6 reasons why you WANT to have competitors in your marketplace

When I was in high school, my friend’s family owned the very first computer store in town. I was always sort of impressed that they had a lock on that market. I imagined a business without competition to be the highest level of business achievement – a sort of entrepreneurial nirvana.

Then, to my surprise, I learned that they were helping someone else start a computer store in the same town. In other words, they were helping to create their own competition! I didn’t understand it at all. When I asked my friend’s dad about it, he said that competition is good for business. Although he didn’t go into detail, it was a lesson I never forgot (I even remember the exact moment when he told me – it was in the kitchen of their house – it was a watershed moment for me).

It took me years to learn why competition is a good thing, but I now realize that it is essential to a strong, prosperous business. Here are my top 6 reasons why I embrace competition:


Competitors help you to figure out what you do. If you are starting a business and you examine how your competitors define themselves, you can identify a point of difference that they are not addressing.

It’s like being lost and using a couple of fixed objects to help you figure out where you are. Your competitors are those fixed objects and you can easily find your way in the marketplace when you compare yourself to your competition.

Creating a business that has too much identical competition (everyone sells exactly the same thing at exactly the same price – real estate agents are a good example) will eventually result in a price war with your competitors. But if you look at your competitors as a starting point and then you define yourself carefully, strategically, and in a different way from the rest of the pack, you’ll help to attract the right people to your business (people who might not be attracted to your competitor). You won’t have to compete on price because your competitors are different from you.

For more information about differentiation and competition, read my blog posts: Equal is not good enough and Mine is bigger than yours — competitiveness and marketing content.


A couple of years ago, I met someone who owned a business that was in-demand and the only kind like it in the entire state. The guy charged insanely high prices and 100% interest on unpaid debts. He could make his own schedule and he didn’t need to provide good customer service. Sounds awesome, at first – you can do what you want and you basically have a licence to print money. But eventually, some other entrepreneur will spot the opportunity in that market and see that he or she could make a financial killing while charging less AND providing exemplary service… and suddenly the first guy’s business is in trouble.

When I was a freelance writer, I would sometimes get frustrated at the low-priced freelancer writers who would charge next-to-nothing, undercutting my prices. On more than one occasion, it caused me to look at my prices and sometimes consider lowering them. (Fortunately, I never did). I realize now that those low-priced competitors kept me hungry and I worked harder to out-work and out-earn those competitors. I’m glad for them now.


In economics, inflation is kind of like a swarm of termites. You don’t see them but they eat away at the stuff you own. Inflation causes upward pressure on prices so that $1.00 tomorrow is worth less than $1.00 today. In other words, if you’re standing still in your finances, you’re actually going backwards.

It’s the same in business. If you want to create a product or service, build a sales funnel, automate it, and then go sip margaritas on a beach, think again. Your business is “standing still” (not innovating) and your competition will outpace you with newer, faster, shinier products and services. While you’re asking the lifeguard to put sunscreen on the places where you can’t reach, your competitors will be inventing a better mousetrap. Before you know it, your business will sputter and die because no one wants your clumsy old offering.

Your competitors are innovating, so you need to as well. Their very existence forces you to get creative, invest in your business, and reach for more. That’s great for your customers and for your business’ longevity. Read more about innovation at my blog post: My best advice on innovation. And this blog post provides an interesting take on innovation: Want a competitive advantage? Offer the same products as everyone else!


In your own business, every interaction in your sales funnel is a piece of data that you can analyze to make your business better. You watch for patterns, for sudden changes, and for opportunities. You put all of these pieces together, you compare it with your metrics, and you can make huge, positive changes in your business.

But if you raise your head out of your sales funnel for a moment and glance across the street at your competition, you’ll learn quite a bit, too. Yes, you won’t have all of the facts or metrics, but you can put together an awful lot just by looking in their windows, browsing their website, mystery shopping them, and listening to both happy and disaffected customers.

Watch for competitors’ marketing campaigns that have a huge impact. Analyze the types of people going through your competitors’ doors. Find patterns among the disaffected customers who decide to switch providers and buy from you instead. By simply watching your competitor, you can learn so much from them to benefit your own business. They become a living, breathing MBA case study to make you a smarter entrepreneur.

Want a place to start? Why not do some really simple competitive research to figure out how to price your products or services. Learn more about it at this blog post: How to easily discover the best price for your product or service.


Imagine a town in which there are only two companies providing window cleaning services. They both market their services aggressively and have their own point of difference. Simply by advertising the benefit of cleaner windows, they highlight the problem of dirty windows in the market’s mind and the market will search for a window cleaning company – even if it’s not the one whose advertising initially prompted their awareness.

It’s the principle of 1+1=3. Competitors’ marketing will attract new Leads (and sometimes YOUR Leads) to the competitor, but it will also alert the general marketplace to the general problem or need. People from the marketplace will look for a solution or fulfillment and may end up in your sales funnel as a result (all because they became aware of the problem or need from your competitor’s ad). Note: I’m not suggesting that you don’t leave all of the marketing to your competition. However, I think that competitors who advertise in the same market will have a greater cumulative effect than if they each advertised in their own market).


I love motorsports, especially NASCAR. One of the things that makes the sport great is when two competitors will work together to push ahead of everyone else. Overall, they are still ruthless competitors, but for a brief moment they can put aside their differences to eliminate the rest of the competition.

The same thing can happen in business, too. You can work together with a few carefully chosen competitors to win more customers and outpace other competitors. Now, please note: There are laws about collusion and I’m not suggesting you circumvent those laws – you’re not doing this to raise prices across the board or to destroy a few competitors. There are ways to legally cooperate with your competitors for mutual benefit. For example, you can share the costs of joint advertising to reach different markets through the same channels. Or, you can send each other potential customers who may be a better fit for the other than for you. When I was a freelance writer, I competed against other freelance writers, of course. But when a Prospect wanted to buy from me and I discovered that they were not a good fit (perhaps I didn’t have the bandwidth to help them, or maybe they were in an industry I knew nothing about), I had a few carefully chosen competitors who I felt comfortable recommending them to. And the relationship worked both ways – those competitors knew who I was interested in working with and they would send people to me.


First, welcome competition. If there are no competitors in your marketplace, be wary. Dare to invite competitors to your marketplace! Get to know your competition as individuals, but also get to know their businesses. Use competitive analysis to learn as much as you can about them. Find out how you can help them (and take the first step to do so) and you may see some reciprocation. And always keep an eye on your competition to motivate you to stay hungry and stay innovative!

Hey, this blog post gives another reason to love competitors: 4 ways to insert yourself into your competitor’s sales funnel and steal their customers.

Published by Aaron Hoos

Aaron Hoos is a writer, strategist, and investor who builds and optimizes profitable sales funnels. He is the author of The Sales Funnel Bible and other books.

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