Why B2B Companies Should Worry More About Customers Than Competitors

Posted by Douglas Burdett

Research shows that B2B companies with a greater focus on their customers than their competition will grow faster and be more profitable.

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We’ve all seen (or worked for) companies with an unhealthy obsession with their competition. This kind of company makes most of their strategic and tactical decisions based on what their competition is doing, or is about to do.

Bob Parsons, GoDaddy CEO, in one of his popular business advice videos explains that there are three types of companies:

  1. Corporate Centric – Care only about themselves and tend to be abandoned by customers.

  2. Competitor Centric – Only pay attention to their competitors and copy them. They do little that is original and tend to be also-rans.

  3. Customer Centric – Stay focused on the wants and needs of their customers. Successful companies are focused on their customers. 

That is not to say companies should ignore their competition. But the difference is that companies should keep an eye on their competitors to get information, not instructions.

One popular and effective model for monitoring competition is the Porter Five Forces Analysis. The approach was developed by Harvard Business School professor Michael E. Porter and introduced in the 1979 Harvard Business Review article “How Competitive Forces Shape Strategy.” 

This approach helps to keep tabs on the competition, but more importantly, it helps to focus on four key competitive forces beyond direct competitors:

  1. Savvy customers who can force down prices who can force down prices by playing you and your rivals against one another.

  2. Powerful suppliers who might constrain your profits if they charge higher prices.

  3. Aspiring entrants, armed with new capacity and hungry for market share.

  4. Substitute offerings that can lure customers away.

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While monitoring your competition and other competitive forces is and has been important, the primary focus for your B2B company should be on customers.

According to Forrester’s research study, Competitive Strategy in the Age of the Customer,” companies that become obsessed with their customers will rise above their competitors.

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Of course, every company will claim that they are focused on their customers. However, the litmus test is if a company’s customer focus supersedes all other strategic goals.

"A customer-obsessed company focuses its strategy, its energy, and its budget on processes that enhance knowledge of an engagement with customers, and prioritizes these over maintaining traditional competitive barriers. -

Forrester calls customers the “sole source of sustainable competitive advantage.”

According to Forrester’s Josh Bernoff, “Previous sources of dominance -- manufacturing, distribution, even information mastery -- are now just table stakes. This is the age of continuous disruption. Your relationship with customers is the only thing that enable you to survive that disruption .... That's why we are christening this "the Age of the Customer."

How are you monitoring your competition and your customers? 

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photo credit: Tomasz Stasiuk via photopin cc
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