Productocracy: How to Outclass Your Competition | Atanas Dzhingarov Productocracy: How to Outclass Your Competition | Atanas Dzhingarov

Productocracy: How to Outclass Your Competition

The worst thing about a race to the bottom is that you might actually win. And even if you win, you’re still a loser. This is what happens when you begin competing on price, aiming to be the cheapest business in town with the biggest sales. Nevertheless, this is one of the most common business mistakes you’ll ever see.

I’ve noticed clients often assume (quite wrongly) price is the only thing their customers care about. When I ask them, “What is that you do better than the competition?”, their reply is some variation of, “We offer lower prices” more often than not. These are businesses that don’t stay in business for long.

If low prices is your only differentiation, then you’re toast, and there are several reasons for that.

  • Your customers might end up wondering how come you’re offering lower prices. What did you skimp on in order to afford it? And no one will believe you’ve simply cut your profit margins.
  • Besides, the moment someone with bigger pockets or lower prices appears, your business is taking a trip down the old family farm.
  • Finally, if prices were all people cared about, there would be no such as a luxury brand. The truth is, people love spending money. All you need to do is make spending them with you a real pleasure.

Offering the lowest prices is a bad way to run your business. Paper-thin margins and competing over penny pinchers is no way to build a brand or establish a productocracy.

Creating a productocracy will transform your business into a profit-generating juggernaut. You won’t have to keep shoveling cash into furnace in order to power the locomotive. You will witness the invention of a perpetual motion engine.

This is by no means easy, but running a productocracy is something to be proud of. It dramatically increases your chances of business success, especially in e-commerce, where the competition is so steep. Let’s dive and see what it’s actually about.

What is a productocracy?

In his book, UNSCRIPTED: Life, Liberty, and the Pursuit of Entrepreneurship, author MJ DeMarco gives us the definition of a productocracy.

A productocracy is “a product or a service that has a distinctive value skew in the marketplace which incites unsolicited recommendations from its current customers, creating new customers.”

In other words, products and services that are so awesome, people can’t help but tell their friends and family about it.

Think about the last time you bought something really cool or you had a really nice experience somewhere. Didn’t you tell your friends about it? Didn’t you post on social media about it?

Word of mouth is still by far the best way to communicate your brand’s value. No amount of advertising, sales funnels, and marketing will ever be as effective as word of mouth. People telling other people about you gets your foot through the door like few things can.

The gist of productocracy is being so much better than your competition and offering so much value, that people can’t help but talk about you. You turn your customers into raving fans.

I know what you’re thinking. “Atanas, this is pretty basic stuff. Every business should be like this.” Thanks for pointing it out, imaginary person I’m currently conversing with. You’re right. Every business should be like this. But few are. In fact, most businesses are barely even OK.

The truth is, most businesses don’t really get what it means to create a productocracy. As long as they can generate some profit, most business owners don’t give a rat’s ass about anything else. Which is ironically the reason why they shoot themselves in the foot. That’s their Achilles’ heel, if you will.

How to create a productocracy.

The core principle of a productocracy is find one or more key elements where you can be better than your competitor and then improving them so you can add a lot more value.

Do that in a way that customers can discern and they’ll be so happy with the product or service, they’re very likely to recommend you.

So how can you achieve this? It’s not as easy as it sounds, but we’re here to make it easier.

Step 1: Identify your target market.

You need to start by identifying your target market. You can’t maximize the value you’re giving your customers if you don’t know who those customers are and what they want. In fact, you can create a productocracy by servicing a market no one else is servicing.

Focus on your customers’ pain points. What goals are they trying to achieve? What outcomes do they dream of? Business is about solving problems. Solve their problems better than the other options on the market.

Step 2: Break down your business into its core attributes.

Start with the product or service and work your way out. Analyze every attribute and find areas you can improve. Anything from:

  • ingredients;
  • quality;
  • warranty;
  • process;
  • product photos;
  • package design;
  • customer service;
  • website design;
  • UX/UI;
  • blog;
  • newsletter;
  • social media presence;
  • delivery policy;
  • return policy;
  • and more.

Doing this will help you map out all the ways in which your business provides value to your customers. Hence, you’ll know where you can value skew (the process of providing more value than your competitors). This will come into play later.

Step 3: Analyze your competition.

Gary Vee says you shouldn’t care about your competition. You should be “too busy executing”. With all due respect, this works well when you’re a creative, but not so much when you’re a retailer, especially online.

Unless you’re in a league of your own, you should know what your competition is up to. Take all the attributes from the above and compare your performance to your closest competitors. Find ways to provide a lot more value than the competition in at least some of the attributes.

Step 4: Skew the value.

Now that everything is laid out in front of you, it’s time to start making changes. You’ve identified your own weaknesses, as well as your competitors’. Use this information.

Start with areas where you can easily outshine your competitors.

  • If they’re not offering free shipping, you should offer free shipping.
  • If they have an ugly, outdated website, you should improve your website.
  • If their customer service sucks, you should offer excellent customer service.

You get the point.

Step 5: Fix your messaging.

Your customers need to be aware of the value your business provides. And unless that value is painfully obvious, you need to make it crystal clear.

Copywriting sells by showcasing real value. So before you go off fixing your messaging, make sure you’ve improved what you can from the list above. Then talk about those improvements explicitly.

Step 6: Start working on your brand.

I know what you’re thinking. “I’m a small business, I don’t have a brand.” If that’s the case, then you have a huge problem. You need to start working on your brand immediately.

Unless you’ve invented a mind-control device, you can’t control what people think about your company. But what you can control is how you conduct your business. Make sure everything about your brand sends the proper signals to your customers.

Step 7: Stop dropping your prices.

No productocracy is ever the cheapest. People rave about “the amazing option”, not “the cheapest option”.

If you want your customers to recommend your business to their friends, don’t be the cheapest option. Instead, provide enough value so customers buy from you even if you’re more expensive. Value is subjective.

Competing on price is a race to the bottom. There are no winners. 

You don’t need to reinvent the wheel to create a productocracy. You just need to make sure yours is perfectly round and polished.

Some examples of productocracies.

You don’t need to be a huge brand to be a productocracy. That being said, you can learn from them and see what makes them tick. Remember, great brands weren’t always great brands. It took them time, work, effort, and sacrifice to get there. Yet, they were started with the idea of becoming productocracies.


One of the marks of a productocracy is they don’t need to advertise in order to stay in business. Sure, advertising helps them, but they wouldn’t go under if they stopped. Tesla embodies this principle to a T.

When someone buys a Tesla, you’ll know about it. They’ll post about it on social media because by associating with the Tesla brand, people are sending a message about themselves. People need to belong in a tribe and that’s what makes great brands great.

Tesla brought electric cars to the masses. They packed their cars with features, long-lasting batteries, made them look cool and took their competitors on a road trip. They also changed the way you buy a car.


If Tim Cook never spends another dime on advertising, Apple would still have legions of raving fans doing their advertising for them. You cannot meet an Apple fan without them showing you their Apple products and explaining why their gadgets are the best.

Apple products use proprietary software, which allows the hardware and software to integrate better. Couple that with strong branding, sleek design, awesome copywriting, good battery, and you have the recipe for a 2-trillion-dollar company.


Once again we have strong branding (notice a pattern, yet?) and some competitive advantages. In the case of Nike, they double down on being comfortable and durable. Anyone who owns a pair of Nikes recommends them. Their quality in combination with athlete endorsement has ensured their spot at the top of sports brands. 


Do you really need an explanation here? Google it.

If you analyze each of the brands above, you’ll find they’re better than their competitors in most or all the attributes from Step 2. Is it then a coincidence they’re at the top of their respective industries? No, it’s a natural consequence of productocracy.

What about your business?

Is your business a productocracy? You can be running a small e-commerce website and still be a productocracy if you give it your all. Once you turn your business into a productocracy, you can easily go against bigger competitors and conquer them. 

If your business is not a productocracy, you have a lot of work to do. But at least now you know where to start. And if you need help with anything, I know a guy.

Till next time.




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