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 hours 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, their thought leadership to put themselves in front of clients in your direct market. So and 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 targeting small- and medium-size 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.
To learn more about indirect competitors, download our eBook "3 Revenue Growth Opportunities Your Business May Be Missing."