My first job out of college was for a firm that was so competitive I was instructed to beat the competitor’s price on the phone each and every time a customer called, no matter what that price was. We gave away deals that were crazy in exchange for market share.
On top of that, we did what we could to learn about how our competition operated. Our office didn’t do anything illegal ourselves, although we soon bought shredding machines when we discovered one of our competitors was dumpster-diving for competitive information. We would phone our competitors and ask for information about their business as if we were interested customers or we’d sit outside their office and count the customers that walked through their door. And although it didn’t happen at my level, I know my higher-ups poured through year end financial reports and shareholder reports of our competitors to get a handle on their business.
Each office had a competition binder that was filled with information we discovered about them, along with copies of all their advertisements and the sources we found those ads in. These binders became detailed planning guides when we wanted to penetrate the market further with strategic advertising.
I’ve never worked in a business that was as competitive and frankly I’m glad. It was a lot of work that I believe took our focus off of properly serving our customer. Still, I learned the value of knowing what your competition was doing and making sure that you weren’t blindsided by them.
And, if you’re just entering a field of business, I can’t recommend enough the value of fully understanding the competition that you’ll be facing, as well as consumer loyalty you may have to wrest from your competitor’s grip.
How do you do competitive analysis?
Here are a few ways:
- Visit your competitor’s websites.
- Try to understand who their niche is and if it is the same as yours or different.
- Visit your competitor’s vendor sites. Are they getting their products at a cheaper rate than you’ll be getting yours?
- If they have an offline store, visit the store.
- As much as this may pain you, if financially possible, buy a product from your top three competitor’s online and offline stores. You’ll end up with six products but you’ll also end up with a great idea of how each side of their business operates.
- Visit sites like Yahoo! Financial, www.Hoovers.com, www.onesource.com, and www.lexisnexis.com. Some parts of these sites are subscription based, but you might find what you need by simply looking at the free areas.
- Google your competitor’s name and their URL. When you do this, you’ll find more than just their sites, but also who’s linking to them and what other people are saying about them, (including consumer critique and “hate sites”).
In my first job we were encouraged to know enough about our competition that we could write their own business plan for them and tell our customers exactly what our competitor’s rates would be. For new entrepreneurs, that’s not a bad depth of understanding.
For owners of growing businesses who have been around for a while, maybe it’s time you refreshed your knowledge of your competitors. Don’t put on your hip- waders and rummage through the trash, but consider giving them another look in case they are secretly stealing business that could easily be yours.
