Every business has competitors. Depending on your industry and your value proposition, you may be in a Thunderdome-style war of all against all, or you may just have a set of friendly rivals. Most likely, you’re somewhere in between. Your competitors are both an obstacle and an opportunity. They are an obstacle in that they are going after many of the same customers you want, and so you need to understand them in order to defeat them. They are an opportunity because they are a collection of (presumably) smart people who have worked hard to solve the same problems you face, which means they have information for you about your market and about your customers. They may not be willing to share that information with you directly, but the odds are good that you can get a lot of it anyway just by observation.
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You know your business’ value proposition, or should, but how about the UVPs of your competitors? Knowing their UVP can help you in creating or adjusting your own; for example, if your competitor’s donut shop’s UVP is that they are open 24/7/365, then you know that being open until midnight isn’t going to differentiate you in that marketplace. Knowing their UVP can also help you compete against them, as you can counterprogram to find the customers who are poorly served by your competitor’s particular focus.
How and where and how much to advertise are difficult questions to answer even for giant corporations with huge market research departments; they are even more difficult for small business owners. If your competitors are advertising heavily and steadily, this can be a strong signal to you that your target customers are advertising-dependent, and that you will need to budget for the expense of an ongoing ad effort. Their advertising can also serve as a direct conduit into their strategic plans. Are they emphasizing discount coupons? or new products? or friendly service?
No company is perfect, and even the most powerful and resource-laden enterprise has weak points. Microsoft can’t pivot rapidly to new marketplaces (although when it finally does arrive, look out) and Google wasn’t exactly successful with their social media platform (although your Google My Business listing shares similar social media functions.
Analyzing the weaknesses of your competitors is a way to gain leverage against them in the battle for customers. If they have indifferent customer service, make your customers love coming in to your store. If they overprice commodity items, make sure you charge a market-clearing price and advertise the fact.
Similarly, no company is bad at everything; how would they continue to exist if they were? Your competitors have things that they are great at. If their strengths are fundamental to the business or industry you are in, then you have no choice but to go head to head, but if their strengths are in areas that are less important or optional, then you can try to avoid competition in those areas and instead go after their weak spots.
Values make the world go. It is our values that define us as people, and that applies to our collective organizations like businesses. You have to know what your own values are, and knowing your competitors’ values is similarly important, for both positive and negative reasons. Where their values are poor, it creates opportunities for you to win. (Your competitor treats their employees like dirt while you treat yours well? Hiring away their best people is going to be a cakewalk, once you know that.)
Conversely, where you have shared positive values, that creates opportunities for you to reach out. Both companies care about educational opportunities? Maybe you can agree to do do joint internships with local schools or fund a scholarship program for local youth.
Every business has a different way of engaging with customers, from deploying an armada of algorithms (Facebook) to building a one-on-one personal relationship with every customer (most good hairstylists). Small business owners should definitely focus on the right-hand side of that particular bell curve, but you can learn a lot from seeing how your competitors are relating to their customers. (One excellent way to get this information first-hand: walk into the store and be a customer.)
Do they piggyback on their staff members’ social media networks? Do they blog every day? You don’t necessarily need to copy everything they do, but their public actions are a window into their marketing as well as a rich source of possible ideas. How do they use technology? Just as with marketing and advertising, finding the appropriate level of engagement with technology (whether that’s in the IT department, the production end of your business, or your customer-facing systems) is something of a black art for small businesses.
Seeing how your competitors do it, taking advantage of their mistakes and learning from their successes, will help you reduce the uncertainty surrounding this area of your business. What new products or services are they developing? Nobody can just stand still and hope to remain in place; the current pushes all of us backwards if we don’t actively try to move forward. That means creating new products and new services, or improving the ones we already have, or upgrading the way we deliver them.
Your competitors are doing this all the time, and you have to as well. Observing their decisions can help you to carve out the innovations that will enhance your business’ attractiveness to customers. Don’t directly copy their ideas, but gain inspiration and find ways to adapt some of theirs to your business. And don’t forget that it’s your own unique contributions that will genuinely attract people to your business.
Seeing what your competitors are doing can give you insight into the areas that aren’t being actively exploited, which present new opportunity for you. It’s important for you to know these things about your competitors. It is equally important for you to know these things about your own business. Knowledge is power in the business arena, and you can never have too much of it.
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