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The Competitors You Aren't Thinking About | Understanding Alternatives

blog blogpost business strategy competition strategy Mar 27, 2024

Think about your top competitors. If you’re like most owners, you can easily name 2-3 companies you regularly compete against. It might be directly competing on bids for the same project or just a shared target market. As we’ve often written and spoken about, finding your competitive edge is critical to your long-term success, right?

In my experience, though, the biggest long-term threat to your success isn’t your direct competition. In other words, it’s not businesses offering the same thing you do with just a slightly different flavor.

The #1 threat to your success will likely emerge in your blind spot. It comes from businesses that solve the same problem but with an entirely different approach.

Welcome to the world of alternatives.

Defining Alternatives – When Markets Change

We’re all familiar with some of the big alternative stories. Think of Netflix knocking out Blockbuster. Think of Amazon vs. brick and mortar. Famous brands aren’t the only ones affected by alternatives. I’ll give you an example from one of our clients.

A 65-year-old privately held company with 80% of its revenue from oil deliveries was experiencing changing market conditions. Customers were switching to natural gas. If they focused on their direct competitors—oil delivery companies—then extinction was the direction. The alternative (natural gas and some renewables) was changing the landscape.

In our work together, we repositioned their brand, strengthened their sales and marketing, and rapidly grew their HVAC (the equipment) customer base. Today, oil deliveries are about 25% of their revenue with continued growth on the HVAC side. (You can read/watch the story here.)

This story represents a win, but I’ve seen many businesses watch revenue decay - even though it’s not going to direct competition. The market can quietly move on without you (another great example from large companies: Kodak focused on Fuji in the battle for film supremacy - just as smartphones replace cameras!)

Assessing Your Market Share

So, how do you spot alternatives emerging in your space? 

They may be harder to recognize because they don’t do the same thing you do or talk about it the same way in their marketing. So, what do you have in common, then?

The Answer: You solve the same problem for the same customer.

In that sense, McDonald's DIRECTLY competes with Wendy’s for drive-through burgers.

But in inflationary times, they also compete with supermarkets’ fast meal offerings.

Two different models and value propositions compete for the same lunch.

This is where it pays to be incredibly clear about the problem you solve and how it fits into your customer’s experience. What does your offer enable them to do or avoid? What are your customers really looking for when they buy from you?

Common Types of Alternatives to Watch For

Alternatives tend to fall into a few simple categories. From process to technology to culture, being aware of shifting trends is what we want our clients to look for. Here are a few examples.

Technology Alternatives: How are companies in your space using technology to make working with them more accessible, integrated, and convenient?

Behavioral Alternatives: Mountain Dew’s biggest competition isn’t other sugary sodas – it’s healthier alternatives. Have customers' wants and expectations changed for providers like you?

Economic Alternatives: How is your ideal customer (not the market at large) doing financially? Are their budgets tightening? Maybe they’re experiencing abundance and more buying power. As budgets change, purchasing decisions change.

DIY Alternatives: This doesn’t apply to every business equally, but many industries are experiencing “democratization,”—meaning more people have direct access to technology, products, and solutions. Is your target market becoming more interested in DIY’ing or in-housing something you provide?

Learning From Alternatives

If you take anything away from this reflection, I don’t want it to be a fear of alternatives. Can they disrupt markets? Absolutely. But how they disrupt markets is what we can learn from.

Alternatives matter because they identify new and potentially better ways to solve a problem. While you might not be able to pivot your business (especially when you have personnel and infrastructure invested in doing what you do the way you do it), you can adapt your offer model to keep pace with your ideal client better.

For example – realtors tend to hate Zillow, but Zillow exploded because they made it easy for potential buyers to browse the market digitally. Taxi drivers tend to hate Uber, but Uber made it much easier for riders to get home from the airport - even select the kind of car they want and track its availability. 

The key here isn’t to draw a line between yourself and the alternative. It’s to learn from them and adjust to better align with your ideal customers.

If you want this to hit home, consider these two questions:

  1. Who are our alternatives? How are they solving our ideal customer’s problem differently?
  2. Can we adopt or adapt any parts of their model that provide more value to our target market?

(A good filter for #2 is the 4 ROI Stories model you can check out here.)

Time to Re-ignite Your Strategic Plan?

Conversations like these are critical to protecting your business's long-term success. Remember that oil delivery company I mentioned before? 

In the words of one of their owners, “I don’t think we’d be here today as a business if we hadn’t had this help.”

Don’t neglect creating and evolving your strategic plan. For owner-led businesses, you often wear too many hats to give much time to true strategic direction. It’s a recipe for wasted time, effort, and resources.

At Value Prop, we help owner led B2Bs establish a strategic growth plan that reignites revenue growth. Whether stuck on a revenue plateau or slowly sliding backward, it’s time to align your resources for maximum impact. We do this through our Revenue Throughput Process which helps you identify precisely what’s keeping you from the success you’re looking for - and what to do about it!

Take your next step – schedule a discovery call with our team and see if our approach is the right fit you’ve been looking for.