Software is one of the world’s most competitive markets. Because the barrier of entry is low, and the value of the product is high, a given segment of the industry is likely to be inundated with companies hawking software products that are remarkably similar. Take CRM, for instance. There are at least two-dozen firms actively participating in that market, a situation that can make for slim pickings when it comes to making a quarterly quota.

Given that the market is tough, it sometimes takes some extra motivation to hit the road or hit the phones and drum up business. Some sales managers (and more than a few sales reps) use the idea of beating the competition as a major motivator. However, while friendly rivalry of the “Yankees vs. Red Sox” variety may have some value as a motivator, going too far, and demonizing the competition, can have a negative impact on sales. It can also lessen your ability to remain flexible as your software market evolves.

Here’s a real-life example of how demonizing can hurt you. In the early 1990s, I worked in Digital Equipment Corporation’s software marketing division. My manager liked to talk about how much he hated DEC’s primary competition, which was IBM. He even went so far as to say that he considered IBM to be “Hitler” and that he got up every morning thinking how to beat “Hitler” and that he expected all of us to do the same.

Our group was responsible for marketing a desktop publishing product that was being ported to run on different operating systems, including IBM’s OS2. At the time, IBM was busily fighting Microsoft Windows and was hurting for high quality software, so the software product was a natural match. Unfortunately, IBM was the only existing distribution channel for OS2 software, which meant that my boss needed to negotiate with “Hitler” in order to make sales.

I happened to be present at a meeting between the two companies to discuss a distribution agreement. My boss must have had similar-minded colleagues at IBM, because the atmosphere in that room was so tense and ugly that it’s a wonder that everyone emerged alive. Needless to say, an agreement with “Hitler” never got signed, and the software version (which cost about $1 million to port) sold exactly four copies… at $250 a copy.

That’s an extreme case, but there are plenty of people in the software business that think that hating the competition is a good way to motivate the troops. There are three compelling reasons why that’s a bad idea:

1. It makes customers uncomfortable. If you’re constantly thinking of the competition as the enemy, that attitude will inevitably creep into your sales materials. I’ve seen several press releases from CRM firms, for example, that ridicule the failures of a competitor or brag about stealing business from a larger vendor. That kind of talk doesn’t impress customers. Instead, it makes them think that you’re being childish and vindictive. If you don’t believe me, just ask one of your customers. They’ll tell you that it’s really creepy when a software sales rep treats the competition like an evil empire.

2. It limits your partnership options. Even if the software you’re selling is functionally identical to the competition, there will be times when you’ll need to work with that competitor on a complex solution. While it may sound like a goofy neologism, “Coopetition” is a market reality and it’s hard to do if there’s hatred bouncing around the room.

3. You could be merged with the "enemy." Software markets go through a predictable cycle of innovation, followed by consolidation. Very few software companies survive to be large firms, which means that your firm will probably be acquired at some point, and probably by one of your competitors. That process is difficult enough when the two companies have natural synergy but a merger can be a truly miserable experience when there’s lingering animosity.