224: How SaaS Founders Should Do Competitor Research
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In this episode, Steli and Hiten talk about the value of learning about your competitors. Hiten used to ignore his competition, but has learned that he needed to change his attitude about this. In order to be able to provide the best product to the customer, one MUST evaluate one’s competitors. Hiten shares the simple strategies he has used to learn more about his competitors and WHY it’s important to dig, even if you do not have a product yet.
Time Stamped Show Notes:
- 00:05 – Today’s episode is about how to learn about competitors before and after you create a product
- 00:35 – Hiten sent out an email he has been working on for 10 days and that has 34,000 words
- 01:06 – The email is what sparked today’s topic
- 01:44 – Check out producthabits.com to subscribe to Hiten’s emails
- 02:12 – Hiten sends a main email once a week that includes 10 links about business
- 02:35 – Hiten also sends one to two other emails a week about product development
- 02:50 – Steli does not read the email newsletters he is subscribed to
- 03:14 – Hiten’s newsletter is the only one Steli reads
- 04:06 – Steli was not excited to read the email because it was about surveys
- 04:37 – In the middle of reading the email, he realized it had good content
- 05:31 – Steli wanted to talk about the email in the podcast because he wanted to learn more about it and share it to listeners
- 06:34 – Hiten used to have a problem with competitors
- 06:41 – Hiten did not want to look at what his competitors were doing
- 07:12 – After some time, Hiten realized he could learn from his competitors to understand his customers better
- 08:07 – Hiten used to think that looking at competitors would change his own opinions and affect his creativity
- 08:25 – More than anything else, Hiten cares about his customers and maximizing his time
- 09:22 – Up until this conversation, Steli thought looking at competitors was distracting him from looking at his customers
- 09:47 – Steli never thought he could understand his customers better by learning from his competitors
- 10:41 – Hiten says to look at everything about the competitor
- 10:45 – Hiten uses G2 Crowd to read about customer reviews
- 11:05 – The customers talk about the competitor publicly
- 11:24 – What they are talking about is an alternative to your product
- 11:58 – Hiten found out people don’t like Dropbox, because it sucks for teams
- 12:03 – People also hate the storage limit in Dropbox
- 12:31 – Hiten says they will not build a Dropbox, Google Docs or Microsoft Word but these are tools that companies relate to
- 12:44 – Hiten wants to understand the usage of the tools because they will build something in the document space
- 12:54 – You can build a product just by looking at the customer insights
- 13:01 – Look at their most important gaps that customers mention
- 13:22 – Hiten says to look at every single website of your competitor
- 13:25 – Look at their home page and the words they are using
- 13:35 – Hiten learned that every document sharing tool are targeting salespeople
- 13:56 – Hiten uses archive.org to look at the first website copy of competitors and to see how they evolved
- 14:40 – Hiten says people have been taught to ignore competitors
- 15:11 – Hiten signs up for competitor’s demos and acts like a customer
- 15:22 – His competitors also do that to him
- 15:24 – Level the playing field by doing that to your competitors to learn about their messaging
- 16:02 – Hiten realized you can survey your competitor’s customers
- 16:14 – Hiten asks his email list to fill-out an NPS (net promoter score) survey
- 16:35 – You can see WHO cares about the product, HOW MANY people care about the product and their LEVEL OF SATISFACTION with the product
- 16:53 – They got 775 responses for one survey
- 17:14 – Hiten found out Confluence has a really bad editor and people did not like it
- 17:38 – Hiten hopes the company fixes the problem
- 17:57 – As a competitor, how the customer perceives the product is an important opportunity to learn for Hiten
- 18:16 – You cannot build the best product for customers if you are not looking at your competitors
- 19:05 – You can ask about a product even if you are not the company making it
- 19:17 – Hiten says that two years ago, Slack needed video conferencing and Slack just did this in the last six months
- 20:39 – Hiten’s strategies that can be used by those who do not have an email list: review sites, look at their own websites and have a customer mindset
- 21:01 – You can also use advertising to get people to answer your survey
- 21:11 – The competitor’s information is out there
- 21:26 – For the Slack survey, Hiten told the responders they can share the report with them
- 22:14 – There is rich data (from your competitors) that you can learn from
- 22:32 – End of today’s episode
3 Key Points:
- Do not ignore your competitors—they have the information you need to understand your customers better and create the best product possible.
- Look at EVERYTHING about your competitors – check review sites and their own websites.
- Try to survey your competitor’s customers or act like a customer yourself; this is a great way to learn what others are doing.
Steli: Hey everybody, this is Steli Efti.
Hiten: And this is Hiten Shah, and today on the startup chat, we’re gonna talk about how to learn about competitors before you have a product and after, and also more about why that’s important. I think I actually sent out an email today, this morning, it happens to be a Friday when we’re recording this. This will probably not go out on a Friday though, so you might not be listening to it on a Friday. But anyways, I sent out an email on a Friday, usually I don’t send out an email on a Friday, just because it tends to be a bad day. There’s also a long weekend coming up. But I’ve been working on this email for, I don’t know, I want to say like 10 days. The email’s like 3,400 words, my business partner, Marie, and I have been working on it and doing a bunch of analysis. The whole email is actually what sparked this conversation. So Steli, this is my opportunity to get feedback from somebody who reads my emails, especially a 3,400 word email. I’m not the one that calculated the words. The last one that we hit was 2,200 words, the longest one we did. This one we just kept writing, and all of a sudden is was 3,400 words. Anyways, what’s up? You read it and you wanted to talk about this; I would love to get feedback, your thoughts and what really triggered you.
Steli: First of all, for the few listeners that are not on your email list yet, give them the URL. Where do people need to go to get these killer, killer emails from you?
Hiten: I have list called producthabits.com, it’s actually a blog now. It used to be my personal newsletter. Many of you are probably listening because of it or something like that, some of you, not many of you, I should say. I linked the podcast every week as well, and it’s basically all about product development, creating better products, and anything related to that, whether it’s growth or business or marketing. There’s tens of thousands of people on that email list now, and I’ve been sending emails on top of the main one I sent. The main one I’ve been sending is a once a week email that you get 10 links, including the startup chat link, usually, that is about product development, SaaS and just things that I’m just generally interested in when it comes to business. It’s all business oriented, for the most part, especially tech businesses, although, there are some other ones that I end up linking to. And then, on top of that, I’ve been sending one to two other emails a week because I just want to keep building more audience for this topic I really care about, which is product development.
Steli: Honestly, I don’t read that many … Let me take this back, I read no newsletters that I’ve subscribed to, and I’m subscribed to a bunch of newsletters. But I honestly never read them. Once in a while I’ll actually be disciplined enough and go. I’ve been on this fucking newsletter for like a year, I should unsubscribe. This is not good for them, and this is not a mutual beneficial relationship here. Yours is the only newsletter I read. I really look at every email you send, because I know it’s gonna be fucking valuable, right?
Hiten: Thank you, yeah.
Steli: This was an email I was reading this morning, and you know, often times in the subject line you’ll tell the reader what this email is going to be about, and I’ll be honest with you, when I read this is gonna be about customer surveys … We recently talked about surveys and you had some really killer insights that I got excited about.
Hiten: Yeah, this is actually part of that process.
Steli: Part two? Yeah.
Hiten: It’s like part 20, but it’s been part of the process. I’m launching a new product and I’m first learning everything before I can before we write any code. We haven’t written any code yet and it’s been weeks.
Steli: Surveys are not like the thing that I … If I hear survey, it doesn’t push my excitement trigger or button, I’m not like, “Wow yeah, I can’t wait to read a super long email about surveys, right? Like, I’m so excited.” I was literally like, “Huh … Customer surveys.” But then again, your brand with me has such a high trust level that I’m like, well let me just give this a chance, and I started looking into it. It’s happened many times before in the middle of reading the email. I’m like, “Oh shit, this is really good stuff, like, I’m glad I’m actually reading this.” I’m particularly glad because it’s the type of thing I would not read about usually, and I would not get new insights, new information, new ways of thinking about things. I was just super surprised by the depth of the email. I was surprised by a bunch of things you’ve done, basically figuring out the NPS score for certain competitors, just your whole way of thinking was super refreshing and something I would have not have thought of myself and wouldn’t have done. And now, by the end that I read the email I go, “Huh, how can I use this?” I’m immediately sending emails, chatting with people on the team, and this is the killer stuff where I’m like, “Oh shit, okay let’s talk about this on the podcast,” selfishly because I want to learn more about this, but also because I know that if I read something and I read so much content and then I’ve been around this space for such a long time. If I read something and I am getting my mind blown and thinking I need to change our agenda and the things we’re working on in the company, then I know a lot of listeners will feel the same way. Let’s start and go through the process maybe step by step. For people that want to re-read it, there’s a place where they’re gonna be able to go and read through all this stuff in more detail. But maybe guide people through your thinking. Why do you want to learn more about your competitors, even before you build the version one of your product? Guide people through that strategic level of thinking and then we’ll go into the tactical stuff on how to do it.
Hiten: First of all, thank you for the compliment. I really am flattered if my partner here in crime on this podcast is actually reading my emails, even though you can hear from me anytime. But more importantly, that it’s inspiring you to go talk to your team and do something about it, and that actually excites me more than anything else. I’m gonna step back and talk about my problem. My problem used to be that I would literally think of a competitor in my business and I’d want to run away. I wouldn’t want to think about them, I wouldn’t want to talk about them, I wouldn’t want to go to their website, I wouldn’t want to go look at their crap, I just wanted to go build my own product, make my own business. And honestly, that worked for a while. That worked maybe from like 2005, a couple years into like online businesses that I was doing, all the way until maybe 2010. It’s been a while that it worked, where I could just ignore them and I wouldn’t have to worry so much about them. And then something just clicked and I realized that there are a lot of competitors, there are a lot of alternatives, there are a lot of products and businesses out there that I can learn from to understand the customer better. When I realized that, I was like, “Oh crap, I’ve been missing out on this like, gold mine of information about the customer and what they think, just because I’ve been ignoring the competition,” and whatever I consider the competition. From like, if it’s an analytics tool. There’s everything from what people did internally, in house, when Amazon was the competition, because they were using Amazon to analyze their data, all the way to a competitor we had at Kissmetrics, Mixpanel, or anybody new coming up, or anybody old like Google Analytics. For the longest time I didn’t have this appreciate and a healthy dose of looking at competitors to understand my customers. I always thought looking at competitors meant that your opinions would change because of what they would building, or you would start building what they built, or ignoring them just helped you better because then you weren’t clouded with what they’re doing and getting all involved in it. And then what I realized is, I care about my customer more than anything else. Whether I have them already or not, if they’re my customer, or they’re not my customer yet, and on top of that, I also care about not wasting any time. Between those two things, I realize that I need to go deeper into understanding the competitor so that I can understand the customers better. Just to give you a little bit of a hard time on this, just a little bit, you have a fuck load of customers, Steli, you’re a CRM company. Why wouldn’t you go talk to your customer? I’m sorry, why wouldn’t you go understand your competitors better and understand exactly what’s going on in the market and what your customers are seeing and hitting? That’s the high-level, strategic sort of problem I had and why I’m so excited about this process of actually learning about the customer from competitors.
Steli: This is why I fucking love you, this is the moment, because you’re right. Up until this very conversation, I felt like looking at competitors is distracting from looking at your customers, right? We’ve talked about this so many times, whoever understands their customer best wins. And customer insights and customer intimacy, so important to many of the work that we both do.
Steli: I never thought about learning more about my competitor as a way to understand my customer better. That is such a killer insight that it hurts me that I never thought about it that way. That’s just amazing. I’m sold, okay? I’m like, shit, this is very true. How do I do it? What is the difference between looking at my competitors as a distracting factor, versus looking at them as a way to learn more about my own customer? How do I differentiate between the two and how did you tactically arrive at your process that you are putting together right now? You know that I read about how you did the competitor survey to get all this data and all these insights about your customer in relation to what kind of competitor products they are using and how they feel about them.
Hiten: I think you just look at everything. You look at all their websites, you look at the review sites that are out there. My favorite one right now is G2Crowd, G2crowd.com, that’s the one I mentioned in that email. And just type in a competitor, type in your own business, you probably have reviews in there, and start reading what people are saying about them, what ratings they’re giving them, what different types and sizes of different companies are saying about them, because that’s the customer. That’s the customer giving a review that you can read publicly about a competitor. Just think about that for a second. That’s actually the customer saying some shit about the competitor that you want to know, you need to know, because they’re talking about something that is an alternative to what your product is, an alternative to them using and buying from you. I don’t know, that’s probably the clearest thing I can think of. Go look at the reviews of competitors and yourself, but really of competitors to understand them better. The amount of stuff that we learn just by looking at companies like DropBox and Google Docs and Microsoft Word and all these companies in those review sites is ridiculous. We learned all kinds of things. People actually, they dislike DropBox because DropBox sucks for teams, number one.
Hiten: People dislike DropBox, number two, because of the storage limits and how every single competitor has way higher storage that they give away for free now. I’d have to do a lot of work to understand those things if I were trying to figure out how to compete with DropBox, or how to even understand all about DropBox. And to be honest, all those companies that I mentioned, we consider competitors to what we’re doing, but we use competitors loosely. And what I mean by that is, we’re not gonna build a DropBox, we’re not gonna build a Google Docs and we’re definitely not building a Microsoft Word, but what we understand is these are tools that companies that we’ve been talking to and interviewing and are using, and we want to understand our usage of these tools because we’re gonna build something in the document space. We don’t know what it looks like yet. And wow, the insights like that. You can basically almost build a product just by looking at those insights, and the reason I say that is it’s not by copying the features a company has, but by really looking at where are their gaps, where are their most painful, most important gaps that customers mention, and then going after it. And if you’re not doing that for your own company, you should start there. That’s like the basic shit, in my mind. The next basic shit would be looking at every single website out there that is of a competitor, basically. Look at every single website, just look at their home page to start with and start digging in and start understanding what words are they using? What is the trend in the market? One thing we learned is that every document sharing tool, so these are tools like Clearslide and and Attach.io and Fileboard, there’s a bunch of these. Many of you that are listening have probably never heard of any of them; there’s a good reason for that. But all of them are targeting salespeople, but yet they’re a document sharing tool. Some of them even started as a more generic tool. If you go to Archive.org, which is another strategy I use, and put in their homepage, you can go find their first website copy, at least, because a lot of times a website doesn’t look the same anymore, but you can find their copy and look at that home page and see where they started and even how they evolved. There’s so much research you could do to understand how they were framing themselves in the market to their customers and why they got to where they got to today from a standard document sharing tool, in this example, to a very specific document management platform or sales enablement platform, whatever they ended up with for sales and salespeople. This is just fascinating to me how I don’t meet many people that do this stuff. I don’t meet anybody that really does this stuff in this way, because we’ve been taught, I think, just on the internet, I guess, or as building products for software or at Y Combinator or 500 Startups or our learnings or our own anxiety, mine was mostly anxiety, no one else told me not to look at competitors except myself. We don’t look at competitors, we ignore them, and I think that’s completely wrong. We care about customers, that’s why we look at competitors. You can understand the features in your market, you can understand exactly what customers are exposed to. I love even signing up for a competitor’s demo and acting like a customer. Some people can say, “Oh, that’s unethical,” blah, blah, blah. Well, I’ve had every one of my company’s competitors sign up, and competitors do that to me. So if you want a level playing field, go do that to your competitors so you can understand what their messaging is to your customer, your future customer, maybe your current customer, if they’re taking market share away from you. I think these things are super important, they’re super critical and you just have to do it. Those are all, to me, basic strategies because it’s just super easy to do those things. The harder one, or the one that’s, I wouldn’t even say harder, just takes more effort, is the one that I did that I almost missed. I was writing up this email and I was like 1,500, 2,000 words, I was like, “Okay, cool, I’m going good.” And then we hit on a method that we forgot to use, and that’s what part of the email is about. It’s this idea that you can survey your competitors’ customers.
Hiten: What we did is, we actually emailed our email list on Monday instead of sending our weekly links and asked them to fill out one of six or all of them, NPS scores, or basically NPS surveys is more accurate. It’s called net promoter score and it’s 0 to 10 rating that you make a customer fill out, and then you ask them what their most important reason for having that score is, and then you do some calculations. I wrote all about it in the email, but essentially you can figure out who cares about the product, how many people care about the product, and you can also get a good score on what the customer satisfaction, customer happiness of the product is. But more importantly, when we asked people what their most important reason was, it was very interesting the learnings we got around these companies, because we ended up having like 775 people, or sorry, 775 responses to a single company survey. There was 775 individual responses, NPS surveys that we got, and then we analyzed them and we basically learned a whole bunch of other things about why people like these products, why they don’t. It turns out that Confluence, which is a Wiki tool, has a really bad editor, and people don’t like the editor. In that one, unfortunately, I found nine words that were all negative that people used to describe the product. One of them was shitty, I think, or it sucks. You know another one? Stupid. And this is out of hundreds of responses, this is what people are saying about that product. I really hope the team over there reads it and knows that so that they can go fix it, because this just sounds bad. Why would you want your customers to say that about your product ever?
Steli: Yeah, that’s harsh.
Hiten: But now I know that, right? I know that. As a competitor, I’m just putting that in quotes. That’s a very important learning for me as to how the customer perceives this product. You’re asking, how do you put this in a customer mindset? Just think about the customer. They’re reading all this stuff. They’re going through these people’s demos, they’re reading the white papers, they’re even looking at these review sites and reading them. If you, as a competitor, don’t understand what customers are looking at, how are you gonna build the best product you can? You’re not. And, more importantly, you could do all of this without writing a single line of code or even launching your product, like I have. Haven’t launched anything, haven’t wrote a single line of code. Have a bunch of really, really, really rich information to figure out what the actual opportunity is before having to do any of that actual, real work.
Steli: Yeah, that’s . I think nobody understands that, and coming back to you were doing a survey about how happy customers are in relation to a certain tool or a certain company, and you’re not that company. And I remember you did this for, what was it? For Slack you did this for?
Hiten: I did it for Slack, yeah, a couple of years ago.
Steli: Where you did an NPS survey and all of these surveys to figure out how happy users and customers of this product are without being that company yourself, and I think this is such a simple strategy, but I have never met anybody that’s done this except you.
Hiten: We learned two years ago that Slack needs to add video conferencing. We learned two years ago, they just launched it within the last six months. We learned two years ago that every single type of customer that Slack had, from the very disappointed people who would literally be very disappointed if the product didn’t exist, to people that didn’t care. They all wanted video conferencing. It was the number one feature request basically, and we learned that. I don’t know if they knew that at the time, honestly.
Steli: Yeah, that’s amazing. That’s just amazing. I just want to add an asterisk, and we’re gonna wrap this episode up.
Hiten: Sounds good.
Steli: Such a killer thing. But I can already imagine, potentially, I know that our listeners are actually pretty dope, we have a way above average audience here.
Steli: But some people that will listen to this will go, “Yeah, sure.” has tens of thousands of emails of people that just wait to respond to any question he asks because they love him. So when he wants to figure out something about competitors, he can just run all these surveys and get all this rich, valuable data. I’m a nobody, I don’t have a fucking email list. I’m thinking about building a tool in x, y, z, space, how the hell do I do this? I don’t have an email list to survey. What’s the answer to that Hiten?
Hiten: Yeah, I mean I gave you strategies that are easy that you don’t need an email list to survey to do. Review sites, look at the websites and just have that customer mindset of like I want to know what the customer perspective is and what they think. That already will get you really, really far because there’s these sites out there that do reviews of software and things like that. There’s even like if you’re building a mobile app, there’s enough mobile app reviews that you can go analyze and look at. If you don’t, then use advertising. Figure out a way to get people to fill out these surveys, you don’t need that many responses to get a good indication of what’s going on and what to do. To me, you just don’t have an excuse. The competitor information’s out there, even if you can’t do surveying or don’t have the money to do ads to get those survey responses.
Steli: I love it and I remember for Slack, you guys rent some ads right, for the Slack survey that you did?
Hiten: We didn’t run any ads, we made it a group effort and one trick we used is we told everyone that filled it out that we’d share the report with them if they want it, if they gave us their email.
Steli: That’s another
Hiten: Yeah that probably got us an extra 300 or 400 responses. We got 700 and something that time and that got us an extra, probably double, easy.
Steli: Awesome. All right. Guys, you’ve heard it here, there’s no excuses. For all of you that are subscribed to the philosophy of being very close to the customer and generating customer insights and understanding your customer better than anybody else, thinking that this is a true paradigm shift in my mind, of thinking of learning more about your competitors as a way to understand your customer better. Then ultimately be able to serve the customer better, it’s just a killer reframing and new perspective on this amazing, new, rich data that’s out there waiting for you to look at and to learn from that I know I have not done. Right, I haven’t done that and I will do it, and I advise everybody else to join in doing that as well. I think with this kind of call to action kick in the butt, we’re going to wrap this episode up.