Competition is a reality of life. It is especially brutal in business.
If competition is fierce for established businesses, it is doubly so for startups. Regardless of the market you operate in, there is a looming threat of an alternative (and disruptive) product that will be built by someone else.
What do you do when the competition has lit a fire to your hindquarters and is looking to take your lunch money? Here are some pointers to keep you sane and probably help you win.
1. It’s not always about the price
In most competitive landscapes, the scrimmage line is pricing. Average entrepreneurs based their total competitive strategy on selling their inventory at a cheaper price. The best ones compete on value, which may include price reduction.
You don’t have to reduce your price to win. Focus on providing 10x value to the customers.
If you are convinced your present margin is the lowest you can go, then stick to it. One of the advantage of being small is that your customer base is probably small enough for you to make them feel special.
Level up your customer service game, and let your competition run to the bottom of the pricing ladder on their own. It is infinitely better to focus on improving your product and your position in the market than to cut down prices.
2. It’s not personal, it’s just business
Sometimes competition will take direct jabs at you. Maybe even mention you by name if they are not one for subtleness. The last thing you want to do is get down and dirty.
If your competitor says your product is unsanitary, you don’t want to reply by saying their version of the product is made in a sweatshop staffed with leprous midgets. This could very well be the case, and revealing this fantastic bit of information could cause immense damage to their product, but that’s certainly not a message you want your name on.
Remember, if you wrestle a pig in the mud, you get dirty and the pig gets happy. It is low, unscrupulous and may present you in a bad light to your customers.
An average customer doesn’t want to be identified with a low, unscrupulous and unimaginative brand. Simply turn attention to your product’s best features and put those on blast.
3. Know what the competition is doing and improve on it
The competition is not always busy spreading rumours about you. They have a product and a process, that is good enough to get a few customers to buy from them.
Then beat them on that turf. Know what their product and processes are and aim to be 10x better.
The ancient war strategist, Sun Tzu said, “If you know yourself but not the enemy, for every victory gained you will also suffer a defeat.” Although you need to focus on your customer and your best features, you need to understand how your competition is operating and aim to create a better version of their process, marketing strategy, branding, customer acquisition strategy, business model and so on
If on the other hand, you are already dusting the competition’s product or process, make sure you are self-disrupting. The competition is with yourself. The goal is for your business to be better than it was yesterday.
4. Differentiate and let your customers know what they are getting
Greener, easier to use or retro, modern? You need to have a differentiated offering to what exists in the market.
Differentiation is important for your business, always, but it’s especially so when the competition is playing the loss leader. You need to make a bold statement about what the customer will get from you that they can’t get from the alternatives.
If you are getting into an existing market which has an incumbent player, your USP is usually that your solution addresses a pain point that Goliath is too big to see or too clumsy to address.
So, differentiate. Provide better design and user experience, zen customer service, freebies etc. Whatever, stand out.
5. Nurture your local connections
Your business has a target community, which is both geographic and demographic. Figuring out your community is one of the things you get to do at the customer discovery stage. To rout the competition, participate in this community and strengthen those connections.
Say, you sell fruits online and most of your customers are millennials who work for tech companies. Your community is “millennial entrepreneurs and tech employees who love fruits”.
It’s possible that niche is not organized yet. Better for you. You could organize community events, sponsored by you. Or partner with a bunch of other organizations who share similar worldviews as you. Perhaps there is an existing community event, support it. The whole point is to entrench yourself in the community. This helps retention and sets off another customer acquisition funnel.
6. Establish thought leadership
This is a content marketing turf. Present useful information to your community without necessarily over-selling yourself or being a shill.
One of our thesis at Starta is that – people want to be educated, informed, entertained, inspired and supported. Anyone that demonstrate leadership in this aspect will win the trust of their audience. People are more likely to buy from brands and businesses that they trust.
Build an audience in your market by sharing information that can help your users do their job, or live their lives better
It’s therefore natural for them to choose your product when they decide to buy. When users trust you, you are likely to to have a bigger slice of the market than the brand they dont.
7. Give out free stuff
People love free things. So, reasonable promotions, deals and bargains will get people looking in your direction.
This doesn’t have to cost you an arm and a leg. It could be a percentage off your actual selling price. Perks on your SaaS. Or a free sample with every product.
The most important part of your promotion is timing. Promotions around celebrations and holidays are better executed when they have been planned ahead. When promotions are consistent, it creates constant excitement for customers. It gives them something to look forward to.
Promotions achieve three things. They make customer feel valued, thereby making them stay with you longer. They make your customers buy more – especially when you give multi-buy offers. And new customers are attracted to your offering. This is because they are convinced they will get value for money. Find out great ways to explore promotion for maximum effect.
8. Start with the customer and work backwards
This is the most important layer you need to build your competitive strategy on. Whatever you do, never lose sight of the customer.
Executing a good customer discovery process helps you to know who your customer is and what they love.
An averagely-funded company that understands their users will beat a cash-flushed unicorn that doesn’t.
Knowing what they want and how their desires are evolving will help you iterate your product and processes. It could also determine the kind of vision you should be pursuing.