“I’m not sure about naming competitors in our customer survey. Isn’t it risky to name potential replacements for our products? If we talk about specific competitors, are we introducing the market to other options out there? Would we be planting seeds of doubt about our offering?”
Marketers everywhere consider these questions when conducting market research. Everyone wants to know more about their customers and their customers’ choices, but many are worried about opening up a can of worms that may lead potential buyers to the competition.
So what’s the right approach?
The answer hinges on two additional questions:
- How familiar are the customers in the market with the existing competitors already?
- How much of the market will be influenced by the survey?
Back in the good ol’ days, companies had more control over the flow of information (including access to competitors). Now we exist in the Age of the Customer, where businesses must adapt within a customer-led market.
In most situations, it’s naïve to believe that customers are not aware of other alternatives in the market: we’re hit with thousands of ads per day, and our understanding of the options available to us has greatly increased. The vast majority of customers conduct some form of online research before ever talking to a salesperson (B2B) or purchasing something (B2C). In fact, several studies show that as many as 94 percent of consumers search online before purchasing in B2B and 82 percent in B2C environments.
A huge portion of customer journeys start on the web these days. Most web traffic is indirect, meaning that consumers aren’t searching for you by name, they are searching for some type of solution and your name comes up as an option along with others.
Companies can either recognize this uncomfortable truth and gather the competitive intelligence data they need to win in their market, or they can tiptoe around it and end up being less effective.
What’s in it for me?
Customers are making the choice, so asking customers about competition is one of the most effective ways to learn who your competition is, how they influence your customers’ choice, and how you stack up compared to the competition. It’s not just about the value you offer—your customers’ choices are based on the perceived differences between you and your competitor.
But what do we really mean when we refer to a “competitor?” A competitor is any alternative (other than yours) that a customer considers when making a choice. The competitor may be a company that sells the same products as you. Alternatively, it might be an activity, very different from yours, that competes for the same time or money. In either of these cases, it is your customers who define your competition because they are the ones making the choice—not you.
Asking customers directly about your competitors may go against all of your natural instincts. However, avoiding the topic, especially when you need to make tough business decisions, is one instinct that can do more harm than good.
I think I’ll sit this one out. I’d like to avoid the risk…
The hard truth is that most of your customers are already aware of your competitors. If you don’t gather this type of competitive intelligence, you are likely taking these risks:
- You may overestimate how loyal your customers are to you.
- You may underestimate your competitors’ influence or misjudge the key factors that are driving customer choice.
- You may completely miss your true competitors from the viewpoint of your customers.
But… what if….?
Let’s suppose you do introduce a fraction of your customers to these alternatives for the first time. Unless you are a small B2B organization sampling 100 percent of your clients, your research will only touch a small fraction of your total customer base and therefore only has the chance of influencing a fraction of your market. Only a fraction of those customers will likely be previously unaware of a particular competitor (especially if that competitor is significant enough for you to be asking about it on your survey).
If you’re concerned about advertising for your competitor, you can make sure that you perform your customer research at points in the customer journey where it is most natural to ask about competition. For example, when a new customer joins, you can ask them what they were doing before. When a customer leaves, you can ask them about where they are going.
If you’re still nervous, do a couple qualitative interviews with customers to explore their understanding of the competitive market and confirm what they already know. Asking questions like, “What have you done in the past to solve this problem?” or, “If you weren’t using us, what do you think you would do instead?” are good ways to have your customer tell you about the competitors on their mind. Then you can ask more detailed questions about the competitors they name without introducing any new ones.
In almost all cases, even when customers are not aware of specific competitors, they are generally aware that they have alternatives. When you ask about competitors, it communicates respect to your customers, because you demonstrate that you recognize that they have options and that you appreciate their business enough to ask how you can be better.
About the Author: Bart Frischknecht, PhD, is the Vice President of Research at Vennli. Bart is passionate about using data to understand customer choice to drive strategic decision making. At Vennli, Bart leads initiatives related to strategy and customer experience.