Indirect Competitor

Ask anyone to list competitors and the first names out are companies in the same product category. Build a collaborative document tool and you write down other collaborative document tools. The habit is convenient for whoever makes the list: features line up neatly side by side, and there's no argument about who belongs on it.

The trouble is that customers don't choose on that basis. A company adopting a new tool is usually spending one line of this year's budget and one block of the team's capacity for learning something new. The things competing for that single slot are not confined to one product category.

So this happens. You build a feature comparison and come out ahead on nine of twelve rows, at a lower price. Then four of the five accounts evaluating you this quarter don't buy. Ask later and it turns out they spent the same budget on a project management tool — a product that overlaps with yours on nothing at all, except that the team had room to learn exactly one new tool this year. You won everything inside the table and lost outside it.

An indirect competitor is what pulls that outside back into the list. Change the criterion from same category to same resource, and rivals that were invisible start showing up.

If what overlaps isn't features but the customer's limited resources, you're looking at an indirect competitor. Three conditions travel together: you sell to the same customer, you draw on the same pocket or the same hours, and you solve different problems. That last one is where the line falls against a direct competitor, which solves the same problem the same way. An indirect competitor was never solving your problem to begin with.

Sorting out who qualifies takes four steps.

1. Ask the accounts that didn't buy what they bought instead. Ask why they said no and you'll hear that the price was too high. Ask what they purchased and you get a name. Half the list usually comes out of this one question.
2. Check whether it comes from the same budget line. If your price is paid out of the team's tooling budget and so is theirs, you're contending for one slot. If theirs comes from training or outside services, drop it.
3. Check whether the timing overlaps. Landing on the shortlist in the same quarter is competition; different quarters is a question of sequence. Selling into companies that decide everything at year-end makes this overlap much sharper.
4. Cut the list to three or four. There's no natural end to how wide you can go, so keep only the rivals a customer actually named as the thing they chose instead.

Competing here works differently than it does against a direct rival, because you can't win it by adding a feature. What does work is making the cost you remove measurable against what the other purchase is worth. Jobs to be done (JTBD) gets used a lot at this point: look at what the customer is hiring a product to finish, and the candidates for that job gather in one place regardless of which category they belong to.

The first destination is a row on the competitive matrix, the table that lines companies up against features and prices. Fill it with same-category names only and the scene above repeats. Feature rows don't work for these competitors, so the columns become adoption cost, the time a team needs to learn it, and the spending it removes elsewhere.

It reaches positioning and price too. If the thing you're compared against in a buyer's head isn't another tool of your kind, the sentence changes. Instead of claiming you're better than other document tools, you argue that this should come before the thing they were going to buy with that budget. Pricing shifts the same way: the reference point stops being category rates and becomes the size of the budget line itself.

It also comes up in churn work. A customer who left for a competing product and a customer whose budget moved elsewhere call for completely different responses — the first means fixing the product, the second means showing again what the tool is worth inside that company. And differentiation hunted for only within your own category tends to produce strengths that have nothing to do with what the customer was actually weighing.

"Looking at the deals we lost, we lost to project management tools, not to our competitors."

The budget went to something outside the category.

"This is indirect competition, so we shouldn't be fighting on features."

Switch the comparison from capabilities to the value of adopting.

"We ignored them last year, but this year they're on the same budget line."

Something that used to be irrelevant now belongs on the competitive list.

At Pagedeck the phrase first came up during a quarterly review. Mia contacted nine companies that ran an evaluation and then didn't buy, and asked what they ended up using. Three picked a competing product, four bought no tool at all, and two spent the same budget on a project management tool.

Sofia relayed what those four had said: adding another tool costs a month just to get the team comfortable with it, and there was no room for that this year. The team rewrote the opening page of the sales deck afterward. Instead of leading with how Pagedeck differs from other document tools, it leads with what gets smaller in the first week of use, because the rival they were actually losing to was the choice to change nothing.

The most common assumption is that indirect competitors are less dangerous. No feature overlap seems to mean no threat to your customers. But at the decision point the two weigh the same, and indirect rivals arguably win more often, precisely because nobody watches for them. A competitor shipping a feature gets a meeting on the calendar; a customer's budget sliding to a different line is something most teams have no way of even noticing.

The second mistake is treating a wider list as a better one. Push the logic that anything taking the same budget counts and eventually every expense in the company is on the list, which makes it useless for any decision. The test is confirmed fact, not breadth. Keep only what a lost account named out loud and the list usually settles at three or four — and those three or four feed straight into sharpening your ideal customer profile (ICP).