I was talking to a business owner just the other day that needed help and was having problems with competition in the town. The competition was new in town, some were fly in fly out businesses and all had arrived when business was booming.
When business had slowed down and major projects had slowed, the competition started playing hard ball and had brought his business to its knees with lack of work due to them under cutting the price and him not being able to compete.
After analysing everything and asking many questions to get an idea of how I could help him, I came to the realisation that everyone had the same costs and in some cases even more that others, so I couldn’t understand how a local company couldn’t compete on price and what the real problem was.
So I asked, why can’t you compete on price?
This brought out the full picture of the situation and gave me a better understand of what the real problems were.
When we first start out in business we perform research or at least should and we list the very important keys to our business to give us guidance and understanding of what we need to say and write for our marketing. As the business grows, we can lose our way and forget these points, especially if everything is going well. As soon as new competition comes into the picture, we need to reassess the situation and use these points below to stabilise the business and change direction.
#1. Understand Your Client
When business is booming or the company is growing fast and evolving, this can be one of the first things which are forgotten and businesses can forget their clients as they race to meet demand. But this is even more important to have this relationship and if not handle properly, it can be just as dangerous to your business as not having enough business.
If you have been in town or in business for a while you should be communicating with your clients constantly to understand what they want and why they are using you. If you don’t then you definitely need to start doing this before it is too late.
This creates a strong relationship with your client which makes it harder for them to change, especially if you give great service. This also makes it easier to talk to them to understand when new competition comes into the market, they will also give you important information about them and what they are offering. This will allow you to evolve your service/product to adjust for new needs or requirements which may be needed to compete, especially if your client is looking to change to your competitor.
#2. Understand Your Competition
As a business owner this is important in any situation and should be monitored all of the time. The problem is that when business is going well, we forget to keep track of this until they start eating into profits or sales.
There are 2 easy ways to keep track of your competition and this included research and lost tenders or contracts.
Research may include things like on-line research, keep in touch with new and existing clients, etc…
The second point about lost tenders or contracts may be looked at as a negative, but everything can be an advantage if looked at in the right light. If you lose a contract call up the person who went with your competition, thank them for their time and ask if you can gain some feedback on why you lost the tender and what you can do better next time to gain the next contract.
If done the right way, this will leave a positive memory of the contact and you will gain some valuable information about what to do next time to beat your competition or maybe even win back the contract.
The problem which the business owner was facing was that the client was comparing apples with oranges and both the client and business owner didn’t realise this. By understanding this point, they can help to make the client more knowledgeable on the next quote and this will help to win future tenders or contracts.
#3. Understand Your Product/Service
This is vital to any business because the more you know about the strengths and weaknesses of your product/service compared to the strengths and weaknesses of your competitors, the easier it is to sell. This allows you to have answers prepared for any objections to a known weakness in your product/service and also allows helps to point out the strengths in your product over you a competitor’s weaknesses.
If possible you may even be able to change your product/service to overcome any weaknesses of your product/service. A simple way to do this is to write out all of the pros and cons of your product and compare this to the pros and cons of equivalent competition products. From here you can plan a market and sales strategy for this.
#4. Understand Your Advantages
This is similar to understanding your product/service but this concentrates more on the experience and knowledge of you and your staff. An example of this may include local knowledge of the area verse outside knowledge or experience.
A perfect example of this that the business owner who I was talking to explained that he was facing competition from fly in and fly out businesses, his advantage was his local knowledge and experience of the area which included the understanding of the soil types in each area, ground water levels, etc… This was essential when digging to lay pipes or underground lines and potentially could save the client’s 10’s thousands of dollars. This knowledge wasn’t common to other businesses flying in from outside of the area.
#5. Understand The Market and Sell to It
This may sound like common sense, but when businesses expand and grow, sometimes they cross into different market sectors without fully understanding the market. They look at the opportunity and try to sell to the market but they don’t understand why their product/service is useful to this market and what the client wants.
When expanding in to different market sectors, you may need to produce different marketing material and change the sales approach which is used to adapt to the wants and needs of this sector.
A simple example of this would be in the case of digging holes for different industries. i.e. you need to use different equipment for digging holes for underground piping compared to drilling holes for above ground power poles or posts or lifting and carrying heavy items, even though you may be using the same Machinery.
If you turn up to the job with the wrong equipment it may lead to wasted time and lost work for the future.
These are some simple points which can easily be forgotten when business is booming and it can often be hard to remember these when the work stops and starts to become a struggle again. So next time that business isn’t going as well as it is, take a step back from the everyday grind and go back to the basics of the business to work out what you are missing.
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