Why Trying to Achieve Feature Parity with Competitors is a Bad Idea
Stay Focused on Market Needs, not Competitor Capabilities
NOTE: I’ve had a draft version of this post sitting uncompleted for several months now. I saw Andrea Saez’s article recently on the same topic and it inspired me to finish this and get it out there. Thanks andrea saez for the motivation.
In my work, I sometimes encounter B2B software companies having discussions about achieving FEATURE PARITY with a competitor, or closing FEATURE GAPS vs. competitors. This often happens after losing a big deal (or two or three etc.) against said competitors.
And of course we know that the only reasons we lose deals to competitors are:
- Their products have more features
- Their products are way cheaper than ours
At least that’s what you’ll often hear from Sales teams 😆, especially if you don’t do ongoing Win/Loss analysis.
But I digress.
If you are having internal discussions about FEATURE PARITY vs. a competitor, you need to stop immediately.
These discussions and the ensuing work are a losing game, Here’s why.
Who is steering the ship?
For startups competing against established competitors, or in larger companies that have launched a new product, or are competing against a scrappy startup, there’s a period of time where your product is less “feature-rich” than your competitors’ products.
And so you may want to work to gain “feature parity” or reduce the “feature gap” with key competitors. Sales teams will let you know what “features” are lacking because those are the reasons they’ll give for losing deals.
But here’s the issue. Your goal (or one of your goals) as a company and as a Product Manager, is NOT to close the “feature gap” or gain “feature parity” with your competitors. Why?
- You’re letting your competitors, not the market, drive your product investments.
- You’re assuming your competitors have made the right decisions in what they’ve built and why.
- You’re being reactive and playing a game of catchup, instead of being proactive and setting a path to leadership.
- You should be focusing on differentiation and real value, NOT feature-parity and catching up.
Your goal is to lead in some area or segment of the market, and by focusing on what’s important to that segment of the market, build a product, market it and sell it in a way that creates a lead that OTHERS have to follow.
NOTE: Let me say this up front. If there are one or two “features” that you want to implement to close some gaps you’ve identified or fill some commen checkboxes on RFPs, go ahead and do that. But understand that is very different than the idea of trying to hit feature parity with competitors or mimic what competitors are doing.
Let’s look at each of the four points above individually.
1. Focus on the Market, not Competitors
I understand that no one, not just sales people, wants to lose deals to competitors. And the natural reaction is to…well…react. But reacting to your competitor is the game THEY WANT you to play, because as long as you’re focused on them, you’re not focused on the market. And as long as you’re reacting to them, they’re in the lead.
IF you lose a deal (or two) to a SPECIFIC competitor and you KNOW FOR SURE that the reason those customers selected your competitor’s product vs. yours was STRICTLY due to a certain feature that you didn’t have (notice all the caveats), then your next step is NOT to “implement that feature”, but to understand WHY those customers made those decisions. Basically you should be performing some Loss Analysis.
The real reason for a decision is almost never simply the feature that the customer was looking at (a feature is a solution to a need/problem), it was the fact those customers felt that your competitor’s product addressed a specific problem or need they had, better than your product did.
But it could also be the competitor CREATED the perception of a need, and then, with knowledge of your product gap, used that to position your product as a poor choice.
Or it could be that your sales team didn’t understand the need the customer had, or the need the customer believed they had, based on what your competitor was whispering in their ear.
Or it could be some other reason that was only viscerally related to that “feature”. You see what I’m getting at?
The feature is the WHAT. The reason is the WHY. You need to understand the WHY.
Now, as a Product Manager, you have 2 choices:
- You can listen to Sales, hear the need and set out to implement “the feature” (with very little additional information on the why behind that feature)
- Take a step back, understand the problem and market needs, not only what that particular prospect needs (i.e. do some focused discovery work) and decide how to proceed.
I’m pretty sure you can guess that I’m advocating for #2. And I understand that there will be pressure from Sales to do #1 — i.e. implement the feature — and they will make a strong case for it, but they are just doing their job. And you need to do yours.
And this leads us to the next topic.
2. Don’t Trust your Competitor’s Decisions
Your competitors have made decisions and implemented capabilities because they felt it was warranted. Ask yourself these questions:
- Do you know how much discovery work THEY DID, or insight they had, when building that feature?
- Do you know if their implementation actually addresses the problem completely or in the best ways possible?
- Aside from implementing some “feature”, do you think you could also learn about how to better position, market and sell it if you did some of your own research?
- Do you believe your competitor is that much smarter than you that they’ve done a better job than you could ever do?
- Do they have the exact same vision and strategy as you? What is your strategy anyway? Is it to be a fast-follower or to be a leader?
The point here is that you need to do your homework and really understand what you’re deciding to build and WHY. And the WHY is NOT because your competitor has it.
The WHY is because it is important to the market you are competing in (i.e. addresses a real need or provides tangible benefits) AND building it (vs. anything else) will help you compete better, win deals and move you towards the vision you have for your product.
NOTE: If you don’t have a clear, evidence-based vision for your product, you should. It will help drive alignment in your company and give you a basis to decide between competing priorities for your product. The article below provides a detailed explanation of Product Vision and how to create one.
3. Being Proactive and Not Reactive
As mentioned earlier, reacting to your competitor’s tactics is the game THEY want you play. It means, they are leading, you are following.
Now ask yourself what they’ll do when you close the feature gap in one area. They’ll probably start promoting another area where there is a gap, even if it’s not that critical. I’ve seen it happen many times. ‘And don’t forget they’re enhancing their product in ways that you don’t yet know.
The way to deal with this, even if you are worried about losing more deals, is to stop playing their game, and start playing your own.
Look at these diagrams below. This first diagram shows 3 circles.
The green circle is called “Your Company’s Capabilities”, and represents your company AND product, and the entirety of what you offer to the market that would be valuable to them. i.e. product(s) + service(s) + reputation/brand + other factors.
The blue circle is what your (main) competitor offers — products, services, reputation etc. — that is valuable to the market.
The red circle represents that market — the set of potential customers that would buy your product (or your competitor’s product)— and what they want/need.
Now, these 3 circles can be represented in a Venn diagram as follows:
- Your differentiated capabilities/value that are important to the market (and that your competitor doesn’t offer).
- Your competitor’s differentiated capabilities/value that are important to the market (and that YOU don’t offer)
- Areas of overlap between you and your competitor that are important to the market. This might be table stakes capabilities, services etc.
- Areas of overlap between you and your competitor that are not important to the market. These might be suitable for other markets or other situations.
Areas 1 and 2 are the critical areas to understand. i.e. what you offer that your competitor doesn't, and vice-versa, where those things are important to the market.
If your competitor understands this, they will get prospects to focus on area 2 — THEIR differentiation— and be very vocal on the fact that you don’t have those capabilities.
Now you can play the same game, and try to get prospects to focus on area 1, to try to get the competitor on the defensive.
And in any given sales opportunity, this might be a good approach. But thinking longer term, from a Product Management perspective, you have a choice.
You can focus on Area 1 — increasing your differentiated value — or Area 2 — try to “catch up” and cover your competitors strengths.
Far too many companies will react to their competitor’s strength, and try to reach feature party, or at minimum, close the gap between their product and their competitors. i.e. Focusing on Area 2.
But in reality they should be focusing MOST (not necessarily all) of their efforts on understanding what the market needs/wants, and investing in those areas. i.e expanding Area 1 as much as possible to both address market needs AND differentiate from your competitor.
And this doesn’t simply mean building more features. By learning what your market needs, you might uncover how you can improve your positioning and messaging, pricing or packaging, how you can differentiate better etc. In short, you will learn things your competitors don’t even know.
One story I love — it was told to me by a friend who was doing Win Analysis with new customers— is from a customer who said they bought the vendor’s product because a certain feature supported a new regulatory requirement in their industry — law enforcement.
The vendor wasn’t even aware of this requirement, but once they learned about it, they created GTM actions targeting law enforcement bodies. They also enhanced their support for that regulatory requirement and used the knowledge that their competitor didn’t have that feature to win almost every law enforcement deal they competed in. Additionally it took their competitor almost a year to add that capability, so they made major inroads into a new market segment.
There is NOTHING — and I say this very confidently— that gives you more leverage than deep market and customer insights. NOTHING.
Invest in ongoing efforts to understand the markets you operate in (not simply the prospects you’re selling to), and leverage that knowledge to create lasting competitive advantage.
4. Focus on Differentiation and Real Value
Let’s start with an understanding of differentiation. I define it as:
Differentiation: n. what makes your company/product meaningfully better/different than your competitors’ products in the eyes of your customers/prospects, AND is difficult for your competitors to duplicate
The key words are:
- meaningfully better/different in the eyes of your customers/prospects
- difficult for your competitors to duplicate
Meaningfully better/different in the eyes of your customers/prospects is all about value.
That could be something specific about your product — specific capabilities, design, performance, usability, scalability, architecture, connectivity etc. Or it could be something about your company such as your levels of service, your size, scale, reputation, brand etc. Or, it could be some combination of both.
For example: the iPhone is clearly differentiated from all other phones on the market (Android or other types) because of the technology, design and brand/reputation of Apple.
Whatever the differentiation is, it MUST be important to your customers/prospects. This is something that many companies don’t realize. Your product is always going to be different than your competitors. i.e. you’re not building identical products and your companies are not identical. But what have you done to make it MEANINGFULLY different in the eyes of your customers/prospects?
The only way to that is to understand what is important and valuable to your customers/prospects is to do research and find out. In the case of the iPhone, when it was introduced, it was meaningfully different in 3 main ways. It had a LARGE screen compared to other phones, it had a great browser, and it had no physical keyboard. The first two — larger screen and great browser were absolutely meaningfully different. The competitors to the original iPhone looked like those phones in the image below, and had small screens and lousy or very constrained browsers.
The lack of a physical keyboard, was not immediately a differentiator. Blackberry users LOVED the keyboard. It was considered a strength of the Blackberry phones. But by removing the physical keyboard, and substituting it a virtual one, Apple gave people the large screen they wanted without making the phone itself bulky or unwieldy.
That’s DIFFERENTIATION. That’s VALUE.
As for “difficult for your competitors to duplicate” — that’s a bit tougher. There’s no doubt that Android phones are very similar to iPhones. They have the large touch screen, the great browser, the virtual keyboard, the apps and more. In fact, Android phones often have features well before similar features appear on the iPhone.
And yet, people still buy iPhones. Apple does a great job at launching and marketing their products. iPhones integrate well with other Apple products (Macs, iWatch etc.) and Apple supports their products through their Apple Stores and easily accessible Apple Support/AppleCare. The Apple “brand” plays a significant role in the iPhone’s success and Apple’s differentiation.
And many of those things are VERY difficult for other companies to duplicate, yet are meaningful to customers. And notice that several of them (Apple Stores, Apple Support, Apple Care etc) are not part of the physical product, but part of the overall experience of buying an iPhone.
Creating differentiated products that stand the test of time is difficult. It takes knowledge, insight, determination and persistence. Not all companies are willing to do that.
But if you are, the payback is significant. And you don’t have to worry as much about what your competitors are building or the need to copy them all the time to play catch up.
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