Tips on How to Use Your Competition to Your Advantage

 

No business, small or large, can succeed if they do not have the ability to outshine their competitors. Even a sound sales strategy and effective marketing campaign can do little to help grow your company if your target market sees no difference between your product or service and your competition.

 

While it is common to see your competition as the enemy, I would suggest that you look at them as research. After all, how do you know why a customer would choose you, over other companies that offer the same product as yours? By researching your competitors, you gain information about your competition’s marketing strategy, sales strategy, strengths, and weaknesses which provides a basis for your competitive advantage.

 

What is a Competitive Advantage?

 

A competitive advantage is formed out of the unique feature of an organization that allows it to outperform its competitors.

The three basic types of competitive advantage are:

 

Cost: When companies separate themselves from their competitionby producing high volumes at lower prices.

 

Differentiation: When companies separate themselves from their competition by choosing an aspect of their product, other than cost, that is valued by consumers (i.e. innovation, quality, or customer service) and capitalize on it.

 

Focus: When companies separate themselves from their competition by focusing on a very specific target or niche market that others cannot reach.

 

In this post, we will look at 3 different aspects of your competition that you can use to improve your competitive advantage.

 

1. Know your Competitors’ Target Audience

 

The first step in using competitive research is to gain an understanding of who your competition is targeting. Once you know who they are talking to and how they are talking to them, you will have a better picture of their marketing strategies. You will also know if you are directly competing for the same customers or separate niche markets in a larger group. Having this information allows you to evaluate how you want to position yourself against your competition. Which can lead to a competitive edge and minimize your need for outreach experimentation.

 

Earning a Competitive Edge

 

You earn a competitive edge through a skill, process, product, resource, or information that your competition does not know or have, giving you an advantage. For example, you are the manufacture of Limited Beer Inc a small beer manufacture and your competition is Mega-Beer Inc a large beer manufacture. You observe that Mega-Beer Inc invests its large marketing budget primarily on national campaigns. Since your marketing budget is 1/5th of theirs, you realize that you cannot compete with them head on in every market. But, through research you discover that 30% of North Eastern US beer drinkers prefer beer from small manufacturers. This research provides you a competitive edge, allowing you to maximize your marketing budget and outperform your competition in that market.

 

Minimizes the Need for Experimentation

 

Companies often spend a lot of money and time experimenting to see what message and channel works best to reach their target market. A great way to save time and money is to research what does and does not work for your competition. I am not saying that you should simply copy your competition, only learn from their mistakes and successes. For example, if you discover that your competition benefits from sports sponsorship, then you may want to incorporate it into your outreach plan.

 

2. Know Your Competitors’ Products / Services

 

The second step in using competitive research is to understand what your competition is selling to their target market. While you may know the basic features of the product, investigating your competitor’s product can help you uncover their key features and benefits.

 

Comparing your product/service to your competition’s product/service provides an understanding of how you compare in direct competition. You may want to evaluate the durability of the products, the look of the products, how they interface with the customer, etc. Again, I am not advocating that you steal their look, or technology, only look for ways to improve your product. For instance, if you are a watch maker and you discover that the quality of your competitions leather band is better than yours, then you may want to either increase the quality of your band or lower your price.

 

3. Know Your Competitors’ Sales Process

 

The third step in using competitive research is to understand how your competition is selling and servicing their target market. The easy way to uncover this is to simply buy their product and note what worked well and what did not. If you are unable to purchase their product/service, you can gather this information through focus groups of others who have purchased their product/service. Likewise, create a focus group of your customers to gain an outside view of your sales process. Again, the goal of this is to compare your process to their process looking for a competitive advantage.

 

What is Their Sales Process?

 

Start by evaluating the first half of the sales process (initial contact through sales and service). The actions that make a member of their target market become a customer. Some examples of questions that you may want to include are:

 

Who initiated the sales call?

How did the sales process feel?

Could they answer all your product questions?

When and how did they follow up?

If there was a problem how was it addressed?

How where you treated by customer service?

After you have this research take the time to evaluate how you compare. If you find you have areas for improvement form a brain storming team and create action steps to address the issues. As mentioned in our last blog, but 55% of customers are willing to pay a higher price if it provides them with better service. So take your time evaluate this area.

 

How do They Retain Customer Loyalty?

 

Next, look / ask about how they retain their customers. Are there any special techniques that they use or processes that keep the customer coming back? A sample of these questions are:

 

Do customers stay due to their service / follow-up?

Did the sales representative build a strong relationship with the consumer?

Is it the quality of their product?

Do they feel part of a ‘special group’ buy owning their product?

Does the company use coupons / discounts to retain customers?

Again, compare this information to your process looking for ways to improve. If you discover that you outperform in this area use it as your competitive advantage.

 

Final Word

 

Do not look at your rivals as enemies; rather, learn from their strengths and weaknesses to create your competitive advantage. Take the time to know your competition’s target market, products, and sales process and use this information to improve your marketing, products, and sales techniques. Then, once you reach the top, work diligently to maintain your position because others will be comparing themselves to you.