Chances are there is a solution on the market for what your idea is seeking to solve. The potential of an idea should not be judged by whether there is a competing solution on the market. No matter how competitive or underserved a market is, there is always room for innovation and differentiation. The short answer to what to do if your startup idea already exists is, don’t be discouraged, you can still build a successful startup.
Competition is a good sign. People paying for and using competing products signal market validation and customers’ budget allocation to solve a problem. Launching disruptive first-to-market solutions does not immune startups from competition or failure.
Back in the nineties, WebVan launched the first grocery on-demand service. With close to $400 million dollars in funding, the company ceased operations after going public. In 2012, Instacart launched with the same idea but lots of lessons learned from WebVan. Instacart is now valued at close to $8 billion. Pets, SixDegrees, Ask Jeeves, WebTV, COLOR, and IndexMedical are a few other examples of innovative startups that failed despite their market leadership.
The point is, building a startup will always come with challenges with or without direct competition. To build a successful startup in a competitive space, define and execute on your unique differentiators. Here are three ways to be different without reinventing the wheel.Today In: Small Business
1. Segmentation
Differentiation through concentration is one of the most effective ways to stand out in a competitive market. It is about customizing an existing product for a niche while adding features and benefits tailored only to the chosen group.
In its most basic form, as in the example of Dropbox and Box, you could choose to focus on consumer or business buyers. Within the consumer and business groups, there are numerous ways to customize an existing solution or business model to a specific group of buyers. For instance, PatientPop created a marketing CRM just for healthcare providers. ConvertKit built an email marketing tool for creators and bloggers. Notice how even within the healthcare and blogging groups, there is still room for deeper segmentation.
The success of a startup that differentiates through segmentation is depended on how important is personalization for the chosen group. Not every market segment needs a tailored solution. Sometimes, such solutions are good to have but not important enough to justify customers’ switching cost. Make sure to validate the market before building the product.
2. Revenue Model
Can you make and offer a paid product for free? Perhaps instead of making money by selling the software, you can sell complementary or supplementary products and services at a premium price.
To use an example, ProfitWell is powerful analytics software for subscription businesses. While competing products are paid, ProfitWell is free. Thanks to this tool, Price Intelligently, a ProfitWell subsidiary, attracts quality leads to its premium offers. Neil Patel is another example of an entrepreneur who offered a paid product for free. His tool, Ubersuggest, attracts hundreds of thousands of visitors to Neil’s blog and agency.
Can you align your return with customers’ performance? Can you change pricing to only charge for what a customer uses? Those are two other ways your offer can be attractive in a competitive market even if the product is not significantly different from the competition. Although, combining a couple or all of the differentiators in this article will make you stand out and a fierce competitor.
3. Customer Experience
Automation through technological innovation is both a blessing and a curse. In many ways technology boosted efficiency, reduced costs and made life easier. The truth is, automation has also opened many gaps for differentiation through personalization.
No matter how smart or artificially intelligent software can be, there will always be a need for the human touch. For some groups, this could be an urgent need which makes it a good business opportunity when combined with differentiation through segmentation as discussed above.
Furthermore, if your industry is characterized by high technological standards, differentiation through personalization and superior customer experience is a great way to stand out. Bigger companies may not be able to offer personalized support for lower tier subscribers given their high operating costs and pricing structure.
In sum, if your startup idea already exists, don’t drop it, focus on what makes you unique. To be unique, not that you shouldn’t but you don’t necessarily need to build a superior product. You can be different by addressing an underserved market, restructuring your revenue model, and/or providing personalized customer experience.
Original source:
https://www.forbes.com/sites/abdoriani/2019/12/05/what-to-do-if-your-startup-idea-already-exists/#32346fdfe9a7
