I lead the product management team at a vertical-market SaaS company, and I’ve never had a problem getting feedback and product suggestions from existing customers and potential customers, even though many of them compete with each other. The same is true for other vertical-market products I’ve worked on in the past. Below I’ll explain why customers tend not to worry too much about giving advice and feedback to SaaS vendors.

First, most companies value short-term gains from technology adoption above the hypothetical impact of their competitors eventually adopting it too. Most decision-makers just don’t think that far ahead! If a company can give a SaaS vendor some suggestions about how to redesign a feature to save 5% of the customer’s labor costs, then they’ll do it. Saving 5% this year is worth it, even if the competition might figure out how to get that 5% next year. Most buyers are happy to roll those dice.

Second, if a customer gives you feedback or ideas that you build into your software, you will have designed software that exactly matches their existing or desired business process. Any competitor will be at a disadvantage because they won’t necessarily have a business process custom-tuned for the software you just built. For example, imagine you’re building SaaS software for fast-food industry. Imagine your customer “UberBurger” has a competitive differentiator in their ability to profitably customize each customer’s burger with lots of different toppings, while most of their competitors pre-make their burgers with a small, fixed set of toppings. UberBurger might share with you the Excel-based tools they use to set pricing based on the cost of ingredients, and ask you to extend your software to dynamically set pricing based on ingredient usage. All fast-food chains might benefit from this feature, but UberBurger would benefit the most because their existing business process creates much more variability in ingredient usage than their competitors’ variation-free cooking.

Third, even if you can build a universally-applicable feature from customer feedback you get from one or a few customers, customers vary widely in their ability to derive value from technology. Not coincidentally, the customers who give you the best product feedback (especially those who will help you design the V1.0 of a brand-new product) tend to be ambitious, forward-thinking early adopters who are very good at adopting new technology and using it to beat their competition. They know that they will get more value from technology than their slower, dumber competitors so they’re eager to use your SaaS product as a way to amplify their existing advantage in technology adoption. Even if the dinosaur competitors eventually adopt that new feature, your early adopters know that they will always be several generations ahead.

Fourth, intra-industry competition is not zero-sum, and savvy customers know this. If a dentist helps you design SaaS software for dentists that cuts her costs by 10%, then she’ll get more customers—not just by taking share away from other dentists but also because better quality and/or lower prices for dentistry will attract more customers to dentists overall.

Fifth, the things that SaaS companies build are usually focused on the “boring” parts of a business, like data entry, logistics, financial processing, reporting, etc. The things that truly differentiate one company from another are seldom things that you can clone in software. Using your Guidewire example above, think about the competitive positioning of Geico (“lowest price!”) vs. State Farm (friendly, “like a good neighbor”) vs Allstate (“you’re in good hands”). Claims processing workflow is just not what differentiates companies in that industry.

Finally, human beings *love* to talk about themselves, and *love* it when other humans volunteer to solve their problems. When a SaaS vendor comes to your office, tells you that you’re a smart industry leader, and asks how you do your job, most humans are overjoyed to share this information to another human. Sure there’s a hypothetical competitive risk, but few business processes are so sensitive that they override the innate human need to share their valuable wisdom, to complain about their problems, and to participate in the wonderful mass delusion that employs us all: that new technology will solve every problem! ;-)

A caveat: especially early in a product’s history when the vendor has no revenue nor bargaining power, an industry player will sometimes offer to help you design the software (and even offer to pay for the development!) in exchange for an “exclusive” so their competitors won’t get it. In most industries this is a rookie move— and often a sign that you should find another source of advice, unless you want to be their personal outsourcing shop instead of a product company.

But some industries are so concentrated (think Coke vs. Pepsi, or Fedex vs. UPS) that you won’t be able to engage with any of the big players without an agreement to not share with the competition. My advice is: don’t start your business targeting these kinds of companies! My current company’s industry— vending— is littered with the corpses of startups who focused their initial sales effort on Coke or Pepsi.

Instead, target your initial product at smaller, hungrier, more ambitious players in these industries. Over time you can work your way up, so that when you’re big enough to go after the #1 player and they demand that you not sell to #2, you can counter-offer effectively and extract top dollar for a limited-time exclusivity… and then cheerfully raise the price when it comes time to renew.

Good luck!