Keep in touch with the rumor mill
It’s a rumor mill because not everything you hear is true but there’s a lot to be learned from the
talkers in your industry. Attend industry and community events and talk to your colleagues in the
industry. You’re likely to learn valuable information like key people leaving, new initiatives they’re
trying, or customers who are unhappy with them.
Of course, when you’re talking to the rumor mill, stay closed-lipped about what you’re doing. If
they’ll talk to you about others, they’ll talk to others about you, right?
Check their LinkedIn Profile
If you know the key people in your competitor’s business, head to their LinkedIn profile. You’re likely
to find a significant portion of their customer base or other industry contacts important to you.
Reach out to those people and make them contacts as well. Then, let them know why you’re better.
First Facebook. Go to your competitor’s page, and look at who is commenting and sharing their
posts. Follow those people and they may start following you, too.
Do the same on Twitter. Once you have them listening, you can employ social media strategy to
present your value proposition.
Get Crafty
Offer a discount to anyone who brings in a competitor's ad newspaper ad or gives you the
competitor's product literature.
Test staying open on days or during hours your competitors is closed. Run Internet remarketing
campaigns to make to show your ads to potential customers after they've left a competitor's site. To
borrow a cliché, think outside the box.
Make it Personal
You know that once you have a loyal customer, they don’t get all of the same courting that they did
when they were new. They should, but you always have to set your sights on new customers while
keeping the current ones happy.
Everybody likes to be treated like royalty. If you know somebody who is doing business with your
competitor, give them the star treatment. Offer a service for free, take them to lunch, build a
relationship, and make them feel like a VIP if they have any dealings with your company. Your
competitor likely isn’t doing that anymore. Now is your chance.
ALWAYS Put Your Differences on Display
Which companies get the most business? The ones that stand out. Companies that show potential
customers how they’re different and better get the business while the ones who try to blend in are
left behind.
Your business has to be built on stand out characteristics. Simply saying, “we value our customers”
or “we’re committed to the highest quality” may make for good marketing fluff but it’s not going to
win customers. Be specific with how you’re different and you’ll take customers from your
competitors.
Be Willing to Spend Money
Look at a company like T-Mobile who is willing to pay a customer’s early termination fee in order to
take customers from its competitors. What can you offer a customer to get them to jump ship? It’s
going to cost you some money but if they become your customer, it’s money well spent.
Other Quick Tips
If you’re in a business that requires you to quote jobs, offer a discount if the person shows you a
quote from your competitor for the same job.
Offer a discount for anybody currently using a competitor’s product or service.
Did you hear through the rumor mill that your competitor did a job that a customer didn’t like? Offer
to fix it for them at a discount.
Think Long Term
You have to spend money to make money. Attracting new customers who are doing business with
your competitor comes down to offering a better deal or experience than what they’re currently
receiving and that will cost money at the beginning. However, this is a one or two time cost. Some
will not become loyal customers but for those who do, the small financial outlay will be well worth
the cost.
Understand Your Business's Competitive Advantage
by Doug and Polly White
Do you know what sets your business apart from your competition? Here's why it's important to
define your business's competitive advantage.
Image source: BigStockPhoto.com
Every business owner must be able to answer one very basic question, “Why should a
prospective customer buy my product or service rather than a competitor’s?” If the owner cannot
answer this question, he or she should probably cut his or her losses and seek alternative
employment. Fortunately, this isn’t a complex question. At its core, there are only two possible
answers; either the product or service is being offered at a lower price or the offering must be
differentiated from the competition’s.
Companies such as Wal-Mart have been extremely successful pursuing a low cost strategy. WalMart uses its massive volume to negotiate purchase prices that are well below what smaller
competitors pay. Consequently, the retail giant can make very good margins selling brand name
products at lower prices than competitors can offer. As a practical matter, small businesses will
generally not have the volumes to pursue this type of strategy.
Very small businesses can sometimes offer lower prices than their larger competitors because
they have much lower overhead. For example, consider a residential cleaning service run by two
friends out of their homes. The two friends are the only employees. There is little to no overhead.
Such an operation can offer its services at prices below those that a company such as Merry
Maids would have to charge, because Merry Maids does have significant overhead. However,
this strategy is inherently limiting. If the two friends were to attempt to significantly grow their
enterprise, they would discover that they would need to add overhead similar to their larger
competitors.
Most small businesses that want to grow beyond a few employees will find that a low cost
strategy is difficult to pursue successfully. Therefore, such enterprises are left with the need to
differentiate their products or services--give their customers a reason to buy that isn’t based on
price.
It’s great to create a differentiated product/service package. Unfortunately, that, by itself, is not
enough. In addition, the differentiated product/service package must be more desirable to a
specific segment of the market than any alternative. Also, the size of this segment must be large
enough to be attractive. For example, you could market a skunk-flavored Popsicle. This would be
a differentiated product; nothing remotely resembling such an offering is available in your local
supermarket. However, it is highly unlikely that this product would be attractive to a large enough
segment of the market to make it an economically viable offering. This is a silly example, but it
makes the point that differentiation alone isn’t sufficient. You must target the differentiated
product/service package to a sufficiently large segment of the market, which values the unique
characteristics of the offering.
So, what makes a market segmentation that will allow companies to target their products and
services profitably to customers who will pay a premium for them? There are two criteria for a
segmentation to deliver significant value. First, members of the segment must make the buying
decision like each other and differently from those not in the segment. Second, members of the
segment must be externally identifiable or they must be willing to self-identify.
The key to effectively segmenting a market is to understand how customers make the buying
decision. What characteristics of the product/service package are most important to each group
of customers? For example, automobile manufacturers must target specific segments. Some
people are looking for basic transportation with a low cost of operation (i.e., good gas mileage
and low maintenance costs). Other car buyers are interested in a sporty looking, high
performance automobile. Still others are interested in luxury and prestige. More recently, a
segment has emerged that is primarily interested in a car that is environmentally friendly. One
product cannot possibly satisfy all segments. Product design and advertising are specifically
intended to position the manufacturer’s offerings closer to the wants and needs of a given
segment than those of the competition.
Assuming that the product/service package can be targeted to uniquely meet the needs of a
sufficiently sized group, the customers in each segment must be externally identifiable.
Marketers need to know how to reach the specific segments. Should the company advertise in
Sports Illustrated or Cosmopolitan? Alternatively, the members of a particular segment may be
self-identifying. For example, if a man intends to buy a suit, those who walk into Sears, The
Men’s Warehouse, Joseph Bank’s, or Brooks Brothers are fairly clearly members of different
market segments.
To be successful, every business owner must be able to explain why a prospective customer
would buy his or her product or service rather than a competitor’s. The answer will be based
either on lower price or a differentiated product or service. If the answer is based on
differentiation, the product or service will have to be the most attractive alternative for a segment
of the market that is large enough to sustain the business. Although this may sound straight
forward, our experience is that sorting this out can be complex and the business owner may
need to reach out for expert advice. But, the rewards are worth the effort.
How to Outsmart the Competition
by Rich Harshaw
What is the objective of your advertising? Getting someone to call you? Building name
recognition? Promoting a particular product - or your entire business? Here's why defining your
advertising goals is important to its success.
Image source: BigStockPhoto.com
Sometimes it’s easy to identify and combat your competition, but let me point out to you a few
scenarios you may not have considered when sizing up your competitors and formulating your
strategy. You can classify competition into three general categories: direct competitors, indirect
competitors, and what I call the dreaded “inertia.” I’ll use a common product to illustrate these
three kinds of competition. I’ll use a weight loss product.
Let’s say you’re marketing an all-natural weight loss product that a person takes in the form of
pills that metabolically “melts” fat away. Remember: there are three categories of competitors –
direct, indirect, and inertia. Who are your direct competitors? First of all, the other 50 to 100
products on the market that are pills that metabolically melt away fat. There’s a ton of them. You
could also include similar products like weight loss shakes, weight loss skin patches, similar
products that you drink, and things like that. These are all products that the customer could buy
instead of yours that at least claim to do the same thing.
What about indirect competitors? Indirect competitors are products that the prospect could buy
instead of yours that aren't the exact same kind of product, but that offer the same benefits and
results. So, ask yourself this question: What is the end benefit of using your product or service?
Then ask yourself, what other kinds of products offer the same end benefit? Those are your
indirect competitors. For weight loss, there are tons of them: Since the end benefit you’re
promoting is weight loss, think of all the other products that can do that – including weight loss
clinics like Weight Watchers & Jenny Craig, books, audio & video tapes, personal trainers,
doctors, chiropractors, acupuncture, health food, fitness equipment, sports equipment,
membership gyms, and some options that don’t even cost money, like exercising at home. These
are all things that your prospect could do or buy instead of buying your product. These are your
indirect competitors.
And what about this thing I called the “dreaded inertia?” This is a tough competitor to combat. It’s
called “DOING NOTHING.” Your prospect could just not do or buy anything. In the case of our
diet aid, it means staying fat; taking no action whatsoever. That’s a tough competitor to beat
because it costs the prospect nothing and it’s really easy to do. Plus, it’s already proven that he’s
really good at doing it.
Related: Get Customers to Choose You Over the Competition
So why do you want to know your competitors? Because then you can design your marketing
and advertising strategy to address and combat them. And the advertisements would be
different, depending on the competition. Now that we’ve identified each of the three kinds of
competitors for the weight loss pill, let’s determine how that would effect our advertisements.
First, if you were selling against direct competitors, you’d have to articulate all the reasons why
your formula was superior...whether that means better or more scientifically proven ingredients,
higher doses of certain nutrients, cheaper prices, it has to be taken less often, the pills are
smaller, the supply lasts longer, less side effects or whatever. I don’t know what the specifics
would be, that's up to you.
But what if you were advertising and competing against indirect competitors? First of all, your
target audience better not be all that familiar with the direct competitors or your message won’t
carry much weight. They’ll hear your comparisons against indirect competitors and wonder why –
or if – you’re any better than the other pills on the market. It would be like advertising that a BMW
is better than a bike. True enough, but people would be wondering why it wasn’t being compared
to another luxury car (a direct competitor) rather than a bike (an indirect competitor). But for the
weight loss, you could talk about how much easier the pills are than going to the gym or how
much cheaper they are than buying an expensive piece of exercise equipment that you’ll hang
clothes on then sell in a garage sale in 2 years. You could talk about how much cheaper the pills
are than going to Weight Watchers and how it’s far less painful than going to the acupuncturist.
And so on.
RELATED: Understand Your Business's Competitive Advantage
And think about what your strategy would be if you were selling against inertia...or in other words,
doing nothing at all? What would you say? What would your slant be? First, you’d probably talk
about the benefits of being thin, then you’d compare the benefits of your products against
INDIRECT competitors; for example, easier, cheaper, less work, etc. Why? Because the reason
that they’re doing nothing is they perceive all their options to be too hard, too expensive or too
time consuming. So you’d be introducing a way to lose weight that overcomes all those
problems. You probably wouldn’t even need to mention direct competitors.
Let me give you a real life scenario. We have a client that sells a franchise-like business
opportunity in the e-commerce industry. So let’s say that you’re going to write and place ads with
the intent of finding people who are interested in investing in starting their own business. Who do
you compete against? Direct competitors? Indirect competitors? Inertia? Do you know? Are you
still awake? The answer is that it depends on where you advertise.
One place that people who are in the market for buying or starting a business go to find ideas
is Entrepreneur magazine. There are tons of ads in there for businesses – over 300 different
opportunities, in fact. So in this case, advertising in Entrepreneur magazine, they are competing
against direct competitors – or in other words, all the other business opportunities vying for the
business. So in this case, we hit the prospects head on with a headline that said, “The 3 Biggest
Reasons Why You Should Immediately Grow and Safeguard Your Business.”
On the other hand, we also do a lot of radio advertising and fax broadcast advertising to find
people who are interested. In this case, however, we would be competing against inertia.
Someone who’s listening to the radio probably isn’t doing it so they can hear an advertisement
about a wonderful new business opportunity. Someone who picks up a fax at the office probably
isn’t thinking, “Oh, I hope this one’s for a business opportunity. I sure would like to drop 20Gs on
something today.” No, they’re not thinking that at all. In this case, we’ve got to create the interest
from scratch and turn them on to the idea of making more money by getting involved in a
business. We have to say things that get that fuse lit just a little bit. We can’t just say that this
opportunity is superior to other opportunities and here’s why. It wouldn’t make any sense. Could
we say those things to the Entrepreneur magazine crowd and have them make sense?
Absolutely. But not to the radio audience. See how that works?
Now I know you’re not selling a franchise and I know you’re probably not selling a diet pill. The
point, though, is to identify your competition. Ask yourself the questions I just went over and
make a list of these things: 1) Who are your direct competitors? 2) Who are your indirect
competitors? Remember: you find those by asking first, “What is the end benefit of using your
product or service? Second, what other kinds of products offer the same end benefit? And finally,
3) Does the prospect have the option of doing nothing, and if so, what would you have to say to
get him to take action? I'll give you a hint on this one: it needs to be really low-risk. Remember
what I told you about the furniture store and the Inventory Update List? There’s a great example
of competing not only against other furniture stores, but also against inertia. Think about it – it’s
easy to not go to any furniture stores at all. Remember how the solution involved offering the lowrisk option of signing up to be on the update list? Can you apply this into your business?
5 Ways to Make the Competition Irrelevant
by John Mehrmann
It's getting harder and harder to get and keep your customers' attention and make the sale. Here
are five things you can do to make your competition irrelevant.
Is there an easy way to make the competition irrelevant? In an age with so much access to
information, bombarded by advertisements and commercials, is it possible to keep the attention
of your potential customers? What is the secret to help customers make an easy decision to
buy? There is a secret formula that works for e-commerce, retail, bids and proposals. It is a
simple formula that has worked since the days of bartering beads, beans and burrows.
Create Differentiation
Create differentiation within your own products or services. If you have an assortment of products
or services to offer, you may have identified your differentiation already. Common examples of
differentiation for products may be based on size, speed, color, components, combinations or
accessories. Common examples of differentiation for services include speed, performance,
quality, responsiveness, availability, ease of integration. If you are in the unique position of
having only one product or service to offer potential customers then you should consider
accessories, partners or other options to create a variety of levels from the perspective of your
future customers. If all else fails, you can offer different levels of shipping speed or delivery.
Focus on the Moment of Truth
Focus on the moment of truth, the place or position that your products or services will be offered
to the customer. In a retail environment this may be the end-cap, a wall display, shelf space or a
counter display. On the Internet this may be an on-line store, e-bay or your personal site. It may
be in a catalog or a brochure. It could even be part of an email communication. Occasionally the
moment of truth may be in the form of a bid or proposal after several months of discussions with
a potential client. The moment of truth is the moment that the customer has a an option to make
a purchase decision, to buy your products, invest in your services or hire you. This is the moment
that you need to put your good, better and best foot forward.
Good, Better and Best
Give your customer three options. Show them something good, show them something better and
show them your best. It is a simple formula that takes a little care and creativity in crafting your
message. The three offers should be based on the foundation of a consistent theme, the single
most important underlying reason to invest in your products or services.
The 'good' product or service should be the lowest cost option but still demonstrate your inherent
value and differentiation from the competition. You should be able to clearly define your value,
the features, advantages and benefits of what you have to offer. This is the customer minimum
investment to buy, and it should be a good one.
Step up to better. Using the foundation established with your 'good' offer, add something more
for a slightly higher price. The customer value should be easily distinguished and highlighted as
more significant than the slightly increased price. Make a clear comparison to the "good" product
or service. This should be a preferred alternative for the potential customer. The option should be
slightly more expensive, but worth it. Some examples may include, "with additional 1GB
memory", "includes six months of Satellite Radio", "bundle package includes download of 50
songs", "50% faster than the original", and similar comparisons.
Show them your best. The third option should be the best that you have to offer, the cream of the
crop. This is the most expensive option and will only be selected by the most exclusive of
customers. It should also have something in common with the original "good" option and the
"better" option, but the third and final option should be recognizable the best you have to offer.
The price may be significantly higher than the other two options, and that is fine. Demonstrating a
significant leap to a higher price point for the top of the line option will help to differentiate the
cost value of the other two options. Do not expect large volume of sales on the best offer. Rather,
use this to demonstrate competitive advantage and differentiation with the "wow" factor.
Even if you have hundreds of customized solutions or products, select and present three options,
good, better and best. In the decision process, human beings can easily compare and contrast
three options. The mind can juggle three prices and three sets of features for a quick and easy
decision process. Once you add a fourth element, the customer needs to start a deeper level of
analytical comparison. If you have too many options then the customer will need to spend more
time to consider the alternatives, and while they are weighing your multiple options they may
start to consider the competition as well. Limit your presentation to three options. If the customer
makes a specific request for an alternative, then provide the alternative that the customer has
requested, but avoid introducing too many new variables unless asked. The more factors in a
decision, the longer the process and the more likely to turn your "Moment of Truth" into a Lapse
into Confusion.
The Value Proposition
For each option that you present to the potential customer, provide a value proposition. Your
value proposition should be something that can be conveyed in three to five bullet points, three to
five sentences, or spoken in thirty seconds or less. You should be precise and succinct. Present
the value proposition from the customer point of view. For example, rather than say "we ship in
three to five days", you could say "the product will typically arrive at your door in three to five
days". Rather than say "we have the fastest process", you could say "our process is fast, so you
get results faster".
A value proposition typically contains the essential elements of Feature, Advantage, Benefit,
Image and Offer. This is a reference to a specific important feature of your offer, the advantage
as compared to the competition, and the benefit to the customer. The Image refers to a
photograph or diagram. The Image is an important element of your value proposition, as people
will generally remember an image more readily than words. Images convey feeling, and typically
depict a lifestyle example of the customer enjoying the benefits of the feature's advantage. The
Offer is a call to action. Give your customer an offer to buy, and let them know specifically how to
conduct the purchase. Examples of the order call to action are "buy now", "limited time discount"
or a number to call to place the order by phone.
An example of the value proposition with the essential elements is "Call now to order the selfcleaning home brew coffee maker and start enjoying fresh, hot coffee with the extra convenience
of no fuss, no muss and no clean-up. Order on-line to receive your free sample of assorted
coffees, available while supplies last." All we need to complete this enticing offer is an image of
hands gently caressing an aromatic steaming cup of coffee, cradled over a saucer.
Plan, Do, Measure and Adjust
Carefully plan your three offers and the value proposition for each. Once you introduce your
three offers, measure the success rate of each option by the corresponding sales attach rate.
Typically the "good" offer should be about 25% of your sales, and the "best" offer is normally only
15% of your sales. Some customers will want the lowest cost option, and some will want to be
exclusive and purchase the best option regardless of price. The middle of the road "better" offer
is customarily the lion share at 60% of your total sales. Most customers are willing to pay a little
more for quality, speed or convenience associated with the "better" offer if presented properly,
even if they do not want to pay the high price of the "best" option. The "better" alternative gives
customers a chance to do a little better than "good", but still feel that they saved money as
compared to the outrageously priced "best" option.
If you do not experience the desired result in mix of sales then it may be necessary to adjust your
plan or your value propositions. In any case, as long as the customers continue to make a
selection between your options, the competition is irrelevant. Your customers can get what they
want, and they will remain your customers.
Words of Wisdom
"No computer network with pretty graphics can ever replace the salespeople that make our
society work."
- Clifford Stoll, Silicon Snake Oil, 1995
"You can only cure retail but you can prevent wholesale."
- Brock Chisholm
"Give your customer three options that they can compare without memorization. Make it quick,
make it easy, and add value. - Just like that."
- John Mehrmann