand Equity and Brand Jacking

Let’s say you have a competitor who’s already well-established in the industry. They have 10 times as many customers as you have and they’re practically a household name. What if you could use the power of their existing brand name for your own benefit?

Brand names have power, which we’ll call “equity.” And that equity can be tapped into. Consider brand jacking, a strategy that relies on your ability to derive power from someone else’s brand.

For example, by using the power of search engine optimization (SEO), you can write content optimized for brand-specific keywords belonging to your competitors. When a potential customer searches for the brand, they’ll likely see your competitor in the top position in search engine results pages (SERPs).

But in the second position, they may see an article you’ve written titled something like, “The Top X Alternatives to [Brand Name].” It’s an easy way to leech traffic from a competitor, using their own brand equity against them.

You can also practice this strategy by utilizing pay per click (PPC) ads based on your competitors’ brand name keywords and phrases.

Lifting the Industry

Oftentimes, good PR and marketing isn’t just about improving the reputation or visibility of your company – it’s also about improving the reputation and visibility of your entire industry.

If this is the case, consider looking for opportunities where you and your competitors will mutually benefit (and take advantage of them). For example, if a competitor announces expansion into new territory, that could mean increased exposure for the entire industry.

Even if the expansion is likely a threat to your brand, it also presents new opportunities – which you can find and tap into if you’re willing to lean into the new publicity.

Complementary Offerings

There may be areas where you and your competitor directly compete, but there may also be areas where you have complementary offerings. If this is the case, you may be able to work together to provide your mutual customers with a more comprehensive, singular experience.

For example, you can use your competitor as a third-party vendor for a service you may be unable to provide on your own. It’s a risky maneuver if you stand to lose the customer to a competitive offer, but you may also be able to arrange a white label provision of service to minimize this possibility.

Collaboration and Cross-Promotion

Have you ever considered working directly with your competitor on a new piece of content or a new marketing campaign? By combining your data sets, your resources, and your pool of experts, you can likely create something more interesting and more valuable than either of you could by yourselves.

Consider working together on an industry whitepaper, an eBook, or even a podcast or video series designed to support the industry. It’s the perfect opportunity for shared cross-promotion.

Referrals and Trading

Referrals have enormous power to grow your business. But prior customers don’t have to be your only source of referrals. You could set up a dynamic cross-referral program with a competitor, trading leads and referrals on an as-warranted basis; for example, you could forward excess customers to your competitor if your backlog begins to get unwieldy. In exchange, they could pay you a referral fee and/or send you referrals when the tides turn.

Your competition is always going to be a threat – but it doesn’t have to be a threat exclusively. In addition to adjusting your business to minimize the peril of direct competition and improving your business overall through innovation and development, consider making use of your top competitors. It’s a counter-intuitive strategy, but can be quite a powerful one if used properly.

Image Credit: @ run 4 ffwpu; pexels

About ReadWrite’s Editorial Process

The ReadWrite Editorial policy involves closely monitoring the tech industry for major developments, new product launches, AI breakthroughs, video game releases and other newsworthy events. Editors assign relevant stories to staff writers or freelance contributors with expertise in each particular topic area. Before publication, articles go through a rigorous round of editing for accuracy, clarity, and to ensure adherence to ReadWrite's style guidelines.

Timothy Carter
Chief Revenue Officer

Timothy Carter is the Chief Revenue Officer of the Seattle digital marketing agency SEO.co, DEV.co & Law.co. He has spent more than 20 years in the world of SEO and digital marketing leading, building and scaling sales operations, helping companies increase revenue efficiency and drive growth from websites and sales teams. When he's not working, Tim enjoys playing a few rounds of disc golf, running, and spending time with his wife and family on the beach -- preferably in Hawaii with a cup of Kona coffee. Follow him on Twitter @TimothyCarter

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