I’ve been working on two strategic consultancy projects this month with two new clients – and each time, the earliest stages of the conversation have included the same key question:
“Who are your competitors?”
Most companies are very happy to talk about themselves – but some are less comfortable talking about the competition.
Some even deny having competitors at all. “There’s no-one who does what we do, we’re unique,” I have been told, even when the evidence says very much to the contrary.
Different kinds of competitors
No matter how unique your business is, you will always have some kind of competition. That’s because there are different kinds of competitors, some more obvious than others. The important thing though is think about competition from your customer’s point of view. You’ll find you have:
- Direct competitors – those who provide the same or a similar product or service as you.
- Indirect competitors – those who provide an alternative way to solve the customer’s problem. Or, it could be an alternative thing that the customer chooses to spend their money on which means they won’t be spending it with you (ie, you are competing for the same pot of the customer’s disposable income.)
So why is it so important to understand your competitors?
It’s because competitors are good for you. Like greens are good for you. You may not relish them, but you need them. Here are seven reasons to be grateful for your competitors:
- Competitors spur you on. They put fire in your belly. If you need a shot of motivation to drive your business forward, win more work, and commit to your own marketing… then spend some time on competitors’ websites.
- Competitors bring clarity to your own value proposition. By understanding what your competitors do, and how they present it to customers you will get a clearer picture of how you are different, and how you can use that to your advantage. Different is important when you’re trying to win the hearts and minds of potential customers and stand out in a positive way.
- Competitors help you innovate and find new market spaces. Once you see where your competitors are focusing, and their approach to the market, you can do things differently, or target sectors where they are slow to move. Marketers create ‘positioning matrices’ to look at the marketplace from different perspectives to help plan strategic direction.
- Competitors stop you making the same mistakes. If you can benchmark a similar business and monitor them over time, you can watch and understand their strategic successes and failures – then make sure you don’t repeat the failures.
- Competitors can be allies. There are times when it’s important that competitors stick together. Most industries have trade associations where competitors regularly sit around the table and discuss the broader industry issues that could affect them all, and agree to speak with one voice. Sometimes even bitter rivals are pragmatic enough to work together for mutual survival.
- Competitors can be collaborators. Every now and then a project will come along that needs an extra bit of expertise, or which you need to partially outsource. It’s worth knowing who else is out there who has complementary skills or facilities, so you don’t have to turn away work.
- Competitors keep you competitive! Without them, you’d have a free run at the market. That might sound sublime, but it would give you no incentive to be more efficient, or more innovative, or committed to good customer service – and that’s all part of the satisfaction of running a business well. Customers probably wouldn’t enjoy dealing with you, and at the first sign of an alternative they would be off.
It’s often said that competitors are good for customers and the market, because it keeps businesses on their toes. For that reason, and these many others, they are good for you too.