You certainly don’t want to lose market share to your business competitors because that puts your livelihood at some degree of risk. But what if you could learn from your competitors? If you’re a small business juggling a lot of responsibilities, there are two types of competitors to consider:
These are other small businesses trying to iterate in your space. They may be a little older or younger than you, and their business model and offerings might be slightly different. However, because you’re both relatively small, your peers can be good role models to observe.
Those who “made it”
These are midsize to enterprise companies in your industry. At some point, they were small businesses or startups, but they grew consistently and established themselves. For many small businesses, this (or acquisition) is the goal. When studying these companies, the lessons are often aspirational.
So what can you learn from competitors?
There are dozens of lessons you can learn by studying your competition, but here are four primary areas:
There is a ton of digital noise out there -- 293,000 statuses are posted to Facebook every minute, for example. And even though digital marketing often has advanced targeting features built in, many don’t take advantage of them; this tool is still confusing to a lot of people.
So, go observe what competitors do on Facebook, Twitter, LinkedIn, Pinterest, and even Instagram. Subscribe to their email newsletters, and see what they send out. Look at what types of graphics they use. You don’t want to copy them directly, no. But you do want to look at the wording, the presentation, etc. Their potential customer base is similar to yours. If what you do is very different, it could be perceived as jarring by a customer. And you don’t want that.
You can also use tools like SpyFu, Perch and Kompyte to track what your competitors do in terms of Google AdWords, social media marketing, and more. Remember: learn, but don’t directly copy.
Look at the products/services your competitors offer. Now, go read their reviews on social media, Amazon/related sites blog and/or forums. You can even pose questions to the people that have commented on each of these threads. Your goal is to understand what is good and bad (in the eyes of customers) about how your competitor’s product is delivered. Make a list of the good aspects, and try to do those in your company’s own unique way. Then, make a list of the bad aspects, and try to figure out ways that your company can improve them. Now, you’re using actual customers’ views and opinions as a way to make your offering better.
Pricing is incredibly hard for companies of all sizes. Only about 10% of businesses use “value-based pricing” models, which are rooted in a customer’s willingness to pay. For that reason, you should never directly copy a competitor’s pricing model -- it might be flawed, too. But if you look at 5 or more competitors on similar services, you should be able to get an idea of the general region your offering should land in. At the very least, if you can get access to their projected revenue using sites like Glassdoor, you can see which price ranges seem to be working in terms of driving revenue. (Revenue isn’t directly correlated to price, no. Other aspects like customer experience, branding, etc. play in. But if something is massively overpriced, it won’t generate a lot of revenue either.)
You can usually get a good picture of a competitor’s fiscal situation, including any funding (usually public information), and some idea of current ratio or cash ratio. Sites like SpyFu, mentioned above, will show you how much they’re spending on digital ads. Once you have a picture of how they’re functioning financially, make sure your own side is in order. (That’s where AMOA comes in.) Yes, different industries have different financial ceilings and floors. There’s no one-size-fits-all answer here, so the best thing to do is work with qualified financial and accounting professionals to make sure you’re where you need to be in order to grow.
The biggest takeaway is this: learn, observe and iterate.
There are lessons to be learned within your local market, among your competitors, and dozens of other places (YouTube, books, speeches, blogs, etc.) But when you find something you like, don’t just copy it verbatim. Make it work in the context of what your company is becoming. This quote from an article by MIT sums it up nicely:
“A key reason for business failures is simply that organizations are complex configurations of people and technology, and a set of tools or practices that works well in one context might not be equally effective for a major competitor — even if that competitor is located just down the street.”