Sometimes our competition does as much to define us as our business successes. Think: Edison and Tesla, Microsoft and Apple, Coke and Pepsi. Other strong forces in your market can serve to help your business as much as hinder it. It’s all in how you use them in your business strategy. How well do you know the other movers and shakers in your industry? Are you using them to help your business succeed? If not, it’s time to get to know who else your customers are paying and for what!
Know What They’re Doing…
Now, we’re not suggesting collusion or trying to undercut the market here, but having a good relationship with competitors can be very helpful in the short- and long-term. The trailblazer in the market works the hardest, and often missteps along the way, so sometimes letting the competition pave the way works best. Paying attention, and getting to know your competition allows you to stay close enough to walk the path with less effort (learn from their mistakes), but far enough away to observe and learn from the pitfalls.
Beyond your direct competitors, look at similar businesses in other geographic areas than you. These “competitors” are generally easier to speak with. Another great resource for a look inside your competition is to talk to your own A/R and A/P accounts. People who are already buying your products/services, or other professionals working within your industry, understand what you do, so their input is precise and constructive.
Ask your vendors about their other business accounts – what are those businesses doing? Do they have new innovations, technology, or services that they are rolling out? What are they spending their marketing dollars on? Of course, your own customers are also important to talk to. Ask them what other businesses like yours they also patronize. What alternatives to your services do they use in the market and why? What do they like best about your products or services, and what makes yours better than others? What would they like to see you offer?
While collecting this data can be formalized via online surveys, etc., nothing is better than direct conversations. Simply get into the habit of striking up conversations with your vendors and customers. People love sharing their opinions, and knowing you value their input.
…And What They’re Not
Paying attention to your competition is paying attention to your market, and that is what all business owners should be doing on a consistent basis. Competition forces us to pay close attention to our key customers, and stay on top of innovation, which discourages complacency.
Is your competition overlooking an important demographic or low-hanging fruit? Do they appear to be struggling to recognize a return on investment in an area? Have they expanded or niched their business differently? How is their customer experience?
You gain efficiencies when someone breaks ground in the market before you, but there is a lot to be said to leading the pack as well. Evaluating what your competition is doing allows you to identify holes in market, different ways to deliver similar services, ways to diversify your business. Just because someone else isn’t doing it, doesn’t make it a bad idea. Don’t be afraid to seize opportunities to diversify, whether that’s pivoting early or letting the competition pivot while you stick with what works. Getting stuck in the complacency of a follower can cause you to miss the opportunity to jump in front. Being creative, innovative, and diversifying is what being an entrepreneur is all about!
Use Their Efforts…
McDonald’s invests heavily in market research and identifying the perfect location – visibility, traffic count, ease of entry, local demographic analysis, and more. Burger King waits – then puts one across the street. A good competitor can show you where the market is trending, and where you need to focus. Following the competition allows you to re-invest what you save in R&D into your Advertising. Aim to be the (better) alternative… every Coke needs a Pepsi.
Having alternatives is good for consumers, choice can drive traffic and build business.
…And Plan for Mutual Success
Don’t be afraid of your competitor’s success, just make sure you’re mirroring it. Two competing entities can bring attention to a market and strengthen both companies. Back to Microsoft and Apple – their fierce competition turned the computer market into a household product, making computers a necessity in the modern world, not just for businesses and education. You can do the same thing in a local market with a smaller business. When more people know what you do, more people will realize they need it too! Your edge in knowing your competition so well, allows you to offer the better choice in the market.
At the end of the day, your competitors are prime opportunities for you to expand and acquire – or sell and retire. At some point, you will either buy or sell. This plays to how knowing your competition is part of your long-term business planning. When you already have some relationship with your competition you know what their strengths and weaknesses are, how their market position is, and the goals of the business – because you have been watching them consistently over time. If you have burned all your bridges with competition, you lose opportunities to buy them out, or you lose the chance to position your business as a great investment for one of those competitors.
“Know Thyself, Know Thine Enemy. A thousand battles, a thousand victories.” – Sun Tzu
Special thanks to Raynor Large for contributing this article.