Top Business Lessons To Learn From Your Competitors
Competition is the backbone of every industry, and it can provide the structure for your business development. This competition is not there just to beat, but it can give us some valuable lessons to help us become better at what we do.
While most people consider overseeing and spying on the activities of our competitors as a bad thing, I like to think quite the opposite. This is because learning business lessons from competitors who have already been in the position where I am now, who have gone through the same phase and tried out the same strategies, helps me to know where I should put my focus and what works out and what doesn’t.
Doing so, I can understand how to beat them at their own game. Learning from the successes and failures of our competitors can give your business a much-needed boost while helping you save time, money, and resources.
In this blog, we are going to discuss some of the best ways to learn from your competitors.
- Examine the horizon
Find out the competitors working in the same field as you. Divide these competitors into three categories:
- Primary Competitors – These are the direct competitors targeting the same audience as you and sharing an identical product or service.
- Secondary Competitors – These competitors provide a high-end or low-end version of your offerings, or they offer a similar product or service to a different target audience as yours.
- Tertiary Competitors – These competitors share very little relevance to your business. However, they can be valuable as potential business partners or a potential threat if they sway.
- Play consumer for one day
If you run a clothing store, search the shops that are selling the same products within a specific radius. Pay a visit to these stores and write down your first impressions about them, such as the way you were greeted or anything that sprung up as a surprise or the setup of the shop. Now compare your methods with these notes.
In case you primarily depend on your online sales, you can take advantage of tools like Google Adwords to gain insights on competitors who can push you out of the precious digital market. Visit their websites and observe their marketing behavior. You can also try to contact them by visiting the customer service section on their website. Go to their checkout page to find out how they are encouraging future purchases, what promotion techniques they are utilizing, and the modes of payment they are offering.
- Check their system
Has your competition hired a large staff consisting of significantly incompetent or untrained employees with very few efficient members? Is the team working on commission? If yes, then how does it seem to be impacting their performance? Are they utilizing any third party dealers to reduce expenditure? It might be a little challenging to obtain all this information, but once you do, it can be of enormous benefit to your business.
Moreover, you can research the ownership and administrative structure of these companies through public reports. Find out if any news forum has run any stories about these companies. Check when they release campaigns or press statements.
- Compare the financials
Examining the financial health of your competitors is an excellent strategy to measure the performance. Gross, net profit margin, operating, salaries and compensations are some of the numbers you need to pay attention to. Take note of their sales and profitability trends. Figure out their marketing expenditures as a percentage of their total revenue. See the variations in your financials and ask yourself why these disparities exist. Analyze how your competitors are utilizing money better than you and find out a way to turn the tables.
- Follow strategic pricing
You might be enticed to compare your and your competitors’ pricing strategy when you find out that their prices are lower than what you think you can afford. Pricing based on competitors may work in an overloaded, thoroughly researched market. Also, you must know that some competitors often exaggerate their abilities to price their products or services correctly. As observed, very few businesses employ a value-based pricing strategy, which is based on the buyer’s willingness to pay.
However, if you set your prices based on your competitors’ prices (which is called strategic pricing), you might risk your competition reacting to your action. Even the price will become a competition, which will result in a price war where nobody wins, and this only leads to incurring expensive losses. Because at the end of the day, you must maintain your profit margin in order to run your business successfully. Compromising this primary goal, trying to chase what somebody else has already done in the market sounds absurd. In case you need some help with your pricing strategy, you should consider hiring a qualified third party for that.
- Comprehend your competition
Conduct a brief SWOT Analysis (strengths, weaknesses, opportunities, threats) of your present as well as prospective competitors. All of you are wrestling to establish yourselves in the same market, so how do you plan to snatch your share away? Consider all the businesses, including the global brands that you adore and respect and find out what strategies they used that you are capable of implementing too.
When it comes to analyzing your competition, social media can be your best friend. Use private accounts to keep an eye on your competitors’ activities and to prevent them from knowing that you are observing their behavior. See which of their posts or tweets or images get the most number of views, likes, comments, and shares. You can also make use of some third-party apps that lets you compare your social media strategy against your competitors in terms of total views, CTRs, and shares.
These were the six business lessons that you can learn from your competitors and help your business grow faster while avoiding making the same mistakes that they did. Let us know what you feel about these tactics in the comments below.