Growing your business requires you to be constantly learning about it and making necessary adjustments. However, you can only grow and improve so much when you learn in relation to yourself. This is why it’s important for companies to have competitors. Learning about your business in relation to the competition will broaden your knowledge about your target audience and industry so that you can refine your business strategy. (There also happens to be a free app that allows you to keep tabs on your competition. It’s called Perch by ThriveHive. Download it free for iOS and Android.)
Knowing about your competitors will help you to communicate with your target audience, distinguish your business from competitors, improve your processes, and navigate challenges in your market. Here are five things to know about your competitors that helps your business in these areas.
What Kind of Competitor Are They?
The first thing you should now about your competitors is the kinds of competitor they are. Your competitors include any business that might deter a potential customer from choosing you, but this can take different forms.
Direct Competitors
Direct competitors are businesses that have the same product or service offerings. For example, if you’re a landscaping company, your direct competitors are other landscapers. Information on your direct competitors will facilitate your ability to stand out above them.
Indirect Competitors
Indirect competitors are those who don’t offer the same service, but meet the same need in an alternative way. In the landscaping example, your indirect competitors would be businesses that facilitate do-it-yourself lawn care, like local nurseries, home improvement centers, and hardware stores. Information about your indirect competitors will help you to find effective ways of getting in front of your target audience.
Knowing what kinds of competitors you have, and why they are competitors can help you to identify which marketing activities and messaging are the most effective for your business.
How Do Your Competitors Position Themselves?
The same product or service can be offered in a number of different ways, through various combinations of circumstances. People vary in what combinations of circumstances are most important to them, which is why several businesses with similar products and services can exist. The combination of circumstances under which a business presents its offering is its positioning—which is another thing you should know about your competitors.
The more you know about your competitor’s positioning, the more you can differentiate yours from it and make your business unique. This also makes it easier for customers to quickly compare businesses and understand how those differences apply to them. If you have similar positioning to your competitors, this is okay too. Knowing how your competitors are operating within this context can help you to learn what’s effective and what’s not.
So how do your competitors position themselves? Do they appeal to a particular age group, gender, or niche market? Are they a luxury service or geared for the cost-conscious? Do they use environmentally friendly practices or products? The more you know about your competitors’ positioning, the stronger you can make yours.
Understand Your Competitors Pricing
You should know about your competitors’ pricing for many reasons. The first is so that you can keep your pricing in line with what people in your target market are willing to pay. In addition, you might learn about new pricing models that are more appealing to customers.
Knowing your competitors’ pricing isn’t always so that your pricing can match or beat theirs. The point is to understand where your pricing falls in relation to your competitors in the greater market. If your pricing is lower than theirs, this is an advantage. However, you will need to convince prospective buyers that the value of your product or service is as good as those with higher prices.
On the other hand, if your pricing is higher than that of your competitors, you will need to be able to convey the added value that comes at this price. Even loyal customers may turn to a competitor if the price is low enough, so you need to give people a reason to pay more.
Knowing about your competitors pricing will help you determine the pricing that is right for your business, and also to obtain and retain customers with those prices.
What Are Your Competitors Strengths?
Yes, you want to beat your competition, but ultimately you want to best serve your customers. Therefore you should know what your competitors strengths are. What do their customers like about them? For some things that customers really like, you may want to offer those too, or something similar or better. You have your own offerings, but the addition of something else that customers really like may be enough to win them over.
However, there may be some things that your competitors offer that you won’t be able to match or exceed. In this case, it won’t be worth your time or effort to try and win customers over in this area. Your business can’t meet every need, and that’s perfectly okay. Now you know where your time and energy will be best spent.
What Are Your Competitors’ Weaknesses?
In addition to knowing where your own business can improve, you should also know the weaknesses of your competitors. First, because many of your own strengths come naturally to you, so you don’t always realize you have them. Knowing your competitors’ weaknesses may help you identify your strengths.
At other times, your competitors will have weaknesses that are strengths you know you have. Knowing the weaknesses that stick out to people can help you determine which strengths to highlight in your marketing and messaging.
Sometimes, your competitors’ weaknesses will reveal an area of importance that you hadn’t thought of, which you can incorporate as a new strength into your business. Knowing the gaps in your industry created by your competitors provides opportunities for you to fill them.
Yet in other cases, your competitors will have a weakness because of a significant or common problem in your industry, community, or target market. In this case, seeing how your competitors face those challenges can help you learn how to handle them better or know what to avoid. With the power of online customer reviews, today, you’ll want to do everything you can to create the most positive customer experience possible.
It is extremely important for you to know about the positioning, pricing, strengths, and weaknesses of your competitors. The insights you gather on your industry and your own business will help you to improve your marketing strategies and truly stand out to your target audience.
