Markets rarely collapse in a single event. They leak. If you wait for a big customer exit or a PR crisis, you’ve already lost some of your options. This article gives you signs to detect and act on early signals of competitive decay, so that you could buy time or pivot to other ventures.
What does competitive decay look like?
Competitive decay shows up first as subtle changes in metrics: a cohort’s retention that dips slightly over time, a competitor shipping a feature faster than expected, or a channel that suddenly costs more per acquisition. On their own, each sign might look benign; together they indicate erosion.
Three leading competitive decay indicators you must track
Cohort churn data
Measure churn by cohort and acquisition source. When a single cohort shows persistent churn over a period, flag it. That data often precedes broader churn because it signals changing customer expectations or a competitor delivering a better value proposition.
Feature parity velocity
Track competitor feature releases against your backlog. Convert parity risk into a simple score: how many core features did competitors match in the past couple of months? If your competitor’s parity velocity approaches your roadmap, your market size is shrinking.
Channel economics deterioration
Monitor customer acquisition costs and ROAS every week. A sustained CAC increase without corresponding growth is often the earliest sign that your market is eroding, either due to competition or changes in market dynamics.
How to operationalize detection?
Start simple. Pick the top three datasets (signups, cohort churn, acquisition costs) and publish a lightweight monitoring spec. Automate weekly pulls, display the tiles on the exec dashboard, and assign an owner for triage. Conduct quick triage meetings, 15 minutes, twice a week, to decide on next steps when tiles turn amber or red.
Where to start today?
Make competitive decay part of your workflow. Add the three indicators to your next leadership dashboard and run tests and audits. Early warning beats emergency fixes. Spotting competitive decay early keeps your options open and gives leaders time to defend or pivot.