Every positioning exercise I have run starts with the same moment of tension.
I ask the team: “What are your competitive alternatives?” And someone pulls up a slide. It has five logos on it. Three of them are companies your prospects have never heard of. One of them is a company you researched because a journalist mentioned them in an article. None of them are the thing your actual customer compared you to before they bought.
That slide is not your competitive landscape. It is a list of phantom competitors.
Phantom competitors are not your problem
A phantom competitor is a company that could theoretically compete with you. Maybe they serve a similar need. Maybe they show up when you search your category on Google. But when you win a deal, you never beat them. When you lose a deal, you never lost to them. They live on slides, not in sales calls.
Positioning yourself against phantom competitors is expensive. You spend resources explaining why you are better than companies your customers have never considered. Meanwhile, you are losing deals to the thing you are actually being compared to, and you have no answer for it.
The question that unlocks everything
There is a better question than “who are our competitors?”
It is this: what would a customer do if our product did not exist?
This question does something the competitor slide cannot. It forces you to see the actual alternatives your buyer would resort to. Sometimes that alternative is a direct competitor. Often it is not. In enterprise software, roughly 25% of deals are lost to “no decision.” That means you lost to a spreadsheet. To manual process. To the customer deciding to hire someone to do the job by hand.
That spreadsheet is your real competitor. If your positioning does not explain why you are better than a spreadsheet, your positioning has a hole in it.
The chain that starts here
Positioning has five components: competitive alternatives, differentiated attributes, value, target customers, and market category. Every component has a relationship with the one before it.
Your differentiated attributes are only differentiated relative to what you are being compared to. If you compare yourself to Salesforce, your differentiators are one thing. If you compare yourself to a spreadsheet, your differentiators are something entirely different. Both can be true at the same time. But only one is relevant to the customer sitting across from you.
Once you know your real competitive alternative, your differentiation becomes specific and honest. Once your differentiation is specific, your value becomes real rather than theoretical. Once your value is clear, you can identify which customers care most about it. And once you know that, you can choose the market category that makes your value obvious without you having to explain it.
Change the starting point and the whole chain changes.
How product teams, marketers, and founders each get this wrong
In practice, I have watched three teams approach competitive alternatives in three different ways, and all three are predictably wrong.
Product teams tend to list technical alternatives. Companies building something similar at a different feature level. This is the Google search approach. It captures technical peers but misses what buyers actually consider.
Marketing teams tend to list aspirational competitors. The category leader they want to be associated with. This is useful for positioning by association, but it is not the same as honest competitive context.
Founders tend to think they have no competition. Or that their category is entirely new. Both claims are almost always wrong. Every buyer has a current solution, even if that solution is “we are not solving this problem yet.” Doing nothing is a choice, and you are competing against it.
The most reliable source for real competitive alternatives is your sales team. They hear the actual question in the room. They know what the buyer was using before they called. Ask your salespeople what customers say they are comparing you to. That answer is your starting point.
For the founder closing your first ten deals
You do not have the luxury of experimenting with positioning for a year. Bad positioning at the 0-1 stage does not just lose deals. It sends you in the wrong direction for months.
I once ran marketing for a company where we called our product a Microsoft Access killer. We spent a year positioning it that way. It barely sold. When we finally talked to actual customers, we found six companies that had transformed their operations using it for something else entirely: syncing data between mobile devices and a central database in the field.
We had been positioning against the wrong competitor for a year. The right competitive alternative was not Microsoft Access. It was paper forms and manual data entry. Against that alternative, we were not just better. We were transformational. That repositioning made the company worth acquiring.
Start with the right alternative and your differentiation tells itself. Start with phantom competitors and you are writing copy to convince people of things they were never thinking about in the first place.
Before you write a line of messaging, ask what customers would do if you shut down tomorrow. The answer to that question is where your positioning has to begin.