As you’re starting up, you’re always thinking about strategy and branding. Good branding will highlight your uniqueness and (hopefully) put you before your competitors in the eyes of customers. But don’t forget that it’s good strategy that will actually ensure you can take on the competition and win.
The next time you’re about to go into a competition-induced freak out, remember these tips on how to come out on top:
1. Observe the Competition
While it might seem obvious, getting to know your competition is key if you want to beat them. Keeping a regular track record of their strategy, branding, customer acquisition tactics, and numbers will actually go a long way in calming those nerves.
Obviously don’t spend more time analyzing their business than your own. You just want to get a feel for how they’re fairing in the market, and what their strengths and weakness are.
2. Learn From Your Competitors
What kind of mistakes can you see your competitor making that are definitely turning customers away? How have they managed to use online marketing and social media to attract more customers than you have?
Since competition is a key part of innovation and growth, checking out what your competition is up to can be a good learning experience for improving your product. You might even learn something new without actually needing to pay for it.
3. Don’t Trash Talk the Other Guy
While you could spend way too much on PR or marketing to try and steer people away from your competitors, that’s pretty low and probably a waste of your money (think Facebook's Google smear campaign). Being confident and smart about your product should be more than enough. (But if you’re the victim of online business smack, learn how to defend yourself.)
4. Price is Not the Silver Bullet
Accurately pricing your product is crucial, but pricing includes way more than just underselling your competition. Make people see impeccable quality as the reason behind your product’s price. Then they’ll be satisfied regardless of how much it costs.
You don’t find those MEGA BLOW OUT SALE signs in any Apple or Williams-Sonoma store because there’s no need for them. People know that they can buy first rate, bangin’ products, which also make their friends drool, at these stores. That’s the real golden ticket (Wonka Bars weren’t cheap either, you know).
5. Know Your Customer Numbers
While you might feel that amassing a huge customer base is the best way to deal with competitors, it can also get really expensive. Make sure you actually know what it costs to attract new customers versus keeping the current ones happy.
If you add up all the expenses for one month that you put into acquiring new customers, and then divide that by the number of new customers from that month. You might be surprised how that number compares with the same month’s results for average customer spending.
If you’re spending too much on getting new customers rather than increasing sales for your current ones, then you know where to trim your budget. If you feel like you’re spending an appropriate amount, then at least from now on you’ll have an easy way to compare monthly or yearly numbers.
This might be the most important part of dealing with the competition. As Mike “Toilet Paper Entrepreneur” Michalowicz says, less is more. Focus on doing less than your competitors because you’ll end up doing it better. In his presentation at Stanford University's Entrepreneurship Corner, Shutterfly CEO Jeff Housenbold agrees that you shouldn’t try to make every product for every person.
Have any other smart ways to deal with competitors? Share them in the comment section below!