In competitive markets, not all rivals are created equal. Some competitors chip away at your deals occasionally, while others dominate specific regions or consistently win high-value contracts. 

To compete effectively, it’s essential to distinguish between minor threats and major ones — and to allocate your attention and resources accordingly.

This is where competitor tiering comes in. By categorizing competitors based on the impact they have on your business, you can sharpen your focus, reduce wasted effort, and better align your go-to-market strategy.

Why Tier Competitors?

Tiering is about prioritization. Instead of treating every competitor with equal urgency, tiering allows you to:

• Focus sales enablement on the most pressing threats
• Tailor win-loss analysis to meaningful patterns
• Streamline competitive intelligence efforts
• Improve market strategy and forecasting

But how should you tier them?

Our Tried and Tested Approach to Competitor Tiering

We’ve implemented a practical decision tree approach to competitor tiering in multiple organizations, and it’s consistently improved clarity for the sales team while helping the competitive intelligence organization to prioritize more effectively. This isn’t just a theoretical model; it’s a practical, experience-driven framework that delivers results.

We classify competitors into Tiers One, Two and Three using three key factors:

1. Frequency of Losses

How often are you losing deals to this competitor?

• High Frequency: They’re showing up often in your pipeline and taking deals regularly.
• Low Frequency: Rarely encountered, or infrequent wins against you.

This is the first — and most telling — indicator of a threat’s persistence.

2. Revenue Lost

How much is at stake when you lose to this competitor?

• High Revenue Lost: Losses are materially affecting your bottom line (e.g., large contracts or strategic accounts). Even infrequent losses can sting if the dollar amount is high.
• Low Revenue Lost: Losses tend to involve smaller deals with less overall business impact.

3. Regional Significance

Are they dominant or highly influential in a specific region or vertical?

• Yes: Their influence may be localized but deep — such as regional incumbents or vertical specialists.
• No: Their presence is scattered or insignificant.

This helps identify strategic threats, even if they don’t always show up in broad win/loss data.