Published August 13, 2024 by David Hecht
Last Updated October 29, 2024
Whether you are working at an established company or an early stage startup, people need to understand your product and your business. And as a sales leader or founder you may frequently be asked “How are you different from Competitor X?” or “Why is your Product better than Product Y?”
There is basically one correct answer to this question, and the competitive positioning that you use can make the difference between moving the sales process along versus derailing the conversation.
“Competitor X is a good company, but…”
You should commit this phrase to memory and use it often. Everyone needs a frame of reference, to compare to something they are familiar with or other options they are considering, whether they be potential customers, employees, or investors. How you respond can be more critical than you think.
After speaking positively of the competitor your prospect asked about, explain how your company is better, ideally using a differentiator or area of specialization that Competitor X doesn’t have (or doesn’t focus on).
You should shift the focus to what makes your product or service unique and beneficial for the prospect. Then explain how your solution can specifically meet their needs better than the competition.
By speaking to your company’s unique selling proposition (also referred to as unique selling points), while not dismissing the competition, you will build trust and credibility.
🖙 Pitching InvestorsIf you find yourself pitching investors, this is a related but somewhat different version of the question — sometimes they want to hear how your company is similar to a business they are familiar with, not necessarily differentiated. Investors analyzing many potential investments are often guilty of “pattern matching” to quickly fit you into an area they understand (and hopefully want to put money into), or to make sure you are “the same” as a company that already was funded / successful. If you criticize the competition, however, it may give investors the impression that a) your company is not doing well, and you are jealous of the competitor or b) that you haven’t properly evaluated the competitive threats to your business, and are not taking the competition seriously. |
Customers are important to get this right with, as a savvy buyer will ask about the competition for the same reason they ask about discounts — mainly to see how you respond, as well as gather information. If you speak badly of the competition, it reflects negatively on you as a salesperson. Negative comments can even create the impression that you are threatened by the competitor, so they may in fact be a better option than your company.
Even if the competition has a terrible product or no support, you should be very careful about saying anything negative about the competitor. Find a way to allude to the competitor’s problems in a roundabout way, if you must, but tread lightly.
Above all, be honest about the differences between your product and the competition. Transparency builds trust and can differentiate you from others who might criticize or overpromise.
While you don’t want to overdo it or give the impression that a competitor might be a better choice than your company, there are a number of surprising advantages to speaking favorably of your competitors in a sales conversation.
🖙 Practice Sales LessonProspect: “How does your product compare to [Competitor]?” Salesperson: “That’s a great question. [Competitor] is a reputable company with some good features. However, our product stands out in a few key areas that might be particularly beneficial for you. For instance, our advanced analytics feature can provide you with deeper insights into your data, which can help optimize your strategy. Additionally, our customer support team is available 24/7, ensuring that you get the help you need whenever you need it. Customers rave about them in our online reviews. Can you tell me more about what specific needs or challenges you’re looking to address? That way, I can provide a more detailed comparison tailored to your requirements.” |
Many years ago, when I was running sales & marketing at GoGrid, we had a much larger competitor that shall remain nameless to protect the guilty. Suffice it to say that they were a publicly traded web hosting company, while we were more of a bootstrapped operation.
One of their sales leaders apparently used to tell prospects how bad our company was, how our technical support was unresponsive, our data centers unreliable, our product horrible, etc.
Maybe it is the power of reverse psychology, or simply the skeptical nature of smart web hosting buyers, but we received a number of calls that went something like this:
“I was not familiar with GoGrid, but this guy at [Competitor X] kept talking about how terrible and evil you are. He seemed really threatened by you, so I wanted to see what all the fuss was about, and figured I’d get a quote from you.”
The irony was, that normally when we went head to head with this larger, better known competitor, we typically lost the deal almost 2/3 of the time. And this manager’s poor sales technique was sending prospects over to us, in many cases when we had not even been in the running originally.
Unfortunately that sales manager either wised up or was fired, and the sweet slander that generated free leads for us eventually came to an end.
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