Many business owners think of competition as the enemy—a malevolent force out there somewhere, trying to take their customers and run them out of business. To be sure, your competitors would probably like nothing more than to take your customers from you (and vice-versa), but competitors actually play a largely beneficial role in the business ecosystem. In this article we’ll explain why competition is mostly a good thing and how you can use your competition to your own advantage.
Know that Competition is Good for Customers
The main reason that competition is good is that it keeps everyone on their toes. Most of us are willing to admit that if we have the option to be lazy, we’re likely to be at least a little bit lazy. When there’s only one gas station in town, it doesn’t have to check the market price every day to make sure it’s competitive on gas prices. It doesn’t have to keep the pumps shiny and the bays clean to attract customers. It doesn’t have to make sure the soda machine is working and the cashier is friendly.
With no competition, our mindset very quickly becomes that the business owns the customers, and they have no place else to go. Most of us remember what taxi companies were like before Uber and Lyft came along – surly dispatchers, dirty cabs, and glacial service times were the norm.
Know that Competition is Good for You
That’s why competition is good for your customers, of course, but the same competitive force that requires you to up your game also makes your game more rewarding. Because competition fosters innovation and development, you are continually able to do a better job of serving your customer’s needs in a competitive environment.
Aside from the bottom line, having your behavior focused on your customers’ needs is good for you morally, mentally, and physically. Competition promotes a better business reputation and a more fulfilling journey as a business owner. That’s all well and good, but you may be saying “How can I use my competitors to make my business stronger?”
Learn From Competitors’ Mistakes
Your competitors represent an educational opportunity for your company. Most of the decisions they make and the actions they take are going to be public, or at least observable, and you are in a good position to learn from their mistakes and their successes. If they heavily advertise a giant 4th of July event and yet you look out the window and see that their parking lot is empty on 7/4, then you have just learned that 4th of July (or maybe holiday-themed events in general) may not be big driver for your customer base—and you’re not the one who spent all that money on propane grills and hot dogs to make that discovery.
Watch what your competitors do and try to gauge the success and failure of their initiatives as a guide for your own.
Stand Up and Stand Out
Your competitors provide you with an opportunity to distinguish your brand and your unique value proposition. In the absence of competition, when you’re the only provider of your good or service, it’s harder for you to focus on a particular niche, but that becomes much easier when there are other players in the space.
If you want to sell high-end, high-margin widgets, it’s actually very helpful to you to have Larry’s Bargain Widgetorium open up next door – all the people who would normally be taking up the time of your expensive salespeople with questions about where they can find a $0.19 widget are now over at Larry’s rummaging through the used widget bins, and your employees can focus on creating value for your discerning clientele. Position yourself intelligently against the other companies in your market, and you can increase the leverage of your value proposition.
Use Competition as Context
The benefits of a product or service aren’t always immediately obvious to someone who doesn’t understand the need yet, which is why educating the consumer is a major part of any marketing strategy. This also requires a lot of effort and energy. It may at times be helpful for you to describe your business as it relates to a more well-known competitor. This helps you to bypass some of the legwork in setting up the context of your product or service, and can help your potential customer get into a better frame of mind for understanding what you have to offer.
Adapt Their Ideas
No, you shouldn’t steal your competitors’ ideas. However, you can pay attention to similar ideas they have that you haven’t had a chance to try, or to new ideas they have that you would not have thought of. There’s nothing wrong with staying aware of your competitors’ ideas and using them as inspiration for your own. You can adapt their ideas with your own unique implementation, and you should—after all, every business is different so their exact idea is not likely to be a perfect fit for your business anyway.
Use them for Testing
You can also use your competition to test the validity of your own ideas and assumptions. Perhaps you have a sandwich business and you believe that baking your bread fresh every day is very important for keeping your customers happy. If a competing shop opens up that buys its bread prepackaged from a regional bakery, you can assess whether fresh bread is actually something sandwich customers really care about, without running a risky in-house experiment.
These are just a few of the ways that you can benefit from having a strong competition for your business. Competition is inevitable, and there’s really no way for you to forestall it, so you may as well lean into it and maximize the benefits that you can gain from having it around.