When Machiavelli wrote, “Keep your friends close and your enemies closer,” I doubt he had the success of small businesses in mind. Still, the advice can be applied to one of the key components of business success, knowing your competition.
With a clear understanding of what your competitors offer and how they rate in a variety of areas, you can identify your advantages in the marketplace and use them to attract and retain clients. The results translate into more clients, more sales, more revenue, and more profit.
So, how do you gain this information? Conduct a simple competitive analysis. I say “simple” because most business owners can find most of the information needed for a competitive analysis in a few hours with a few simple actions. So how do you get started? Start by identifying your true competitors. These should be other organizations that serve your target client in your target market. Once you know who they are, use these 5 simple practices to gather information on almost any organization:
- Be a consumer. Try their products and services as a client or customer. Just make an appointment and go and have the experience for yourself. Be sure to take a few minutes afterward to record your thoughts. What did they do well that you can learn from and that your clients might appreciate? What did they not do as well that you can use as a competitive advantage?
- Hire a consumer. Hire someone or a group of people to be a “secret shopper.” Ask them to experience the products and services of your competition and give you feedback. Be sure to gather feedback that is both positive and negative. Have them experience your competition on different days, different times of the month and for different services and price points.
- Conduct online research. Today you can find a vast amount of information about almost any business on the internet. Review their websites to identify the products, services, and prices they offer. Look for “reviews” or testimonials from consumers to identify the level of customer service they offer or what attracts consumers to their business. Check out their social media such as Facebook to see what they promote. Finally, check for any complaints or bad press from news sources or state regulatory agencies.
- Participate in trade organizations. Often you and your competitors will be side-by-side in trade organizations. You may share common goals on committees or projects. This shared experience gives you both a chance to get to know each other and identify your plans and focus. They cannot be expected to share any trade secrets, but it is pretty common that a little friendly competition may easily develop. Additionally, other members of the same organization will often have the information they are willing to share that will benefit you both. Your role is to be constantly aware that the information is yours to collect. Be intentional about who you want to learn more about and take the steps to do that.
- Review print media. Trade publications, brochures, reference books, annual reports, newspapers, and other print media can provide information ranging from products and services to health of the organization.
What do you look for? First, look for confirmation that you are serving your market well and uncover opportunities that you can take advantage of. You can do that by comparing products, services, price, organizational structure, hours of operation, geographic coverage, process, efficiencies, leadership, current status, expected changes, strengths, weaknesses, and consumer confidence.
Use the information you gain to adjust your plans for the short and long term and remember, competitors come and go. Competitors change focus and direction. They enter and exit markets. Introduce and retract products. Change prices. For all these reasons a competitive analysis should be conducted regularly, no less than annually.
Happy hunting! You are bound to find an opportunity in your competitions woodpile.