By Jeff Sheets
I recently did something that I had not done in a long time — played a board game. The goal was domination of the world that was on the board. I stepped back and thought about all the board games I had played like Monopoly, Risk, Life, etc., where the goal was to dominate and eliminate the competition. I wondered if most of us got our initial idea of what to strive for in business from games like these. We try to conquer and get rid of all competition, so that we can rule our world, whether that is a small town or a larger geographic area. That kind of thinking, while motivating, may be frustrating and ultimately lead to your demise as a business because all-or-nothing behavior can leave you with nothing. You must look for every way you can to gain an advantage, but not go so far as to put your business in a financial position where it cannot function. Getting to know your competition is really important, so that you can take advantage of your strengths but also identify your weaknesses and determine how best to fix them. I know this may sound odd, but competition may be your best friend in business.
Here are three steps to follow to get to know and grow from your competition:
#1 Identify your competitors
This step may sound so obvious, but begin by actually identifying your competition. Competitors are those businesses that offer similar products or services to the same customers. Competitors can be direct or indirect. Direct competitors offer the same goods and services that you do, and indirect competitors offer similar goods and services that meet the same needs. (In the OPE world, an example of an indirect competitor might be a motorcycle shop that also repairs lawn and garden equipment.) You need to compile a list of at least your top 3-5 competitors, both direct and indirect. Then, gather information about your competitors. How do they advertise? What are their pricing strategies based on advertisements or customer feedback? What do their websites look like? Look for any other general information.
#2 Scout and evaluate your competitors systematically
Some of you might be surprised what I am suggesting here. Assign someone less recognizable than you to take a designated scouting trip and evaluate the competition. This must be a person who can really take a hard look at what other business are all about. Most dealers who I visit don’t know this (Don’t tell anyone!), but I have a form that I use to evaluate what I see and feel about a dealership. I don’t bring the form with me on dealer visits, but know it so well that I simply take notes during my visits. Then, when I get back to the hotel, I can fill out the form based on my notes from each day. It helps me look at the business individually, but also gives me a chance to compare my notes with information that I’ve gathered from other dealers that I’ve visited over the years for analysis sake. My suggestion is that you create an evaluation form with information that you are looking for during the scouting trip, and make sure the scout fills out the form as quickly as possible after leaving the business. Your scout should retrieve information primarily about hard facts but also about the feeling of the dealership. It is easy to evaluate cleanliness, displays, signage, etc., but how does the dealership feel? Is it customer friendly? How long did it take to be greeted? Do the salespeople know their “stuff”? I could go on and on about what to include in an evaluation form. I would encourage you to send a scout to visit your competition not only once, but a few times to see if the experience remains the same and then periodically (at least once a year) to keep tabs on any changes made. This is a proactive way of knowing your competition and not just through comments made by mutual customers. The goal is to take the information and make yourself better — not to make yourself feel better. Once you have the information, application is always the key to help you take your business to a new level. I also recommend looking at the big box stores this way too! Don’t just evaluate the businesses similar to yours; look at any businesses that sell what you sell, and analyze them. There are great things that can be learned in these types of stores too.
#3 “Scorched earth strategies” are not good for you or the competition
As I mentioned in my introduction, sometimes dealers want to create a “monopoly” rather than just a solid business. In a previous position, I used to set up consumer financing for businesses, and one of our goals was to avoid businesses that were trying to sell high volume at very low margins, because unless a business sells incredible amounts of inventory, it can drive that business into a tailspin very fast, especially during tough economic times. What happens to all of those financed customers who have no warranty or equipment that breaks down? They tend to stop paying their loans or demand things from the financing company or manufacturer because there is no local business to go to. I mention this because sometimes dealers want to discount prices on equipment so low that there is really very little profit for either themselves or their competitors. I have known several dealers who have tried to have a “friendly” conversation with the other owner who might be using the strategy and discuss the disadvantages of it. In some cases, it has worked and some it hasn’t, but making the attempt can make some sense. We all know there are other areas of your business that bring in profit. The problem is that if you start your customer with being known as the “low-price guy,” sometimes that is who you become known as in all aspects of the business. You want to be known for more than price. You need to be known for your friendliness, your knowledge, your efficiency, your can-do attitude and even more.
Healthy competition makes you better. I never want you to think that winning isn’t the goal when you are competing against others. Every day, you want to be the one business that customers choose because you have communicated the aforementioned qualities and more. By knowing your competition better, you can make changes to help you grow and become even more in tune within your marketplace. I like the following quote from legendary sports commentator, the late Howard Cosell: “The ultimate victory in competition is derived from the inner satisfaction of knowing that you have done your best and that you have gotten the most out of what you had to give.” Your goal is to do your best each and every day and communicate that to your customers. The satisfaction comes when you see your customers grasp your message and reward you with their business. Don’t shrink from your competition! Know and grow from your competition!
Jeff Sheets is the founder and owner of OPE Consulting Services. Whether a business is thriving or struggling to survive, Sheets’ rich experience in both the corporate and not-for-profit sectors allows him to partner with business owners to customize unique strategies for their needs. For the past nine years, he has worked extensively with hundreds of outdoor power equipment dealers to create best practices in business structure, personnel management and financial profitability. For more information, he may be contacted at email@example.com or (816) 260-5430. You can also follow him on Twitter @opeconsult, connect with him on LinkedIn, and visit his website at www.opeconsultingservices.com.