Last week, I asked you if you’ve been spending more time on competitive analysis than on customer analysis. Today I want to dig a bit deeper into the competitor theme and examine whether having a lot of competition is a bad thing.
Conventional thinking would have us believe that the best position for a technology company is to have an uncontested market for some solution that lots of companies need. But is that really a good thing? I don’t think so. I think that zero market competition is an indicator that there is no market at all. If that’s the case, you’ll have an uphill battle convincing companies that they need what you offer. It’s an expensive and long process to develop a completely new market.
Very Little is Truly Uncontested
In a market as mature as the financial services industry, I would argue that there is very little that is truly uncontested. Either there is no need for a given technology offering, or people are already meeting that need in some other way. Their approach may not be as efficient, but that’s still competition.
Market Competition Can Be a Good Thing – Especially for Disruption
I don’t think competition is a bad thing. In fact, I can tell you two examples I’ve personally experienced where fierce competition has actually served to grow a market that was ripe for disruption.
Complex Event Processing Example
Back in 2005, a business partner and I formed a company called Kaskad Technology in the then nascent space of complex event processing (CEP). Back then, there were 4 key competitors targeting the institutional trading space, and Kaskad was a late entrant. We were competing against Tibco, Streambase (later bought by Tibco), Apama (later bought by Progress Software and then Software AG), Coral8 (bought by Aleri), Aleri (bought by Sybase). All of these companies were relatively small, scrappy startups trying to build up interest in a new, disruptive technology.
Making a Lot of Noise
All of us were investing in marketing and making as much noise as we could in the industry. We were using content marketing, blogging and online communities (just before the dawn of social media; the first tweet was sent on March 21, 2006) to get the message out long before either approach was popular as a marketing strategy. As these firms steadily built awareness and won some deals, they were able to prove multiple use cases for CEP. In 2005 and 2006, there were very few banks or vendors using the technology. Fast forward to 2010. By then, nearly every vendor selling low latency technology claimed to incorporate CEP in their technology, and nearly every bank had some sort of CEP implementation. The concept is now mainstream.
A Rising Tide Lifts All the Boats
I do not believe that the market growth we achieved would have been possible if it weren’t for all of the competing companies working to build the market. You might believe from my telling of this story that we were all working together. But believe me, we were not. There was extremely fierce market competition amongst the various CEP firms. Kaskad didn’t survive, unfortunately. But all of the others went on to be successful businesses that were later acquired.
Content Marketing Example
My current industry is another great example. Five years ago, when we started pursuing content marketing as our core strategy, there was almost no competition in the financial services space – particularly not in institutional trading. As a result, it was a bit of an uphill battle to win new clients over to this sort of marketing strategy. Today, more and more companies are starting to offer content marketing services.
Building Awareness in Financial Services
This has been surprisingly helpful for our business. Specialists in the content marketing industry have been trying to penetrate financial services industry for a few years, and they’re beginning to be more effective in getting the message out.
We don’t spend much money on advertising, trusting our content and inbound methods to generate leads. This has worked consistently for the past 4 years, and we have not had to do any outbound sales.
Prospective Customers are Better Educated
In the past year, I’ve noticed that prospects come to us much more prepared to discuss content strategy than ever before. We get calls from prospective clients asking us to help them with their strategy rather than expecting us to jump right into creating content. Their executive teams are better prepared and are quicker to understand the concepts and value of content marketing.
Competitor Noise is Helping Build the Market
I attribute this to the fact that they’re hearing the content marketing message from other firms as well as our own. The noise that our competitors are making is serving to build up the market, and as a result, PropelGrowth is growing. We’ve had to hire several new team members to keep up with demand.
So you tell me…Is competition a bad thing?