Indirect Competitor (Glossary Definition)

An indirect competitor is a company that has products and services that are deemed to be a legitimate alternative to your company's products and services. Yet there's something just a little different about that company compared to a direct competitor.

The way to think of the big differences between a direct and indirect competitor requires that you think about the digital-first world that we live in and the modern buyer’s journey that your clients and prospects go through. They are doing tons of self-directed research on search engines and social media before they ever get to you.

They're asking questions by the dozen on Google and Bing. They’re asking questions on Facebook and Twitter, and Linkedin. They're asking their personal assistants like Siri and Google assistant and Cortana and Alexa. They're asking tons and tons of questions all the time, so there are definitely other alternatives that pop up in a digital-first world that are more indirect competitors.

Difference Between Direct and Indirect Competitors

A good way to understand whether you're dealing with a direct or an indirect competitor is those companies are typically a lot bigger or a lot smaller than yours. In other words, if your company has 50 employees, your indirect competitor might be a Fortune 1000 company with 5,000 or 10,000 employees. It could also be a tiny startup with only three employees.

There's a difference in terms of size that would cause somebody that's a potential client of yours to take pause and recognize that because it's just such a glaring difference.

The second big difference between a direct versus indirect competitor isn't just company size, its geographic location. And in a digital-first world, recognize that there are indirect competitors that will show up on a prospect or client's radar screen that may be in a vastly different geographic area, outside of your primary trading market.

Let's say, for example, that your company is a law firm or accounting firm that can work throughout your entire state. Historically, you're not used to dealing with competition outside of your own local city or local region (within a half-hour to an hour's drive).

However, in a digital-first world and the modern buyer’s journey, you could have competitors hundreds of miles away from you that are in the same state. Assuming your state is the size of California or Texas, where there are companies you would never have thought of before that are encroaching on your turf.

Indirect competitors are using digital marketing and search engine marketing. They're using social media. They're using their content, their positioning, and their thought leadership to put themselves in front of clients in your direct market. So then there's also size. If all of a sudden, historically, clients have preferred to deal with relatively small companies, and your company has 50 employees. But then a Fortune 1000 competitor hires away someone from one of your competitors and starts a division that specifically targets small- and medium-sized businesses.

The Bottom Line

So be aware that in a digital-first world, in the modern buyer’s journey, what you have deemed in the past to be your obvious competitors may no longer be the totality of what the competitive landscape looks like.

Much bigger companies, much smaller companies, companies that are far away from where you're located, may now be on the radar screen as a credible alternative to your company's products and services. So make sure when you're thinking of your competitive positioning that you take all of this into account.

Do you know who your indirect competitors are? Share your thoughts in the section for comments below.  

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