Your competitive set may be a lot different than you think.

Years ago, when I was young and stupid and working for a big advertising agency, I was part of a team that pitched a big television campaign for a packaged goods company.  We spent weeks on a flashy presentation (quite literally:  it was 1999, and using Flash in a boardroom presentation was still considered cutting-edge), packed the room with black turtleneck-wearing hipsters, and did the elaborate ad agency tapdance.  We had feelers out at the 3 other agencies we knew were in the running and were certain we'd totally outperformed them in every way.

We didn't get the business.  Neither did any of the other agencies.  It went to a couple of guys we'd never heard of who'd invested in some digital equipment and some super-creative spec work, and offered the client a whole set of commercials for less than we'd budgeted for a single spot.  And it turned out that the client was sick of high-octane presentations that tended to have little or nothing to do with the quality of the final product.

These days, I'm on the other side of the equation:  Half the time we get a new client, it's because some marketing/design company pitched them on a website that was going to cost  $30,000 and take 3 months to build, with an incremental $1500 tacked on for connecting their Twitter feed to their Facebook page.  Sooner or later, the client expresses their incredulity to someone else, who says "Why don't you just call Sarah at StayAwake, because she can at least tell you if that's realistic."

I guarantee you that the other marketing/design company had never heard of us - and in fact I've had the odd angry phone call demanding to know who in fact we think we are - and never considered us their competition.

A different economy means different choices

It's not even as simple as choosing one marketing partner over another, either.  It's that when an individual has $100 to spend on something personal, they're choosing between clothes and perfume, or between eating out and buying a lamp. When an employer has $10k to spend on employee development, they're choosing between a training program or a rewards program.  Or when a company has $1 million to spend on growing sales, they're choosing between infrastructure and marketing.

And don't forget that your customers may not see your competitive set the same way you do.  In my experience, above, we naively assumed that the client was only going to consider other 'big agencies' - but they were looking at a much broader set of possibilities.

Defining your competitive set

Fully understanding just who and what you're competing against for your customers' time and money has a lot to do with your industry, price point, and proposition, but asking these questions will help you get a better handle on what your competitive set looks like:

• Are you selling a commodity where customers can compare apples to apples?  Or a service which has all kinds of different variables?
• What do your customers have to give up in order to purchase your product (i.e. if they spend money on your product/service, what will they have to forego buying)?
• When you lose business, who are you losing it to?  Is it the same couple of companies, or a wide variety?
• Who do your customers see as your competitors?  Are you sure about that?
• What is the end result/benefit of buying your product?  What are the other ways a client could get to that result/benefit?

BONUS TIP:  Try pretending you're a potential customer and Google some of the search terms you'd use if you were looking for a supplier.  The stuff that comes up that you thought had nothing to do with your product or service is a good way to start thinking laterally about your competition.

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