Too often we hear the advice to “focus on what you are doing and don’t worry about anyone else”. While I’m certainly not saying that you should obsess about what everyone else is doing and constantly compare yourself to others, I do think that businesses need to keep an eye on their competition to learn as many lessons as possible. Our competitors are a great source of information that we can use in our own business. Often we can look at them to see what they are doing well so we can copy it, and what they are not doing well so that we can improve on it. It’s a very simple recipe to improve the success of your Simple Startup!
A competitor is any business that you are competing with for the same customer’s money. They don’t have to sell the same things as you, or be in the same area, but if they are attempting to solve the same problem for your customer as you are, then they are competing for the money that your customer is looking to spend.
So what should we be trying to learn from our competitors that is worthwhile information and not just noise that distracts us from our goals? Here’s 5 things every Simple Startup business should be looking to their competitors for.
1) Who is their target market?
While you may not be interested in the exact same target market as your competitors, it is worth figuring out who they sell to. That way you can make a decision about whether to compete for the same customers in the same way, or perhaps target a different niche market that you feel like you can serve better.
2) Where do they sell?
If you take a look at your competitor’s location, you can learn a lot of the effectiveness or ineffectiveness of different ideas you may be considering. If it’s a physical location, what kind of neighborhood is it located in? Is it positioned in high foot-traffic areas or a little out of the way? Does the business need to be highly visible to the public or is word of mouth and the internet going to be the primary way the business gets discovered?
If the business is digital, what platforms are they selling on? Do you feel that they are getting the highest traffic they can in their current location or do you feel like a different website or platform would be better suited to the target market?
3) What do they sell?
What items are the best sellers for your competitors? If the store is digital or has a website, look at their best sellers and try to determine why. Is it the quality, price, uniqueness, availability, reviews, reputation of the business…? Why are people interested in buying those items? Can you sell similar items to compete directly or avoid those and focus on items that your competitor might not have as strong a market share in?
4) How much do they charge?
A few methods of pricing your products and services involves staking out the competition and seeing what they are selling for. Once you have a good idea of the prices out there for similar offerings you can opt to do one of the following:
- Competitive Pricing - put yourself right in the middle of the pack.
- Price Leadership - set your prices higher than everyone else. This can be due to having a superior product, and totally unique selling point, or wanting to give the impression of luxury and quality.
- Destroyer Pricing - come in low and be cheaper than everyone else. Once you have won some customers and gotten them loyal to your brand, start to increase the price towards your target goal.
5) What mistakes have they made?
How am I supposed to know what mistakes they made? For starters, check the news and see if there are any major catastrophes that you can avoid! Second… and this may seem odd… go talk to them. That’s right. Actually go up to your competitors and ask to have a meeting with them. Offer to take them out to coffee or lunch, and tell them what you are doing. Let them know you are starting up a business in a similar market to them and you’d love to know their advice on getting started. You would be shocked at the cooperative culture out there in many businesses, whether it be within certain industries or different geographical areas banding together. Quite often it is a case of “a rising tide lifts all ships”. Or in other words, if you are bringing in business and advertising well, more people will come into a town, or will become aware of the industry which will lead to more business for everyone else too.
Approach the conversation with a tone of curiosity and respect. Offering something in return such as coffee or lunch is a great way to set the tone and encourage a friendly response to your questions. Ask them what mistakes they made along the way or what were some of the steps they took that had the most reward in terms of growth. They may not give you the recipe to their secret sauce, but we often like being asked to share our wisdom and advice.
There you have it! 5 big lessons you can learn from your competitors and without having to spend any money or maybe for the price of a cup of coffee. If you have any big lessons that you learned for your business from competitors, let us know in the comments section of the Facebook Community.