Some small businesses are lucky enough to not have much direct competition. Maybe they’ve identified a previously-unknown niche. Or maybe they are so dominant in their market that others can’t squeeze in. But not even these small businesses are safe from a smart competitor who can sweep in and steal away large swaths of customers.
To be a strong competitor and grow market share, small businesses need to continually improve. Identify your top competitive weakness and fix them– before your competitors do! Give your customers reason to stay loyal to you, and you can reasonably insulate your business from competitive threats.
Here are some questions to ask yourself to find your small business’s competitive weak points.
Competitive Strength Analysis
Existing Customers: What do customers complain about? What steps have you taken to improve their experience?
New Customers: How many new customers did you get in the last year? The year before? Make sure you have a plan for new customer growth.
Product/Service Offerings: When was the last time you improved your product and service offerings? Lack of innovation leaves the door wide open to competitors.
Profit Margins: Do you have any “unexpected costs” that occur frequently? How do these affect your margins and what can you do to allay them?
Vendors and Partners: Are your partners helping you grow? Or do they promote more-of-the-same?
After answering these questions, you probably see several areas for improvement. Pick the most critical, and start working on them right away!
Find the Differences that Matter to Beat the Competition
Customers will always compare your small business to your competitors. Their frame of reference for evaluating you is often if you are better or worse than what they’ve experienced in the past. If you learn what irks customers about competitors and excel in those areas, you will have a significant competitive advantage.
Not every difference matters. Customers probably don’t care if you’ve been in business 15 years, while your competitor has only been around for three. They might not even care that your certifications are more thorough. You must find the meaningful differences that can set you apart from the competition in the customer’s mind.
Let’s take my experience with construction contractors as an example. What really matters to me in a contractor is that he answers my call or calls me back the same day. I want a schedule that actually means something. When there’s a problem, I want him to tell me about it right away. That seems like basic customer service, doesn’t it? But compared to most contractors, a firm that meets those criteria will win my loyalty and business.
For some industries, being better than competitors is pretty simple. You just have to be aware of the differences that matter. How will you learn what matters? That’s also pretty simple. Ask your customers. They will tell you.
If your small business is at the leading edge of your industry, chances are competitors regularly copy everything you do. From innovative products to customer service standards to something as simple as the headline of an advertisement. Here’s one blatant example I found while flipping through Cincinnati Magazine of a competitor copying my client, Paramount Lawn + Landscape.
How do you feel when you find instances like this? Maybe you feel frustrated, indignant or cheated. That makes sense. But what you should really be feeling is excited and validated.
If a competitor copied you, that means you’re doing something right. Something that works. You understand the market in a way the “other guy” doesn’t. That other guy can’t think of anything better, so he will always be one step behind you.
But you can’t rest on your laurels.
When competitors copy you, it becomes harder for customers to tell you apart. Perhaps customers can’t tell who will “Light Up Your Night!” best. It’s time to implement an even better marketing strategy and leave your competition, once again, in your dust. Until they copy you again, that is…
Just as the phone camera became good enough to replace small point-and-shoot models, and that industry appeared close to being obsolete, Nikon fought back with two new models that showed consumers needs they didn’t know they had.
The Nikon 1 is a simple-to-use, compact camera with expandable options like lenses or a flash. Nikon’s goal is to help people take pictures and videos that look good without the added weight and bulk of an SLR camera.
The Coolpix AW100 is geared for action photography where one wouldn’t want to risk damaging his phone or SLR, promoted as being “waterproof, shockproof, freezeproof.” As my wedding photographer friend explained, “Nikon has shown me a need for a third kind of camera!” And, indeed, who wouldn’t want a camera to bring when they go kayaking/biking/snowboarding?
Compare Nikon’s attitude with the music industry ten years ago (or even today…)– embroiled in legal battles and legislative efforts trying to preserve an old-fashioned business model that anyone outside the business could see was going to die anyway.
Instead of trying to stop phone companies from including cameras, Nikon simply became even more awesome.
So when you’re faced with competition that seemed to come out of nowhere, take Nikon’s path. Stop griping, and start being awesome. It’s the only way to survive.
Enjoy this clever feud between two of Cincinnati’s famous pumpkin pie bakers as you raid the fridge for Thanksgiving leftovers. It started in 2010, when Frisch’s Big Boy purchased a billboard in front of Busken’s main bakery facility.
This year, the advertising squabble continues, with Busken’s retort, “Sorry, Big Boy, this pumpkin’s taken.”
In Alaska, the Pebble Partnership has been marketing into the headwinds, faced with stiff opposition. This partnership is owned by two mining companies and is investigating the feasibility of mining one of the most significant discoveries in North America of copper, molybdenum and gold.
In this marketing podcast, learn how the Pebble Partnership addresses their opposition with a positive attitude and how it can help your business think about your competition. And get some great tips for growing grassroots marketing supporters, too.
Do you have different marketing strategies for interacting with customers at each phase of the customer lifecycle? Most businesses don’t, but they should. The cost of acquiring a new customer can be quite high– think of traditional metrics like CPM, CPC or less traditional ones like the time spent making unfruitful sales calls and writing proposals. However, the cost of keeping a customer is usually much less. (Additionally, the cost for getting referrals from your customers is often nothing.)
There are many different customer lifecycle models, but I like Steve Yastrow’s. In fact, he wrote a great article about the topic, “Most Companies Stop Marketing.” Here’s his model:
As illustrated, most businesses focus their marketing on helping customers learn about them, then slack off when it comes to purchasing and the ongoing customer relationship. Think of it like the cable TV, wireless phone provider or car insurance model: reel customers in with a great deal, then see how much hassle you can get them to put up with before a competitor entices them with a better deal. Most businesses aren’t quite as blatant as this, but the result is the same– customers get upset or bored with them and move to a competitor.
Your business will have an incredible competitive advantage if you develop and implement marketing strategies for keeping your customers. When competitors lose their customers, those customers will come to you. And these customers will stay with you, breaking the cycle of fickleness.