by Emily Worden | Featured Contributor
Allow me tell you a quick story. I’m authoring a business book and a few weeks ago I wrote a chapter about pricing strategies. I said that discounts (e.g., 50% off) are detrimental to your brand and lots of sales indicate your business is in bad shape. I own a custom bag business, eThreads, and mentioned my biggest competitor has sales almost every week and that’s a bad sign.
Two weeks later that same competitor announced they were closing their doors.
At first I waved my arms around and did a little happy dance. For eight years we’ve been competing over the same customers and now those customers would be all mine.
However, as their final days approach, I find myself clicking through my competitor’s website (let’s call them Bags Galore) and feeling wistful. I see Bags Galore slowly dismantling and I don’t feel joy; I feel a bit forlorn.
Why? Because competition is good for business. It keeps you hungry. It makes you innovative. Bags Galore … they’ve been my biggest competitor since Day 1 and an inspirational adversary. Now they’re gone and I feel as if I’m losing a comrade.
Why it’s important to study the competition:
The military strategist Sun Tzu said, “If you know your enemies and know yourself, you will not be imperiled in a hundred battles.” Likewise, in business if you know your competition and your own strategy, you will succeed for many years.
It’s necessary to study the competition. You all are going after the same target market – the one with the better strategy wins.
1) Innovation – What can you do better than anyone else?
2) Strategy – How can you get more market share?
3) Evaluation – What’s your competition doing better than you?
How to identify the competition:
Generally speaking, competition is anyone offering products or services to your target customers. There’s always direct and indirect competition:
Direct competitors sell the same product to the same market.
Indirect competitors sell a substitute product to the same market.
For example, Bags Galore is a direct competitor – we both sell custom-made bags to the same target demographic at similar price points. I consider Target stores an indirect competitor – the behemoth sells bags to my market, however the bags are very different in style, substance, and price.
It helps to think about your target market first. Who are your customers? What problems/wants/needs do they have? How do you solve that problem? Who else can do that too? The answers to these questions define your competition.
*Note* – If you sell a high-end/luxury product or service, your competition might also be the economy. When money is tight, people stop unnecessary spending first. Your pricey items are cut in lieu of modest spending or none at all.
What to do once you’ve identified the competition:
Study – Make a list of your top 5 or 10 competitors. Go to their stores or office building. Read their website and any published literature. Look for articles written about them. Sign up for their emails. Follow them on social media. Create a Google Alert to learn whenever they’re mentioned online.
Buy their product, return it, and study the process. How do they interact with customers – how’s the follow up? Does the package arrive in a timely way? Is it packaged attractively? How’s their customer service? Was it easy to make the return? What can you learn about the process? Can you do anything better or different?
Look at what their customers are saying too. Depending on your industry, you can find reviews on Amazon, eBay, Yelp, Angie’s List, and even good ol’ social media. Start by going on Twitter and searching for your competition’s name. Do they have unhappy customers who you can serve better? Don’t be shy about contacting those customers and offering some help.
Analyze – Now that you’ve listed your competition and studied their strengths and weaknesses, it’s time to analyze the results. How will you position yourself differently from the competition? Can you offer something they won’t? Can you excel in an area they can’t?
Look at your competitor’s strategy too – what have they been up to the last year? What are they talking about for the future? Can you stay a step ahead of their plans? Can you offer something better or radically different? Think about ways to establish your competitive advantage.
Customers have lots of options – it’s your job to convince them you’re the best choice. I think that’s why I’ll miss Bags Galore so much. We were such close competitors that it motivated me to do better everyday. They were a great adversary and their departure is bittersweet. We have other competition out there though, so in the end I don’t mind a little extra elbow room at the table.
Emily Worden – Entrepreneur, Business Strategist, Impossible Optimist – Cambridge, MA
Emily Worden is a Boston-based entrepreneur, consultant, and writer. She started her custom handbag business eThreads.com in 2006 while pursuing an MBA and working 3 jobs. After a particularly awful shift at her weekend catering gig, Emily threw down the apron and said, “Screw it, I’m going to do something I love!” She graduated in 2008 and quit everything to pursue eThreads full time. Emily started the cat lifestyle business Ferocious Friends in 2012 with her husband Case to satisfy the needs of their cats Lulu, Smoke and every feline around. She started her consulting business emilyworden.com in 2013 to assist other businesses with persuasive writing, strategic vision, and customer satisfaction.
Emily is an avid DIYer and loves making things with her hands. Her happy place is the library where she walks once a week; she’s always excited to learn something new. Her extra happy place is a great view of sunset with music pumping in her ears. Emily is grateful everyday for following her dreams and hopes to inspire others to do the same.