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Focusing on Customers: The Key to Outsmarting Competition

Focusing on Customers: The Key to Outsmarting Competition

In the business world, almost all problems ultimately point to one thing: competition.

How to compete? How can you survive in the cycle of competition?

I guess you’ve heard at least two types of advice.

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The first one, which is the most common:

Keep your eyes on the customer.

Because what directly determines your survival is the customer, not your competitors.

It sounds good. The logic is flawless.

However, you may have also heard another type of advice:

Customer-centric? Sure, that’s what they say, but I’ll still keep a close eye on my competitors every day.

Because, no matter what you say, the marketplace is a battlefield. And in a battlefield, you have to engage with your opponents.

Know yourself, know your enemy, a hundred battles won’t be a problem.

So, when it comes to competition, where should my eyes really be focused? On the customer? On the competition?

01 – Keep an Eye on Your Competitors

Question: Which entrepreneur has never kept an eye on their competitors?

There are very few, if any.

Most of the time, I hear:

“There’s no other way, we have to keep an eye on them.”

I had a student who was running an e-commerce business, and when he recalled the first two years of starting his business, he said:

“At that time, I was small and knew nothing about operations, promotion, or the supply chain. But I understood one thing: when you search for a product keyword, you get dozens or even hundreds of pages of results, and customers will only choose one to buy from.”

“So, I had to figure out how to make myself more competitive than my competitors.”

“But how?”

“Buying traffic or paying for advertising? I couldn’t afford it, and even if I could, I couldn’t outspend them.”

“Creating unique products? In the beginning, we were all sourcing from similar suppliers. How could I be different?”

“So what could I do? I observed.”

“I created a spreadsheet to track my competitors’ data. The first thing I did every day when I turned on my computer was to update it and understand what my competitors were doing.”

“What prices did they set for products similar to mine? What strategies did they use? Which styles were selling well?…”

“If they lowered their prices, I would immediately adjust mine to be as competitive as possible. If they ran promotions, I couldn’t afford to fall behind, and my free gifts had to be better than theirs. If they introduced hot-selling items, I would immediately source the same products and compete with them…”

“Isn’t this exhausting?”

“Yes, it was exhausting. Even when I later had tools to automatically collect data and a team to analyze it, it was still exhausting.”

“After all, new competitors, new strategies, and new hot-selling items could appear every day. I had to keep thinking about how to respond.”

“I had to know my competitors inside and out so that I could be more competitive and have a better chance of being chosen by customers.”

This is what it means to know yourself and your competitors, ensuring success through careful planning. But is it really true? Does constantly focusing on your competitors guarantee that customers will choose you?

Focusing solely on competitors can lead to at least two kinds of frustration.

The first is called “falling short.”

If your competitor has strong marketing abilities and is the first to launch a “dopamine color” product, even if you follow suit, you will inevitably be one step behind. By the time you start selling, the trend may have passed, and consumers may have lost interest.

If your competitor has supply chain advantages and quickly stocks the hottest product on the market, following them won’t help if you can’t consistently deliver products to customers.

If your competitor has a solid distribution channel, they can shout “the lowest price on the entire internet.” If you try to follow, how can you match their price and still make a profit?

Just observing and imitating others, especially when your competitors excel in areas that are not your strengths, may not necessarily lead to success. In the end, you may have taken many steps but achieved little, resulting in frustration.

The second kind of frustration is called “coming up empty.”

Even if you become the number one in your “competitor spreadsheet,” does that guarantee you’ll win?

Recently, at one of my quarterly gatherings, Huashan brought up an interesting point:

“Suppose you’re pursuing the most attractive girl in class, and you outperform all the other guys. Does that mean she’ll choose you?”

“The business world is like a battlefield, but on the battlefield, it’s not just two sides; there are at least three: you, your competitors, and your customers.”

“And who you trade with, who ensures your survival, is not your competitors; it’s your customers.”

“Even if you focus on all your competitors listed on your spreadsheet, if you can’t meet your customers’ needs, you still won’t be chosen by them.”

“You may come up empty-handed, and that can be frustrating.”

So, what should you do?

Many people would say, “Of course, you should keep your eyes on the customer.”

If you’re going to focus on something, focus on the customer.

02 – Focus on Customers

How do you focus on customers?

Find out what your customers need and satisfy them.

Is it that simple? Just ask them directly, right?

You conduct surveys, questionnaires, and even build a private community to collect customer feedback, and most of the time, you get two main responses:

They want lower prices, and they want quality products.

So, if I open a coffee shop, should I make the best coffee at the lowest price?

But Starbucks offers more than just coffee; they provide a “third place,” a free space that’s different from home and work.

Or, if I open an amusement park, should I offer the widest variety of rides and the lowest ticket prices?

But Disney offers immersive fantasy experiences, meticulously designed by the “Imagineering” team, to create a “magical day.”

So, how can I compete with that? It seems like a losing battle.

How do they “focus on customers”? How do they “identify” these needs?

Someone has already answered this question.

Steve Jobs, the creator of the iPhone, once said:

“Customers don’t know what they want until we’ve shown them.”

Henry Ford, the pioneer of the automobile industry, also said:

“If I had asked people what they wanted, they would have said faster horses.”

Do you see the pattern?

These companies that have achieved tremendous commercial success don’t ask their competitors or even customers directly about their needs. Instead, they ask themselves.

When it comes to coffee, can I create additional value beyond its functional value as a beverage? Can I offer customers more for the price of a cup of coffee?

When it comes to an amusement park as a family-friendly place, can I extend beyond its functional value to provide emotional value? Can I bring customers the joy of making their dreams come true?

Continuously asking yourself questions like: “What do customers really want? How much value can I create for them? What can I do to give customers more benefits?”

Only these types of questions can lead to a higher-dimensional understanding of customer needs and innovative solutions based on that understanding.

This is when you truly gain a competitive edge that transcends the cycle of competition.

The starting point for all business is the benefit to consumers.

Industry giants and market leaders naturally follow from this point.

No matter how intense the competition in your industry, never forget to focus on what value you’re actually delivering to your customers.

Have you benefited your customers? Have you increased the value for your customers?

This is the foundation of your business, rather than engaging in price wars. It’s the solid ground you stand on in the highly uncertain world of business.

Focus on expanding customer value. Got it.

So, I won’t look at my competitors anymore. Let them be strong if they want. Like a gentle breeze brushing over a mountain ridge. Let them be dominant if they want. Like a bright moon shining on a great river.

Wait a minute, don’t be hasty.

Why can’t we look at them together?

03 – Together, But Prioritize

Focusing solely on your competitors can lead you down a path of defeat because your competitors have different resources and capabilities than you do. The strategies that work for them may not work for you.

Blindly copying them won’t leverage your strengths; instead, it might distract your attention and hinder you from creating greater value for your customers.

So, keep your eyes on your customers. However, at the same time, you can spare some “peripheral vision” to keep an eye on your competitors periodically.

What does this mean? “Closely watching” competitors versus “keeping an eye” on competitors, aren’t they both forms of observation? What’s the difference?

The difference lies in the priority and approach you give to observing and responding to your competitors.

If you place your competitors as your highest priority, then what you’ll do is prove that you’re better than all of them. You’ll closely monitor every move your competitors make and base your own actions on what they are doing. This is what it means to “closely watch” your competitors.

If you prioritize customer value as your top priority and place your competitors at a slightly lower level, you have a chance to view your competitors differently.

What you do next depends on what your customers need. Interestingly, your competitors are also doing the same thing:

Facing the same customer, solving the same problem, and earning the same money.

So, you can always consider your competitors as a yardstick or a scale to measure yourself against:

Where do you stand in terms of resources and capabilities?

Are you delivering value that others can’t, or are you delivering more value for the same price?

Are you within the industry, within the range of choices for your customers, where you can maximize customer benefits?

If you are, your delivered customer value is at its highest, and you’ll never be abandoned by your customers.

If not, continue to accumulate your resources and capabilities, iteratively, and steadily accumulate.

This is what it means to “keep an eye” on your competitors with your main focus on “closely watching” your customers. Use your primary energy to “focus on customers” and allocate secondary energy to “keeping an eye” on your competitors. Let your competitors serve as a reference point while making customer value your ultimate goal, so you become the optimal solution that provides the most benefit to your customers.


Michael Porter, the father of competitive strategy, formulated three fundamental competitive strategies:

  1. Cost Leadership: Although it may seem like competing with rivals by offering lower prices, the essence is to make products more affordable for a broader range of consumers.
  2. Differentiation: While it may appear to involve doing something different from competitors, the core idea is to provide a unique and valuable offering that is hard for others to replicate.
  3. Focus: Although it may seem like competing by targeting a specific niche, it’s fundamentally about meeting the specific needs of a particular group of people.

So, it’s essential to keep your focus on customers, but at the same time, remember to spare some attention for your competitors.

Both customers and competitors should be monitored, and there’s no need to make it an either-or choice.

The key is to prioritize and understand the order of importance. As Microsoft’s CEO Satya Nadella once said, “Competition is not the goal. The goal is to achieve customer value. Sometimes we get the prioritization wrong.”

What’s the priority? First, truly understand what your customers need and excel at delivering it. Then, prove that you can do it better than your competitors. Otherwise, you might lose the driving force for innovation.

Wishing you success in keeping your focus on customers, occasionally keeping an eye on your competitors, and navigating through the anxieties and uncertainties of competition with a steadfast commitment to delivering customer value.

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