What to do when a competitor is lying about your product?

Hi guys, just wanted some advice on a situation. One of my competitors has been making up lies about my product and its features to try and steal our customers. I used to think negative press was just a reality of everyday business-so who cares (plus some of the lies were so blatant I was sure no one would fall for them)-but recently I’ve been losing a ton of prospects to the competitor because they’ve heard something about my product that’s not true. I’ve corrected them, but it usually doesn’t work and just makes me appear defensive? Any advice on what I can do instead, or further actions to take would be much appreciated.
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Yikes, this sounds annoying! Sorry about that! I’d be careful about exposing your competitor as a scammer. If anything, speaking illy about them will only cause the prospect to feel even more strongly about your competitor, and suspicious of you! Not worth it risking your reputation. You could try advising your prospects to really get to know your competitior before making a decision and suggest they ask for testimonials. Offer your own too, of course. This way, you’re only helping their buying decision and hopefully they’ll see through the testimonials why your products a better fit, without you needing to speak disrespectfully of your competitor. Good luck!
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If its possible with your business structure, a sample or demo unit heavy campaign may be in order. Seeing is always believing, so sampling a unit in for your customers to test that literally shows your product performing the necessary functions could go a long way. Or, if you could set up a quick sales presentation with your product showing your competition is a blatant liar, it is a great relationship building tool and you get the added bonus of customer familiarity with your product.

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I have a couple of o questions before I can make any suggestions.
1- Are the accusations true?
2- If not, have you used satisfied customers to dispel the accusations?
3- Do you invest time to determine if your client base is satisfied to the point where they are your evangelist?
I have always sold on the quality and never price. Anyone can drop their price and be the lowest. It is very difficult to compete on quality.
I remember early in my career, my company lost 10 accounts. Why they told lies about us. I learned everything about my competitor and discovered they were not selling on quality. They sold on lies and bashing. Within six months I had won all back. I used this episode to take so much business away from them they bought our company and made me the video president of sales.

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Damn, you could try getting a lawyer and sending them a cease and desist letter? You might not get a reply but at least they’ll know you’re aware that they’re spreading lies and will hopefully rethink their aggressive FUD strategy.
This happened to me before, too! @samantha’s advice is top notch. I’d also recommend responding with something like “it appears X isn’t aware of our strengths, but we’ve prepared some documents with their claims, our response, and supporting data”. It’s what I did and people appreciate the transparency so much that they’re usually convinced before even receiving the doc.
Hi there @alturrisi, thanks for getting back to me. So the accusations are not true, and we use biweekly newsletters to keep our customers informed about any changes on our product. We didn't directly address the issue to our current customers because there's a significant portion that isn't aware of it, but it has raised questions by a few loyal ones. And as I said before, we are losing out on prospects. While it is quality over quantity, I think these prospects are switching over because of the lies and the competitor's price! Current customers are largely unaffected, however. How would you suggest using satisfied customers as evangelists? Through case studies maybe?