I recently had a conversation with a friend who owns a marketing agency. My friend, although very smart, has a very deep tendency to see what competitors are doing and is constantly reacting to what others do. This puts him, and his business, in a bad position. Most business leaders run their businesses the same way, looking at what others do.

To me, when businesses mimic what their competitors do it’s a sign that they don’t have a unique insight into their customer’s needs. They’ve stopped talking to their customers to understand their unmet and unarticulated needs, thus they’re reacting to their competitors.

I was reminded by this conversation that many years ago I interviewed Stu Heilsberg, who wrote a book titled The Answers Are Outside The Building which shows you how to stop guessing what customers want. It’s a great read and one you should take to heart because it sits at the core of focusing on your customers more than your competitors.

In the dynamic landscape of entrepreneurship, it’s easy to get caught up in watching your competitors. However, an obsessive focus on the competition can lead entrepreneurs down a path that strays from their most valuable asset: their customers.

With that said, here’s why focusing on customer problems, rather than competitors, is crucial for success in today’s market.

Why Focusing on the Competition is a Loser’s Game

In the book How Google Works, Eric Schmidt says the following:

“Playing catch-up with the competition can only ever help you make incremental gains. It will never help you create something new. It’s important to understand what’s going on around you, but the best way to stay ahead is a laser focus on building great products that people need.”

In other words: know your competition, but don’t copy it.

Here are 4 reasons why focusing on the competition is a loser’s game:

1. Missing the innovation train: When your eyes are constantly on your competitors, you tend to mimic rather than innovate. Innovation doesn’t come from replication; it comes from understanding unmet customer needs and addressing them in unique ways.
2. Reactive instead of proactive: Focusing too much on competitors can make your strategy reactive. You’re more likely to respond to their moves rather than make your own based on what your customers need.
3. Losing your unique value proposition: Your unique value proposition is what sets you apart in the market. If you’re too busy emulating your competition, you risk diluting what makes your product or service special.
4. The competitive whirlpool: The market is vast, with many niches and opportunities. Fixating on competitors can trap you in a whirlpool of rivalry, often ignoring other potential areas for growth and development.

Ways to Focus on Customer Problems – And Why They Matter

I believe that studying competitors is overrated, and studying customers is underrated. Most businesses focus on competitors, which puts anyone who obsesses over customers in a powerful position. Customers are your north star, not your competitors.

Here’s how:

1. Start with empathy: Understand your customers deeply. Use tools like customer interviews, surveys, and feedback loops to really get into their shoes. What challenges do they face? What are their pain points? Empathy leads to insights that can drive innovative solutions. And, remember: customer discovery never ends.
2. Develop a solution mindset: Instead of a product mindset (what can we make?), adopt a solution mindset (what can we solve?). This subtle shift makes all the difference in creating products that resonate with the market.
3. Leverage customer feedback: Make customer feedback a cornerstone of your development process. Continuous feedback helps you iterate and improve your product in ways that truly matter to your users.
4. Create value, not just features: It’s not just about packing your product with features. It’s about creating real value that addresses customer problems. Every feature should tie back to a real customer need.
5. Build a community around your customers: Engage with your customers beyond transactions. Build a community where they can share their experiences, challenges, and insights. This not only strengthens loyalty but also provides you with a goldmine of information.
6. Stay agile and adapt: The market is constantly evolving, and so are customer needs. Stay agile and be ready to pivot or tweak your offerings based on changing customer preferences and behaviors.

Bottom line: Focusing on customer problems creates a direct pathway to meaningful and innovative solutions. It fosters a proactive strategy that is more likely to result in product-market fit and sustainable growth. Remember, in the race to success, keep your eyes on your customers, not just on the competitors in your rear-view mirror. They are your true north.