Why Competitive Analysis Often Backfires—and What to Do Instead

A B2B SaaS company nearly invested millions in workflow automation features, convinced it was their customers' top priority. After all, it was the industry’s buzzword of the year. Their competitive analysis showed every major player offered it, and it often came up in conversations at the C-suite level.

But, just before committing resources to development, the company paused to run deeper customer research and uncovered a major disconnect. Their SMB and mid-market customers didn’t care about automation. What they actually wanted was faster onboarding. The real need wasn’t more features. It was fewer barriers to getting started.

One simple question saved them from a costly mistake:

Do our customers actually value what competitors are offering?

If the answer is yes, feature match. If not, invest elsewhere.

IMO, this is the most common mistake in competitive analysis.  Assuming that if your competitor builds it, you should too.

That logic leads to expensive features that look good on comparison charts but sit untouched by real users.

In this article, I'll explore why companies fall into this competitive analysis trap, how to spot when you're making this mistake, and the research methods that can help you build features your customers actually want instead of blindly matching the competition.

Why competitive analysis goes wrong

It seems obvious to validate if customers want a feature before investing time and money. And yet, competitive analysis has a way of making companies forget this fundamental step. There's something almost hypnotic about those competitor feature comparison charts.  All those check marks you don't have and they do. 

The result? Millions spent on bloated products filled with features customers barely touch. I’ve seen super smart product teams fall into this trap in several ways:

Following competitors without screening for relevance: Companies tend to track competitor features methodically without asking if those features actually matter to their audience. Your target customers likely have different priorities than your competitor's customers.  (Isn’t that why they’re your customer and not theirs to begin with?)

Chasing industry buzzwords: The pressure to incorporate "AI-powered" or "LLM-integrated" features is real.  No CEO wants their product to appear behind the curve. But these trending capabilities don’t guarantee alignment with what your customers actually need.  

Creating bloated pricing tiers: Most SaaS companies offer a good, better, best model.  With the “best” tier loaded with impressive-sounding features.  But, if customers aren’t going to use those features, you’re just creating product bloat.  And can you blame someone for not wanting to pay for something they won’t use?   

Better methods for competitive analysis

To get real answers about what customers value, you need research methods that force trade-offs. In other words, tools that can reveal what customers truly need versus what they simply say they like.

MaxDiff and Conjoint Analysis do exactly that by forcing customers to choose between options. Instead of rating each feature independently, they answer questions like: "If you could only have feature A or feature B, which would you pick?" These trade-off approaches reveal true preferences in a way traditional surveys simply can't match.

MaxDiff is great when you want to stack rank a list of features - typically helpful when setting your product roadmap. Conjoint takes it a step further, showing how people make trade-offs across full product configurations — perfect for optimizing feature combinations alongside pricing.

Filter for relevance first

Before you worry about which competitor features to match, you should first determine if those features even matter to your customers. The Chapman and Bahna framework provides a practical approach:

1. First, ask your customers to identify features that are completely irrelevant to their jobs or use cases

2. Among the relevant items that remain, have your customers identify which are unimportant

3. Then, force your customers to trade-off on what is actually relevant and important to them

   
   

This outcome of this approach results in a clear stack rank of what actually matters to customers and direction on which features you as an organization need to prioritize. Better yet, you could also ask how well current products in the market deliver on these features.  Based on that data, you’ll discover where your product needs improvement and where it has strengths compared to competitors. These insights help both your product development and marketing strategies.

Customer-focused competitive analysis

In my opinion, the most common (and costly) competitive analysis mistake is building features simply because competitors offer them. This can lead to wasted development resources, bloated products, and missed opportunities to deliver what your customers truly want.

Don't let competitive analysis lead you astray. Make sure you're building features your customers actually want, not just matching what competitors offer. After all, you don't want to spend millions on automation features when your customers just want faster onboarding.

Ready to stop building features no one uses?

Contact us today to and let’s talk about how MaxDiff and Conjoint can sharpen your competitive strategy and build products your customers will love.