Know Your Competitor
When is the last time you took a really good look at your competitors? I hope you do it often, but most small business owners get caught up in the tidal wave of work that being your own boss can present. I don’t mean that you have to be a customer for your competitors, but you do need to know what they are doing.
A competitor is anyone who sells the same or similar products or services within your trade area. For retail and food service companies, this is the three to five mile radius around your store. For other companies it can be a much bigger area. Get a list of competitors in your area. Also get a map to see where the other businesses are located. Then call or hit the streets to get all the information you need.
Think about things as your customers do. A customer has a need for products you sell. There are other businesses that sell the same or similar products. What goes through a customer’s mind to make a decision on where to spend money?
- Location - Convenience is one of the top two reasons to spend money somewhere
- Price - Here is the other top reason
- Recommendations - word of mouth advertising is a powerful thing (we will tackle this one in a different article)
- Service - how you treat your customers is added value that can pay BIG dividends
So, what makes you different from your competition? If you have a brick-and-mortar building, there is not a lot at this point you can do to change your location and be more convenient for customers. If this is the case, think about the costs with delivering your product to customers. This may not be cost effective, but it is something to consider. By delivering products, you take the location problem off the table. (Be aware that added insurance costs can make this unprofitable.
The prices your competitor charges is a huge part of a customer’s attitude toward spending money. If you have any doubt, ask someone where the cheapest gas can be bought. It is usually a specific answer and directions too.
Get all of your competitor’s prices. Many times you can get their prices from websites. You can call, but they are going to be suspicious when you ask so many questions. Visiting their store is recommended. Prices are usually listed on something you can take, if not, bring a pad of paper and write them down. You may need to buy something so that you do not stand out.
Here is where you need to take a cool approach to changing prices. If they have the same products for less, is it going to hurt your profits to drop your prices? Are you going to drop below your break even? Many times, the competition has either a different product, a better contract with vendors, or is using products to get customers to come in and buy and are willing to lose on one product to change customer buying habits.
Going to visit your competition is always good. It is a chance to see what they do to advertise inside their store to draw customers in and get them back. The message they send is either good or bad. If there really isn’t anything that is noteworthy, you can mark that as bad. Mediocre is forgetful. Score the competition on products, service, and visual appeal. This will give you a scorecard that you can refer to when you get back to your store and start looking at changes.
When you visit your competition be a customer – think and act like a customer would.
Being overly critical is not useful
Service is a touchy issue. The employees are only as good as the manager, the training, and the attitude they bring to the store. I had great employees one Mondays but lousy ones on Fridays. Monday they needed the job to pay for their rent. Fridays they wanted to get out of the store to start the weekend. My employees were well trained and I was aware of their slacking on Fridays, but it was a different mood at the end of the week and I struggled to get things turned around.
If you get bad service, mark what happened down and the name of the employee who helped you (if you can). On the next visit try to have someone else help you. This will give you a better idea of the training and the overall service they give.
Also, look around and see when the messages posted in the store tell you. If everything is well labeled and organized and the signage promotes sales, take note and be prepared to meet and exceed that standard. Around 89% of communication is non-verbal. What are they saying?
It is up to you to be aware of the trends that influence customers in your area. By knowing what the competition is doing, you have a ready source of what makes a customer spend money. This is not a one-time thing. Make this a part of your schedule. This new insight can help make your job easier.
Email me directly at: Bgriffin@businessbulldog.com
This entry was posted on 26. February 2009 at 10:20 and is filed under Making Money. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.