Get to Know Your Competition

Business is war and the competition is the enemy--right? Wrong. Though competition is a fundamental aspect of being in business, savvy entrepreneurs know that viewing competitors exclusively as adversaries is shortsighted and potentially damaging.
A better strategy is to build alliances with your competitors and let them help you become better and stronger. Here's how:

Know who your competitors are.
This sounds basic, but it's a mistake many business owners and salespeople make. If you have a retail store, your competitors are obviously other retailers who sell similar merchandise (both online and brick-and-mortar). But that's not all. You're also competing with the businesses that are meeting the needs of your customers with products and services you don't offer and haven't thought about offering, and the businesses that might make your products obsolete. You need to know who all your competitors are--not just the obvious ones, but the ones flying under the radar as well.

Find out everything you can about the competition.
Don't get blindsided; pay attention to anything your competitors do. Set up intelligence files for each competitor. Look for articles about them in trade journals, newspapers and magazines. Study their websites. Use programs like Google Alerts to track what's said about them online. If possible and practical, shop them secretly on a regular basis to observe their operations firsthand.

Develop relationships with your competitors.
Once you've researched your competitors, reach out to them. Join industry and business networking associations so and get to know the people who own and work for competing companies as individuals. You never know where those relationships might lead.

Be prepared to cooperate and collaborate when necessary.
If something is going to have a strongly positive or negative impact on your industry, reach out to your competitors so you can join forces and take appropriate action. For example, you may want to unite to oppose or endorse pending legislation that could affect your companies.
Depending on your particular business, you may also find that competitors can serve as backup resources. For example, you might get an order that's too big for you to fill alone. If you have excellent, reciprocal relationships in place, you might be able to outsource part of the work to a competitor. Or if a competitor suffers a disaster of some sort that prevents that company from serving its customers, you can step in and help out. Not only is that good business; it's also the right thing to do.

Let your competitors make you better.
When a competitor is beating you, do your best to figure out why--but don't use that as an excuse to accept defeat. Once you understand what your rival is doing that the market prefers, figure out what you could change to make you even more attractive than the competition. Don't simply copy everything your competitors do; take their best ideas, test them for effectiveness and improve on them.

Resist the urge to compete on price.
It's tempting to cut prices to gain market share, but it's a strategy that doesn't work in the long run. There will always be a cheaper product, trying to undercut every competitor is a race to the bottom. Instead, focus on providing greater value.
If you're not convinced holding firm on price is the way to go consider the arguments of "Get Past the 'Budget' Roadblock."

Be prepared for the competition to play dirty.
Fair competition is great; It forces everyone to give it his or her best. But all competitors don't play fair. There are always people who think that the best way to build their company up is by tearing others down or cheating in some way. When that happens, a fitting action in response is necessary. Don't delay legal action if it's appropriate.

The internet is a common place to find competitors pulling dirty tricks.
Monitor what's said about you online and have a proactive online reputation-management plan in place in case you become the target of an internet attack.
Keep your brand and reputation under control with, "Are you Losing Control of Your Brand Online?"

Competition is a natural part of being in business in a capitalist economy.
You must be vigilant if you are to maintain and grow your market share, so let that work to your advantage. Your best competitive tactic comes from Sun Tzu, a Chinese general and military strategist from around 400 B.C. Tzu said, "Keep your friends close and your enemies closer"--and if you happen to turn an enemy into a friend, all the better.

How to market and stay on top

This interview was with Mark Stevens a marketing Guru and this is how he said one can take his business to the next level of profitability and keep hanging in there

What is marketing?

Mark Stevens: Marketing is the most misunderstood work in business; ask 100 people what marketing is, and you'll get 100 different answers. You get back: advertising, websites, good service, etc. It's all of those things, but the essence of marketing is that it's the movement of the business from one level of profitable revenue to the next. Marketing has to be a driver of business growth, so if you're doing a million in revenue one year, the next year you need to be doing a million and a half, and then you take it to 2 million and so on. You can't stay where you are. You need a catalyst for growth. Accounting can't drive growth, HR can't drive growth, organizational structure can't drive growth--these are all important structures, but marketing is the engine for growth. The only valid definition of marketing is the ability to take a company from one level of profitable revenue and continue to do that.

What's the most common perception people have about marketing?

What happens often is that people over the years have confused marketing with creativity. We'll have people come in typically right out of school and apply for a job and we'll say, "Why do you want to go into marketing?" And they'll say, "Because I'm a creative person." They say, "I like art" or "I like this and that." Well, you really have to like business; what's happened over the years is that marketing has begun to focus on creativity, on aesthetics, on making beautiful commercials and ads or websites. These things have a place, but much more important is the development of a strategy that can effectively make the business two things--scalable and sustainable.

What are your tips for creating a successful business plan?

Most small-business owners really start off with the desire that they will grow something of substance; they just don't know how. It is the self-reliant kind of person who starts a business, so sometimes she takes that self reliance to extremes and doesn't delegate anything to anyone. Then she is held hostage by her own limited situation.

Very few, maybe 1 percent, really truly want to stay a small business: "I don't want any employees, I don't want any hassles, I don't want anybody to manage." That's not a small-business owner though, that's a self-employed person. If you want a business, then you do have to learn how to manage and know how to manage five, 10 or more employees. And then you should want to grow it. Because if you believe in the value of growing, and you believe that your products are really superb and are better than anybody else's, you should want to grow your business and have people enjoy them far away. It's not really difficult to manage people--you have to understand leadership. It's not a popularity contest, and you're going to sometimes make decisions that people will be unhappy with. If you are open to ideas from employees and listen to them and then make a decision, that's all you have to do.

A useful equation that I built when I started MSCO that applies to every business is "C" plus "A" plus "M" equals PG.

C=Capture Attrition happens, so you must continuously capture clients or customers.

Solution: Capture through your website, internet marketing, events, etc.

A=Amplify Once you have a relationship with a customer or client, you need to grow it. You need to cross-sell them, up-sell them, enhance the relationship and get referrals. Oftentimes businesses, once they turn a prospect into a customer or client, lose the sort of lust they had when they pursued that person as a client.

Solution: Give them the same level of wonderful support you did in the beginning. Ensure that your customers know the full range of products or services offered.

M=Maintain You maintain customers not by giving them loyalty points but by providing exceptional products and level of service.

Solution: Do things they don't expect. For example, I was at home recuperating when a salesperson at my favorite store drove out and brought me a royal blue sweater (my favorite color) from a designer I liked. You can't leave a business that does those kinds of things for you.

PG=Perpetual Growth If you do all three things, you will have perpetual growth. The problem is businesses tend to stop doing one, two or even three of those things. How many businesses actually do these types of things? Not very many, which is good news for your business.

What is the best way to grow a business using marketing?

You need to contact your existing client base. It's almost free--you just send e-mails making them aware of the fact that "By the way, we have these 10 products you may not know about, and because you're a good customer, if you purchase one of your regular items, we'll give you a sample of one of the other products for free." Instead of doing those things, many businesses simply advertise. There's nothing wrong with advertising--we recommend it to our clients and we do it ourselves--but you can't simply just advertise; you have to have a strategy that's wrapped around those three elements.

You need to measure your ROI. If you spend $1,000 on marketing, you need to get back at the very minimum $1,001. A lot of people come to me and say "I tried direct mail, I tried Yellow pages, I tried this and that and it didn't work." Well, they didn't really measure and they don't really know--they don't test things. The ability to measure ROI is critical to the effectiveness of any marketing campaign. The reason I wrote Your Marketing Sucks was because I felt like the way marketing has been done takes money from small-business owners and puts it in the garbage--there's no strategy and they're not testing it to get a strategy that does work.

How do you do research to determine what kind of campaign is going to work? Let's say you do an advertising campaign. The best thing to do is make sure there's a prominent way for people who see or hear your ad to get in touch with the company. You need a phone number and a url. Sometimes you may want to create a special url so you can make sure you know where people are responding. For example, go to YourMarketingSucks.com. There's a page where you can set up an appointment by phone. We set that up for a particular campaign we're having as a way to know where people are coming from. They do it, we measure it and see how many people made appointments. But that's not good enough, either--you need to determine how many appointments were converted into clients. That particular campaign cost about $10,000. So the only way it is successful is if we get back at least $10,001 in revenue.

So what if you don't; Do you scrap that campaign?

You might want to change the message to another message, and if it doesn't work, then you can also try another medium. But in that campaign, for example, in the first week it was a radio ad, which cost $10,800. We generated more than $200,000 in business. That was pretty good ROI. Two weeks after that we did an $8,000 TV campaign for two weeks and only got two people responding, so radio worked better. But the client who responded to the TV campaign has already paid $75,000. So we did learn that radio is more effective for the number of respondents, but maybe the responders for TV will be bigger fee payers--we're not sure yet. Perhaps a better commercial will give an even higher ROI, or maybe I'll be sorry. Regardless, you have to use one as the model and then keep testing against it.

How much time should a new business owner spend on marketing?

He or she should never stop thinking about marketing. The person who owns the business should always think of himself or herself as the marketer-in-chief. It should be the most important thing he or she does because it's the growth of the business; the business owner shouldn't just hand it off to other people or another firm. Someone else can do it, but the person who owns the business should always be involved.

Many new business owners are experts in their services or products but aren't well versed in marketing strategies. What would you suggest they do?

They have to recognize that while they're the expert in the operations of the business--how the factory works or the retail store works--those aspects don't grow the business. You have to become a marketer. The reason small businesses fail is because they stop thinking about marketing. It's also why big businesses fail. It's why General Motors is failing now, because the senior management of General Motors stopped thinking about hybrids and creating cutting-edge cars. They just stopped doing it, whereas Toyota never stopped thinking about marketing and making products more and more appealing. A lot of small-business owners start businesses in areas of their expertise--they're IT specialists, computer fixers or chefs, for example. It's important to maintain skills as a chef, but you have got to think, how am I going to market my restaurant? Otherwise you'll be cooking for yourself.

Can you talk about why right now is a good time to increase marketing efforts?

Right now your competitors are sleeping; they're hiding in the bunker, they're waiting for the dust to clear. And they're leaving you a golden opportunity to grow your market share. So develop a strategy, think it through--remembering it can't be perfect from the start. Get the courage to make an investment and then test, test, test until you break the code.