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3 Ways That Competition Works for You

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When you operate a business, competition is a fact of life. It’s only natural to be unsettled by the thought of competition—it could put me out of business!—but in fact, the presence of competitors in your marketplace sector is a good sign, better than you think. If you adjust your perspective and dial back your (understandable) fear, you’ll learn that competition can pay dividends. You have to know where to look.

To make competition work for you, begin by identifying your principal direct and indirect competitors. Direct competitors offer products and/or services very similar to what your entity provides; indirect competitors offer “Plan B, ” products or services in a different category altogether but which your target customers perceive as an attractive alternative. For example, a box of chocolates and a bouquet of roses are indirect competitors for Valentine’s Day gift giving.

B2C business owners can easily ID and research competitors who operate either a physical location or e-commerce site by running a key word search and browsing competitors’ websites. You can also follow-up and visit storefronts, to check out the location and the merchandise and say hello to the owner (or the manager). B2B business owners can likewise conduct a key word search and visit the websites of direct and indirect competitors who operate in your geography (or beyond). You can evaluate the products and services catalogued on the sites, but meeting your B2B competitor peers will probably take some effort. Most work from home and even if an office is maintained, it would be inappropriate to drop in without an appointment. Your best option is to look for competitors at business association meetings and other networking events.

It’s good business to benchmark two or three of your most successful direct and indirect competitors and learn the secrets of their success. Some of what they do might work for you, too! Read on to learn how you can turn competition into a win for your entity.

Barometers of marketplace potential

This insight is only an estimate and is not based on metrics specific to your organization but as a rule, if businesses similar to your own are doing well in your marketplace, it’s indication that your venture could also do well. That local competitors are thriving is convincing evidence that there is money to be made.

Remember, though, that many factors contribute to building a successful business and in the B2B sector that would include influential relationships and strength of reputation, access to decision-makers and the ability to consistently meet or exceed client expectations. Another factor is market saturation—established companies may be doing well, but is there enough demand to allow newcomers to prosper?

How you can succeed

Not only are competitors your canary in the coal mine of marketplace potential, another useful dividend that competitors offer is teaching you to become a more astute business operator. So as you study the websites of your main competitors, pay attention to the descriptions of direct competitors—products and services that resemble yours—and indirect competitors—products and services that offer a credible alternative to what you sell.

Furthermore, make note of the calls-to-action you see—which are especially clever and compelling?, the blog or newsletter archive, scheduled speaking engagements—what are the topics and who is the host organization?—and the client list. Those operating in the B2C space can browse the websites of competitors (or visit a local store) and inspect the products and services offered, note the pricing strategy, assess any add-on and up-selling deals and even see the available payment options. In either the B2B or B2C space it will also be instructive to tour the social media accounts—which platforms are used?— and witness how competitive brands interact with customers.

It’s best if you don’t simply copy everything your competitors do. Every business is unique, even amongst direct competitors. If something looks like an intriguing possibility for your venture, test for effectiveness and optimize for your target clients and brand.

You are also advised to resist the urge to compete on price, unless your competitive intelligence shows that your prices are significantly higher than the amount charged by two or more competitors for a similar product or service. It’s tempting to cut prices to gain market share, but it’s a strategy that seldom works in the long run. Aiming to under-price competitors can only put you in a race to the bottom and that’s not what you want. Particularly in the B2B sector, focus on demonstrating and articulating value as you position your products and services in a premium tier.

Cooperate and collaborate when necessary

Now to be seriously counterintuitive, the most savvy and pragmatic Freelancers recognize that it is not a given that competitors are destined to be your adversaries. Assuming that there will always be a certain amount of hostility between you is shortsighted and could possibly cause you to lose out in some way. While you may never trust certain competitors, it’s nevertheless a good idea to be strategically cooperative when necessary. Ideally, there will be enough trust and respect that allows you to build alliances, cooperate when necessary and, in some cases, even collaborate with selected competitors (while observing boundaries, of course).

You never know what the future will bring—the time may come when it’s mutually beneficial for you and a competitor to align professionally and do a little business.  For example, if a policy or piece of legislation is expected to have a strongly positive or negative impact on your industry or working environment, it would be a compelling ice-breaker if you were to reach out to certain competitors and propose that you join forces to oppose or endorse pending legislation that could affect your livelihood.

Don’t be shy about engineering an introduction if you are fortunate enough to encounter one (or more) of your competitors at a chamber of commerce or other meeting. Your competitive intelligence strategy is to be friendly and ask for an exchange of business cards, so that you’ll have contact info. Getting to know your competitor colleagues as individuals is good business. You never know where those relationships might lead.

Thanks for reading,

Kim

Image: © The Walt Disney Company. Snow White and the Seven Dwarfs the animated movie produced by Walt Disney Productions and released by RKO Pictures in 1937. Based on the 19th century German folk tale published in Volume I of Grimm’s Fairy Tales (1812) by the brothers Jacob (1785-1863) and Wilhelm (1786-1859) Grimm of Hanau, Germany.

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Perfecting Your Pivot

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If the quintessential American motto is “change is good,” then in the business sector change finds its ultimate expression in the pivot. You have no doubt noticed that business publications often feature reports of a pivot executed by one entrepreneur or another. The pivot is the new American myth, a swashbuckling action-adventure narrative that stars a Luke Skywalker archetype who launches a start-up. If sales start tanking, our brave and brilliant entrepreneur-hero correctly diagnoses the problem, intuits the marketplace zeitgeist and engineers a flawless pivot that not only saves the company from bankruptcy, but carries it to phenomenal success.

These heroes’ journeys are exciting and tremendously appealing but as you know, reality does not unfold like scenes in a movie. What’s lost in the fawning admiration is the cold fact that a pivot is a complex process. Getting it right demands a deep dive into both your data and that of your marketplace. The ability to recognize the story that the data tells and the good judgment to know what to do about it is another requirement. A dose of good luck is the third resource you’ll need.

It may take a couple of disappointing quarterly financial reports to convince you that a change must be made, and soon, to avoid getting trapped in a permanent downward spiral. Once it becomes obvious that corrective action is necessary, your first challenge is to identify which aspects of the business need to change and what might be left in place.

Resist the temptation to assume that major surgery, i.e., a pivot, is the best remedy. Choose the course of action that data indicates is the most specific and least disruptive solution and should have the best chance of successfully turning the company around. The purpose of your research is to discover and confirm growth opportunities and how to either successfully enter a new market or hit the restart button on the market you’re in, by refining your methods. Carefully research the size of potential new target markets, your access to those customers and the competitive landscape.

For example, as you analyze the efficacy of your marketing strategy, you may realize that some combination of ramping up your inbound marketing activities to increase outreach to target customers, reassessing your pricing strategy and/or upgrading pre- and post- sale customer services provided could make a substantial positive impact.

Once you’ve analyzed your business and marketplace data, you would as well be wise to review your company mission and vision statements. Before making any big changes to the purpose or mission of your enterprise, make sure that the new direction of your company will align with your values and guiding principles. Or will your pivot necessitate a rewrite of your vision and/ or mission statements?

Pivot to solve a problem

Analyze your KPIs, with special emphasis on marketing data and revenue streams. Get input from your customer-facing team members and feedback from high-volume customers—both groups have wisdom to share. Every pivot is different, but every pivot must solve a problem. Following your analysis, you can develop your pivot strategy, the roadmap that defines the aspects of your business that you’ll pivot and the aspects that will support the new direction and can remain in place.

Your pivot plan will outline the steps you’ll take to execute the pivot. It should include timelines, resource allocation and key performance indicators (KPIs) to measure its success.

As well, encourage yourself to be confident once your decision is made. A pivot is a significant challenge but it is nevertheless a sign of robust strategic thinking and problem solving, essential qualities that support the long-term viability of your enterprise. Signs that a pivot might be necessary include:

  • Insufficient customer base
  • Weak brand equity
  • Unsatisfactory revenue and profit
  • Negative customer feedback
  • Overwhelming competition

Types of Pivot Strategies

Pivots offer customizable options—-there is no one-size-fits-all template. Your company’s pivot may involve a group of small changes that together result in a significant positive impact. Conversely, your pivot may be based on a very visible alteration in your signature product or service that precipitates a re-calibration of your brand and all the ways you market and sell it. Below are five of the most common pivot strategies:

Marketing Pivot: Signals a big change in your company’s core marketing strategy. Pivoting in this instance may include targeting a different audience, using more appropriate outreach channels, re-calibrating your use of inbound and outbound marketing techniques, or adjusting the company’s brand voice and messaging tactics.

Product Pivot: Describes a change of the company’s product or service offerings. Pivoting a product may include altering the product’s ingredients, features, or packaging. In a more dramatic approach, the defining characteristic of your pivot may be the introduction of new product or service lines to provide solutions that are more responsive to customer needs and priorities.

Brand Pivot: A branding pivot strategy entails one or more adjustments to a company’s characteristic image and philosophy. Pivoting a brand may include renaming the company (see Facebook to Meta), editing its mission to serve a new target market, updating the company tagline, or refreshing the visuals, e.g., the logo and/or color scheme used.

Pricing Pivot: In this choice, a company may change the pricing tier in which it has previously operated. For example, a retailer that originally priced in the mid-market tier may conclude that economy pricing will better reflect the perceived value of its products. The expected outcome is a broader customer base that generates greater revenues and increased profits.

Distribution Pivot: Closing all or most of a business’s physical locations in favor of operating in the e-commerce sector is a bold example of a distribution pivot. The strategy involves changing how a company delivers its products and services to consumers. Pivoting your distribution model could include expanding into new geographic markets, adding or discontinuing retailer partners, or introducing the franchise model.

Communicate and monitor

In advance of your venture’s pivot, encourage support by explaining the upcoming changes to stakeholders—employees, customers, investors. Outline the changes you plan to make and clearly articulate how those changes will benefit their relationship with the organization. Schedule videoconference meetings with each key constituency to discuss the pivot and make the case for why it is necessary.

Be certain that your explanation adequately answers the anticipated questions and potential concerns of each group. Consider creating a Frequently Asked Questions (FAQ) sheet for each stakeholder constituency. Finally, closely monitor the pivot’s progress as reflected in the KPIs you’ve chosen, as well as feedback from key members of your constituencies.

Thanks for reading,

Kim

Image: The Academy Drum and Bugle Corps of Tempe, AZ