By Caron Beesley
Has someone opened up a competing business in your town? Are you worried that the town isn’t big enough for both of you and your business may be at risk? Not sure how to react to the new competition?
If you’ve been secure in your market as the go-to business for XYZ and suddenly find that your customers have another option, what can you do to fight back?
Remember, there are no quick fixes, but here are some tips for dealing with competitors and, quite possibly, collaborating with them!
1.Don’t Get into a Price War
Cutting prices to retain customers or distract them from “opening offers” from your competitors is a game you can never win and has a number of consequences, including the following:
- It lowers the perceived value of your brand and product
- Once you drop your prices it’s hard to put them up again
- You’ll risk attracting customers who only care about price points
- It puts you into the category of “follower,” as if you are being led by someone else’s business plan rather than your own
- In most cases, only the business that can tolerate the lowest margins can win
- There are instances when cutting prices does make sense, but it should never be a knee jerk reaction to new competition. Instead, consider the following strategies.
2. Zoom In on Your Niche
Face facts. You can’t expect to hold on to every customer. Accept it and focus your energy on identifying your ideal customer and developing a plan to win your share of that niche. In choosing to attract customers who need and value your services, you will secure your market share even in the face of competition.
3. Assess Your Competition and Fill the Void
Get to know your competition. What are they doing differently? What are they good at? What are their weaknesses? The latter is important because it gives you an opportunity to step-in and step-up your game in these areas. If you can capitalize on your competitor’s weaknesses, you will chart a path for yourself and exploit a profitable niche for your business.
Start by reading media reviews of new businesses or check out online reviews. Websites such as Yelp.com, Google Reviews, Angie’s List, and local community discussion boards offer honest customer reviews and appraisals of businesses. Take a look at your competitor’s service offerings and even be a secret customer yourself.
4. Seize the Opportunity, Be Unique
Even if you offer the same products and services, you are never going to be the same as your competition. This is where opportunity lies.
Review what makes your business unique – often it’s a combination of you as business owner, your team, and all the other factors that differentiate you from your competition. Refocus your sales, operational, and marketing efforts to emphasize the unique customer experience that you offer.
If you are facing competition from a bigger brand, remember that there is something very unique and marketable about being a small business – that personal touch, your agility, your passion, your business values, and so on. Use it to your advantage.
5. Stop the Bleeding
If you are starting to see customers leave your business in droves, then it’s time to review your business strategy. There has to be a reason why they are leaving your business. Identify what your customers are seeking that you aren’t able to provide. This will involve looking at all areas of your business – your location, your products, your staff, your brand, and so on. Use this information to refocus your operations based on what your customers’ need, not on what the competition is doing.
If your customers appreciate your services and need your products, they will typically remain loyal. Yes, many will check out the competition. But if you are doing everything right, there’s a good chance they will come back to you.
6. Once the Dust has Settled, Consider Co-opetition
What is co-opetition? It’s the gentle art of cooperating with companies that might traditionally be considered your competition. Co-opetition means teaming up with complementary businesses to market your companies together. Done right, it can boost business for both of you.
Article first published on sba.gov
There’s more where this came from! If you enjoyed this chapter, download our FREE ebook, Mulligan Funding’s Ultimate Guide to Business Relationships, to access 9 additional chapters jam packed with practical tips and guidelines to maximize your business relationships.
*The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 22, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.