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Whether you’re an entrepreneur or aspiring athlete, you will benefit from studying your competition.
Don’t believe me? Let me show you two examples.
For the first, lets take a look at one of the worlds best basketball players.
Kobe Bryant studies videos of his opponents on a portable 10″ DVD player. He combs through each video to find advantages which could help him guard his opposition in basketball games. Oh, and did I mention that he does this before every game?
The second example is about the world’s most impressive retail tycoon.
Sam Walton, the founder of Wal-Mart, would regularly visit his competitor’s stores. He started doing this as a aspiring business man and continued to do it when his stores were in first place. He believed in learning from everything and he thought his competitors could teach him the most.
But now you must be wondering, “How Can I Learn From My Competition?” In the remaining part of this article I will go over the best ways to study your competition for maximum growth potential. So, lets get started.
Who Are Your Competitors?
You need to find your competition to learn from them. It could be a teammate, a rival business, or it could be yourself, but the bottom line is that there is someone or something out there that you need to compete with. But how do you find them? Who is considered competition and why?
People and businesses compete for limited resources. We compete for sales, customer’s time, or that one promotion, or that one corner office. In short, your competition is anyone who prevents you from getting more of what you want.
You can easily define your competition by looking at your goals. If you want that promotion, your competition is anyone who may receive that promotion over you. If you create video games, your competition is all video game companies or more broadly, any company that demands a person’s “extra” time.
But what if you can’t find your competitors?
You need to define your business and goals on a broad landscape. It will help you spot potential attackers and growth opportunities. For example, if you specialize in 7″ screws, you would not want to compete in the 7″ screw market. You would want to compete in the “we help you build or hang things on the wall” market. If you specialize in iPhone games, you need to compete with “we help you waste time on your phone at work” market.
Okay, but how many competitors should you track?
The magic number is all of them. Unfortunately, who has the time for that? So, if you are a small business or corporate executive, I would focus on 3 competitors. If you don’t have 3, redefine your business and goals so you have 3. If you have more than 3, redefine your business and goals so you have 3.
You may think 3 is too much or 3 is too little, but it is a very manageable number for a single person. On average, you should spend at least 3 hours per competitor per month and 9 hours isn’t too demanding for one person. If you have the resources and time, you should expand your competitor tracking, but if you don’t, 3 is a great start.
What Are Your Competitors Doing?
Here is where we take some insight from people like Sam Walton and Kobe Bryant. You need to find out what your competitors are doing and why. If you can’t find out why, make sure you know what they are doing so you can use it to improve your business.
When the Holidays started coming around I noticed my local Barnes and Nobles did a few changes. I’m not competing with them, but what they did was interesting. They created a huge table of board games and placed it near the customer service desk. Additionally, they moved their “clearance” items from the back-end of the store to near the customer service desk. I found myself asking, “Why did they do it?”
Well, when the holidays come around many people spend impulsively. A parent comes into a book store to buy their daughter the new Harry Potter book and asks customer service where to find it. While waiting for help, she spots 50% off signs and “great games for children.” Now she leaves with the hottest new game Blokus, some cheap 50% index learning cards, and the latest Harry Potter book.
So, make sure you make note of what your competitors are doing. There is a reason for it and it may help you improve your business.
But how do you do it? How do you find out what your competitors are up to?
Are you ready for the answer? it is going to be very complicated. Get dressed, leave your house, and go look at what they are doing. Look at the products they are selling, Look at their light fixtures, look at their signage, look at their event promotions. Just use your eyes and you will find out what they are up to.
What Are People Saying About Your Competitors?
Why does it matter what people are saying about your competitors? Are there opportunities hiding in conversation?
If you’re reading a blog, I doubt I have to tell you this, but yes there is. There are tons of opportunities.
When you look at what people are saying about your competition, you can find one of two things: 1) a thread of discontent or 2) a success story. Lets talk about both of them.
- A Success Story: When you look at what your competitors are doing, you need to use your judgment to decide whether or not it is positive or negative. When you have a testimonial, you have proof. If you see on Yelp that the local diner received a ton of praise for their simple 15 item menu, you may think about cutting 50 items off of your 100 item menu.
- A Thread of Discontent: If you see people complaining about the pizza place’s customer service, you can position yourself as “the pizza place with the best customer service.” If you see people complaining about a lack of information on a competitors blog, you can provide a ton of information on your blog.
But how can you discover what people are saying about your competitors?
- Ask them: Many people love to give their opinion. So, you might as well use it to your advantage.
- Twitter: By now I’m sure you’re familiar with how much Twitter has grown. You should use Twitter Search to scope out your competitors and market regularly.
- Yelp: If you are a small business, you know about Yelp. You probably dealt with some bad reviews before or good reviews, but you should look at your competition’s bad reviews as well.
- Google Blog Search: Blogging is the source of conversation. You can search brand names, peoples names, or anything you want and you will find someone talking about it. Don’t let this free information go to waste. So, use Google Blog Search.
What Are The Experts Saying About Your Competitors?
If you regularly read Prevential.com, you know how cynical I am about proclaimed “experts.” However, they do have a ton of insight into your competition and your market. So, you should read what the experts are saying.
To start, you want to follow your industry news. You want to see what the independent trade journals and dedicated media outlets are saying. If they’re talking about some new great Point of Sale system or Content Management System, you should probably check it out. If they are talking about a new innovative product, you may want to consider adding something similar.
Why You Should Talk to Your Competitors
Many businessmen and executives hate their competition. They view them as villains who are trying to rob their bank accounts. However, this kind of hostility is not beneficial and will hurt your business.
When you view your competitor as a villain, you assume you are the savior. You think everything you do is right and everything they do is wrong. This kind of mindset will prevent you from doing the right things at the right time. You may not be able to keep an open mind when you see them doing something different because you will assume it is wrong.
Instead, you should talk with your competition regularly. They can be a huge help.
You don’t have to give away your secrets, but you should share certain best practices. This type of stuff will promote good will and respectable competition. You wouldn’t want a hostile competitor throwing a rock through your window or hacking your website right?
Additionally, if small businesses or executives communicate, they may fair much better against larger competitors with thousands of employees. I remember when I started an entertainment blog, the way I grew it was by talking with other entertainment blogs of similar size. We worked together and we eventually caught up to the huge entertainment blogs.
The Bottom Line
So you know what people are saying, you know what your competitors are doing, and you talk to your competitors regularly, but what do you do to differentiate? How can you make sure you and your company beats your competition?
Want to know How To Differentiate From Your Competition?
{ 14 comments… read them below or add one }
Great post. I agree that it’s critical to know the competition for all of the reasons you mention. Competitors can help each other in so many ways. It’s great to network, swap experiences and ideas and generally support one another. I call this “collabetition,” and I think there will be a lot more of it in 2009 as people who are otherwise new to the business world launch their ventures. I encourage my Indie Beauty Network members to do this at our social site at http://www.indiebeauty.com. Over 700 business owners in the same industry, sharing ideas, talents and expertise. It’s great to succeed, even better when you can do it while also helping others achieve their goals too!
@Donna That is pretty impressive that you have 700 business owners working together towards a unified goal of success. Would you like to be one of the Success Factors Success Stories? Shoot me an e-mail.
Very true. Also, I’m glad I’m not the only person who thinks about why different stores place different stack-outs in areas of their store real estate. Makes me feel more normal.
@James I guess I’m not the only one either!
I think talking to the competition is a great idea. But what would you suggest is a great way for your competitor to open up to you knowing that you are his/her competition?
@Phox You need to approach them with integrity. Sometimes, a little humility works. I know you’ll laugh hearing this from me, but it works.
Nice article. I actually like to take my competition out to lunch. It’s amazing what people will say if you are give them a free lunch and a beer.
I’ve also read that people are most honest while taking a walk or jogging. I’ve never been able to go on a walk with my competition, but that may be something to try as well.
I like that you encourage people to talk to their competition. If people keep everything to themselves they won’t be willing to create a network of people to help them. A network is possibly the greatest tool to becoming successful at any business.
I like that HIB takes their competition out to lunch. It’s a great way to connect and learn.
@Karl I think I’m going to take HIB’s advice as well. Need to take the competition out to lunch to find out what they’re thinking for sure.
This is a definite must but unfortunately most of us don’t have ot take the time to do this.
@Geoserv Isn’t it unfortunate? People conduct business and feel like they don’t need to watch their competition because “they don’t care.” I’m not sure why, but even large companies don’t do enough competitor analysis.
Interesting points here Derek. I guess I tend to ignore competitors as I have a very creative mind and like to come up with my own innovations and ideas. This makes it easy to loose sight of what the competition might be doing and I see there is value in knowing that for some of that inspiration that might be needed for new innovation anyway. Thanks for the tips.!
@MIke I think you should always focus on innovation, but that doesn’t mean you should wear blinders. Sometimes your competitors are doing things you “need” to be doing and there would be no reason to reinvent the wheel. You can just borrow the idea and innovate your way to the next level.
Derek, excellent points. I love examples from the professional athlete world. We sure can learn a lot from the pro’s, especially the superstars. You’ve given me great food for thought. I also like what you stated about cooperating with competition. I do believe that joint venturing is becoming a lot more common. I have found that collaborating creates a synergy that would not occur if I kept to myself.
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