Competition can be a zero sum game; that means that competition doesn’t create its own set of customers (it wouldn’t be competition, then, would it?) instead it takes some of yours.
In one rural town, I know of a single service provider who had a lock on the business for two decades. He did whatever he wanted because he was the only game in town. (The next nearest “competition” was two hours away!). He charged whatever he wanted, he never advertised, and every vendor relationship was automatically exclusive.
How he got away with it for two decades, I’ll never know. The new competition offered more choice, better service, and lower prices. They stole a lot of business from him. While not destitute, he certainly felt the impact, so he came to me for help. Although we talked about some specific things he could do in his own industry, here are some generalized versions of what I told him:
- Your new competition may have lower prices and better choice, but if you are serious about keeping your customers, you had better have better service than they could ever hope to provide: much, much better.
- They may be your competition but they are not your doppelganger. There are going to be SOME points of difference between the two of you. It could be as small as the color of uniforms or it could be major. Find out what it is and play off of it. Your new advertising slogan may become: “the loyal, local folks in blue.” To some of us that may sound lame, but in a local market it can be highly effective to differentiate yourself in several ways!
- Your new competition is very new, while you have years of experience. The competition may be an old company, but they are new in the area so you can still play the experience card.
- You know your customer’s names while your competition does not. However, if they work hard, they will soon know your customer’s names. You’d better know your customer’s birthdays, anniversaries, and favorite sports.
- If you can afford to compete on price (and not everyone can) offer to beat your competitor’s best price. If they do the same, you could end up paying people to be your customers, so you’ll have to determine your floor price. Although it’s fine to do if you are willing to serve the customers at a lower price, it is arguably unethical to do when you’re trying to force down your competitor’s price. Even if you win the “war” and get your customers back, they may continue to expect the same low price; this could be a losing proposition no matter what.
- If you’re in a small town, the “local boy makes good against the big, corporate outsider” is a fantastic card to play. Rural America – quite the opposite from urban and suburban America – rally around the unpopular little guy, the underdog. It could come down to holding a “keep us in business” bake sale; it may not be glamorous but it’s marketing your competition could never get.
What happened to my friend? He’s still got competition in town but there has been a measurable increase in his business. He knows his customers’ names AND he’s been using the “local boy makes good against the big, corporate outsider” quite successfully. At first his competition tried to destroy him with insanely low rates, but he just stayed the course and stayed “on message” and he’s coming out the other side just fine.
