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Three Clever Ways to Know the Competition Better

What is the secret to success in business? That’s easy! It’s how well you know the competition.

Alright, maybe this is a slightly over-simplified perspective, but it always surprises me how many companies work with a primarily internal focus.

I have written many posts about knowing your customers, such as “Why Customers Are The Answer To All Your Problems (If You Ask the Right Questions).” Watching and listening to them in order to fully understand their rational needs and emotional desires is a great – and free! – way to start.

But today I would like to speak about doing exactly the same thing for your competitors. If you are going to succeed in attracting their customers away from their products and services, then it would make sense to know them as well as you do your own.

Here’s a simple three-step process to do so. 

 

Encourage employees to use competitive products & services

Know the competition better by trying their products and services.In most organisations today, using competitive products is still frowned upon; after all, we make the best don’t we, so why use those of other companies?

However to challenge and beat the competition you have to intimately know what you are up against. Regular contact with competitive products will encourage your employees to evaluate your own offering. They will also be encouraged to suggest competitors’ strengths and weaknesses that were perhaps not evident before. It will also ensure that you are rapidly aware of any improvements made by the competition. You won’t get left behind and find yourself suffering from declining sales due to competitive improvements of which you are unaware.

To challenge & beat the competition you have to intimately know what you are up against through regularly experiencing their product and service offers. #marketing #competition #brand Click To Tweet

This intimacy with competitors’ products and customers should be requested of employees at all levels, by being one of their annual objectives. Of course, in some industries this might not be possible, due to the selective nature of the product or service, but certainly for most consumer products and service companies, this can easily be done on a regular basis.

Now encouraging people to use competitive products is easy to say, but you should also be prepared to invest in it, by paying for your employees to experience them. It would be unfair, and would certainly be resented, if your people had to spend their own money to make such experiences. This knowledge gathering should be seen as an investment by your organisation, of at least equal value to offering your employees discounts on your own products and services.

Why don’t you start a similar process and add these experiences to everyone’s annual objectives? It’s a great way, and a free one at that, to know the competition better than you do today.

 

Make a Library of Competitive Products and Material

KNow your competition better by sharing what you knowIn one of my previous positions, the company had an incredible competitive library. This included every single competitive product that was available from all around the world, classified by country and organised by segment.

Everyone found this library extremely useful, especially when discussing such topics as shelf impact, packaging or in trying to understand our competitor’s portfolio strategy.

However, it was managed by the marketing services team and was hidden away in the lower ground floor where people rarely passed by. Additionally, the packs were emptied of their contents, to avoid infestations of vermin and insects, so people never got to try the products.

It would have been even better had the products been displayed in a location that was easily accessible to everyone. In addition, the products should have ideally been sampled before the packages were emptied of their contents. That said, they still remain one of the few companies I know that have been observing and following their competitors in such a consistent way for decades. As you can imagine, they were always ahead of the market and up-to-date with their competitive intelligence!

Stay ahead of the market & up-to-date with what you competitors are doing with a competitive library of products and communications material. #brand #marketing #communications Click To Tweet

Another client of mine has made a library of communications material. Their advertising agency is of course the major source of the samples, but employees who travel are also encouraged to take photos of ads and promotional materials which are then added to the library. You would be amazed how inspiring it is to review this work whenever a group is discussing their own advertising and promotions. They avoid duplication, get great ideas from countries to which they don’t normally have access, and can again take their customers’ perspective when comparing the samples with their own work.

What could you do to make your competitors’ products and communications more easily accessible to your employees? If you’re serious about wanting to know the competition better than you do today, you have to stay on top of what they are doing at all times.

 

Understand your Competitors’ Customers too

Observe to know the competition betterThis same curiosity to know your competitors’ products can also be used to know and better understand your competition’s customers as well.

When your employees go out to observe your own customers, they should also pay attention to those people who are not using your products or services. In this way they can gather additional information that can then be compared with your knowledge of your own customers.

Whether it is getting a better understanding of your competitors’ products and services or the people that use them, the information accumulated must be stored and shared internally to be of any benefit. Some companies organise weekly or monthly sessions where people from different departments can share their latest knowledge and observations. For more ideas on how to share effectively read “Knowledge sharing and how to WOW!” 

Other companies organise customer connection sessions where teams of employees from different departments – with differing perspectives – go out together with a task to complete or a question to answer. These could be for example:

  • How, where and when do people use our product or service?
  • What is their biggest frustration in shopping for the category?
  • If they could make one change to our major competitor’s product, what would it be?
  • What differences are there in the way the category’s brands are displayed?
  • Which social media channels are most popular with category users?

Employees gather ideas and information by first observing and only afterwards asking questions for clarification purposes. Upon their return, the teams can meet up to share their ideas and learnings, as well as to discuss the impact of their findings and agree on what actions if any need to be taken. For more details on how to observe customers, whether your own or those of your major competitors, read “Five Rules of Customer Observation and Why it’s Hard to Do Effectively.”

I have witnessed these customer connection sessions being run in countless organisations. Every single time I see just how excited and energised employees get about improving the way the company makes, packs, sells or communicates its products and services.

Isn’t it time your organisation got closer to your customers and those of the competition? 

 

These are three ways you can easily and quickly know the competition better than you do today. Do you have other ideas that you’d like to share? I’d love to see your comments below. 

Have you run any such customer connection exercises, or built a competitive library of products in your own organisation? If so please share your experiences too.

For more ideas on how you can know the competition even better, why not organise one of our 1-Day Catalyst Training Sessions? We have them on many areas of brand building, so you are sure to find exactly what you need to inspire and energise your team. Check out and download our brochures here. If you would rather talk through your needs first, then feel free to book time in my calendar. 

This post is an update of one that was first published on C3Centricity in 2011. All images in this article are from the book “Winning Customer Centricity – Putting customers at the heart of your business – One day at a time.” 

Beat the Competition in 2018 (Higher growth, profitability, innovation)

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After the mid-year break, most organisations get into their planning phase for the coming year in earnest. Do you know how you’re going to beat the competition in 2018? If not then this article will set out some clear priorities.

Although business plans are usually developed and approved in the middle of the year before the vacation period starts, it is only afterwards that the real work begins. So what have you promised your top management? Faster growth, increased profitability, or more successful innovations?

Whatever is in your plans, now is the time to review them and decide the very best strategies and tactics for meeting them. Let’s take a look at each of these objectives and see how best to meet them.

 

Higher Growth

As you know, there are basically only three ways to grow your sales:

  1. Get more people to buy
  2. Get people to buy more
  3. Get people to buy more frequently

What you may never have noticed before when reviewing these options, is that all three approaches include the word “people.” And it is only by understanding them better than you do today, that you will be able to grow your business tomorrow.

So, how well do you know your current and potential customers? Do you know what they think about your current offer? Do you understand their needs, desires and dreams? Do you recognise what they really want but can’t even themselves articulate? Uncovering these are what will give you a clear competitive advantage.

Of the three strategies, the first seems to be the one that most organisations immediately think about when looking to grow their business. They go out looking for new customers by increasing their distribution channels in the hope of getting more people to buy. But that costs a lot of money, doesn’t it?

Most organisations try to get more purchasers to grow their #business. Be different! #sales Click To Tweet

CPG (consumer packaged goods) companies on the other hand, frequently encourage their customers to buy more through promotions and discounts. This too takes a large portion of their budget.

However, it is now well documented that it is easier to increase sales amongst your current customers than it is to go out and attract news customers to buy.

A 2015 study by  Price Intelligently showed that a 1% increase in customer acquisition impacts your bottom line by around 3.3%. But improving your retention rate by 1% affects your bottom line by around 7%. In other words, it is twice as profitable to retain a customer than to acquire a new one.

“It is twice as profitable to retain a customer than to acquire a new one.”

Even if you replace every customer who leaves by a new customer who buys, you end up with the same number of customers—but lower margins–because it costs far more to gain a new customer than to keep the one you already have.

According to ThinkJarCollective, it is six to seven times more expensive to attract a new customer than it is to retain an existing one.

“It is six to seven times more expensive to attract a new customer than it is to retain an existing one.”

Marketing Metrics helps you beat the competition

To quote a comment in the excellent book Marketing Metrics, from the Wharton School Collection, by Paul W. Farris, Neil Bendle, Phillip Pfeifer, and David Reibstein, the probability of selling to an existing customer is up to 14 times higher than the probability of selling to a new customer.

Therefore it’s clear that your current customers are worth far more to you than any new potential customers are today.

Whichever strategy you use to grow your business, it involves knowing your customers deeply. Therefore that is what you need to work on first.

To do this, start by collecting everything you know about them and then store all this knowledge and information as a descriptive and visual persona. (You are welcome to download our 4W™ Template if you don’t already have one)

Then get out and meet as many of your customers as possible in person.

Meet your customers to beat the competition

This could be by serving behind the counter if you have a retail outlet. Or attending market research interviews, focus group discussions, or by getting to know your customers by meeting them in their house or going shopping with them.

All of these are great ways to see the reality behind the numbers and truly brings your data to life. And the more you meet and understand your customers, the more likely you are to beat the competition – as long as you put your learnings into action of course!

Increased Profitability

Profit comes from selling your product or service at a higher price than it costs you to make. However that doesn’t mean selling it for a price that is just a percentage increase on your costs.

There are two important things to consider in addition to the category pricing range:

  1. What value do your customers place on your offer?
  2. What is your customer’s lifetime value?

To answer both these questions you need information.

Value-based pricing requires an understanding of what your customers value. With many product categories becoming ever more commoditised, price has unfortunately become almost the only the differentiator. This is a dangerous strategy, as I explain in “Are you on the way to brand heaven or hell?”

A better way to compete is to identify not only the basic requirements customers are looking for in a category, but the small things they value in addition. These include:

  • Sensorial elements such as a better perfume, a more appealing colour, a more elegant packaging
  • Rational advantages such as an easy-carry handle, resealable pack, reusable container
  • Emotional advantages such as club membership, preferential treatment, express service

In so many categories today, the leading brands are nor performing any better than their competitors, they just have a small edge in one or more areas that their customers value.

Does your product or service offer a competitive advantage beyond price? If not read “How do people recognise brands?” for inspiration.

The second area of pricing to review is your customers’ lifetime value.

Sometimes a product can be sold at a price that is not at all or only slightly profitable. This is done because the company makes money from the customers continued loyalty.

Think coffee capsules, razor blades, printer cartridges and game stations. In most of these cases once you have bought the item, you can only continue to use it by buying the same branded elements, usually at highly exaggerated prices.

This business model is called two-part pricing. The first item is sold cheaply and the second, disposable item at a (huge) profit. Customers can’t use the first without the second. Their only alternative is to buy a new product from a competitor. As long as that is more expensive than the replacement item for your current product, you will reluctantly pay up.

A further cost associated with this model that customers must consider, is the cost of switching.

Here the cost is not so much monetary, as time and energy to make the change. That’s why so many software platforms are offered for free trial. They count on familiarity breeding contempt for the competitors offer after the trial. For many, the hassle is just not worth the energy to learn a new system and you pay up.

The final cost for customers in switching in the psychological cost of doing so.

After a certain time, customers are invested in their choice and switching becomes harder to justify. They don’t want to admit – even to themselves – that they made a poor choice.

So you see, pricing isn’t just about cost for the manufacturer, it’s also about the cost and value to the customer that really matters.

Pricing isn't just about cost for the manufacturer, it's also the cost & value to the customer. Click To Tweet

 

More Successful Innovation

There are many articles here on innovation, such as “A Customer-First Approach to Successful Innovation” and “Improving Ideation, Insight & Innovation: How to Prevent Further Costly Failures.”

Both of these posts emphasise the importance of customer understanding and starting your innovation process with the customer.

What does your innovation process look like? Is it a funnel or a virtuous circle that starts and ends with customer understanding. Unless you have moved to the latter, your innovations are almost certainly not as successful as they could be.

The two above posts clearly lay out how you can move from a linear to a circular approach and then how to integrate the customers into your innovation process. That is why I’m not going to go into more detail on how to do this here. Read the above mentioned posts for an in-depth roadmap to more successful innovations.

 

At the end of the day, growing your business more profitably and beating the competition, is simply about knowing your customers deeply, often times better they even know themselves!

Do you know which area offers you the biggest chance of beating the competition in 2018? If not, then why not answer our short quiz. The C3C Evaluator™ Tool will give you a clear indication of which of the four areas of adopting a customer-first strategy you should prioritise. And the summary report will give you exactly what you need to change.

Link to the Mini C3C Evaluator Tool

 

Click on the image opposite to complete the evaluation yourself.

 

 

Hopefully this article has helped you prioritise your strategies and tactics for meeting your business plans and to beat the competition in 2018. If you have another challenge which I haven’t mentioned, then let me know. I will answer all your questions personally either in the comments below or by email, by contacting me HERE

In September I am offering a 20% discount on any 1-Day Catalyst Training Session. I thought that this would help you to meet your objectives next year in a more serene and comfortable position. Again you can book online HERE

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