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It's Only Common Sense: Know Your Competition

Editor's Note: To listen to Dan's weekly column, as you've always done in the past, click here. For the written transcript, keep reading...By far, the biggest mistake you can make about your competition is underestimating them. We’ve all done it. How many times have you said things like, “They’re giving their boards away. Let’s just wait for them to go out of business,” or “We’re so much better than they are. The customers will surely find that out and come back to us.” You may be right and these things might be true, but it doesn’t matter. It does you no good to think this way.

It's always much better to assume the best about your competition: To think they are smart, that they know how to build boards, and that they are as caring and innovative as you are.

As Brian Tracy says in his new book, Marketing (The Brian Tracy Business Success Library), ask yourself "What are they doing right?" Once you know what they're doing right, what is enabling them to attract sales and market share, ask yourself how you could creatively imitate your competitors to be better in the eyes of your customers?

The first step to knowing your competitors is identifying who they are. You must figure out exactly who it is you are competing against. This is based first on what you're selling, who you're selling to, what market you're in, and what technology you're selling. Once you know this you can quickly identify your competition. You must have a good understanding of exactly who you are and what you do before you can do the same for your competition.

Then you must ask yourself why your customers are buying from your competition. What benefits do they provide that makes them successful? Why are you losing business to them?

Once you have a good understanding of these things you can get to work trying to figure out what would make your customer switch. What would make them give you more of the business making you the dominate source at that account?

Or, in the case of a potential customer, this questions is especially pertinent. What will it take to make your competitor's customer switch and start doing business with you? In Tracy’s book, he writes, “If you cannot answer this question quickly and persuasively, it means that you probably don’t know what the answer is...You need at least three reasons for customers to switch from an existing supplier with whom they are quite satisfied to buy from you for the first time. What are those three reasons for your product or service? What could they be? How could you present these reasons in such a way that they trigger buying action on the part of your ideal prospects?”

Of course, there's only one way to find out and that is to ask them. Ask potential customers why they're buying from your competitors. What do they like about them? What do they like about their products and services? These answers will give you strong insight in what you must do to change your products and services to neutralize the competition’s advantage.

In the end the best way to gain competitive advantage is to be better. Do not, and I repeat, do not get in a pricing war because you will lose--you will always lose. Hell, in the end you'll lose even if you win the order and their business, because once you lower that price there's no going back. When you get into a pricing war with another competitor, you're both going to lose.

Remember the old adage, "Don’t sell on price, sell on value." Give your customer more value than your competitors do. Improve the quality of your products and services. Give them more than they've asked for. Make your customers feel that, price aside, they are getting a much better value when they buy from you.

Selling on value will make you a much better company in every way. The product will be better, the quality will be better, the technology will be better, customer retention will be better, and your profits will be higher. And that’s all good. It’s only common sense.