As a business owner you are no doubt keenly aware that you have competitors. But how do you compare competitors and what action do you take?
First of all, in the day-to-day pressures of running your business you don’t always have the time to consider your position before the cold winds of competition strike.
Consequently, before you know it your customers are jumping ship or a new entrant with a new approach is taking “your” business.
Here is a method to quickly compare competitors. It helps to focus you on what’s out there, what’s coming and most importantly what you can do about it.
How do you compare competitors: identify them first
1. List your Top Direct Competitor
- If you can’t choose one immediately, make an educated guess based on your knowledge and experience.
- Select one competitor who poses the greatest threat to your business. Or identify the person or company you most admire (or fear) in your industry.
- Think about who your customers would turn to if you were not around. (Also, if you have time choose more than one, say your top three competitors).
2. List your Top Indirect Competitor
- You will find that customers have many calls on their time and money.
- What is the key service or item your customers would purchase before your own?
- Also, don’t forget. A customer’s decision to do nothing is still your competitor. Inertia may be a key competitor.
3. List your Top Potential Competitor
Beware your unseen competition.
Yes I know you need a crystal ball for this. But you are best placed to understand the trends in your market place.
- What sort of political, social, economic and technological trends are affecting your customers. How do these encourage new approaches and new competitors?
- What sort of competition will you face tomorrow?
- List your top potential new competitor.
For example, how many fountain pen manufacturers of the past woke up one morning to face the full impact of the development of the ballpoint pen?
How many men’s razor manufacturers looked on aghast as a ballpoint pen maker launched cheap disposable razors?
How do you compare competitors: assess them
It could of course take many hours to analyse your competitors and positioning but I know you don’t have all day.
4. Consider these key aspects of the competitors you have just identified
- Customer Needs: What customer needs are your competitors attempting to fulfil? (Relate to your ideal customers).
- Strategies: What strategies do they adopt?
- Strengths & Weaknesses: What are your competitors’ strengths and weaknesses in relation to the factors that are important in your marketplace?
5. Choose the top three factors that are most important
Here are some suggestions …
Product/service, selection, stability, expertise, marketing, payment methods.
Price, service, delivery, reputation, sales method, image.
Quality, reliability, performance, location, credit policies, branding.
Return, profit margin, technology, suppliers, innovation, employees.
Make your moves on your competition
You now have a good idea of who your competitors are (direct, indirect, potential).
You have considered how they fulfil the needs of customers, the strategies they adopt and their strengths and weaknesses.
6. Decide actions
What can you do about it? Quickly jot down the answers to these questions.
- What do you have that fulfils your customers’ needs. (That the customer values.) That your competitors do not.
- What strategies can you adopt to make your business successful over time?
- What strengths do you have that address your competitors’ weaknesses to give you advantage?
- How will you prevent new competitors from gaining ground?
- How will you respond and change?
In answering these questions you now have a considered approach to beating your competitors.
As we consider each of our competitors we can choose to.
- Disregard them.
- Engage with them.
- Adopt their approach.
What will your response be?
In life, you’re either moving forward or backwards, towards something or away from it, growing stronger or becoming weaker. Always strive to be in a constant positive motion.
– Michael Irwin
You have now completed a quick but effective competitor analysis on how do you compare competitors. This will provide a good starting point but for a more in-depth method see this article at HubSpot.
Your comments would be most welcome and if you have found this blog useful please share.