Originally created 05/13/02

Small business owners should study the competition



Your prospective customer has money or credit to buy what you sell, and if you don't provide what they want to buy that competitor down the street, in the next town or on the Internet will. So begin your competitive battle by shopping around and making a serious study of what your competition has to offer.

You may need to physically get out of your office or store and visit the places in your shopping community where your customers and prospects can buy products or services similar to yours, but don't forget the Internet.

No matter what service or product you sell, you have competition. It may be a start-up business with products and services similar to yours or it could be someone with a ready-made reputation that has moved (or is moving) into your service area. You might have noticed them last year and discounted them as major competition, which meant you put any action on the back burner with the idea of getting back to them at a later time. That was last year, and now is that later time.

If last-year's competition is still here, they must be doing something right. If they begin a serious advertising campaign, you could be facing the possibility of a major reduction in your cash flow. What should you be doing? Well, after you scope-out all of your competitors, begin a study of how you need to change to meet or defeat. Here are some ideas.

First of all, stop selling product. Begin your competitive battle by being different. Consider a change in your approach to sales. Learn how to stand out from the crowd. Stop selling products or services and start selling value. Selling product leads to price wars, coupons, discounts and price-shopping customers, and this can make you the ultimate loser. Your customers buy from you right now because they believe they are receiving value for their money. Capitalize on this! For proof of this approach look at your personal purchases: you buy one brand of soap over another even if the cost is higher because you believe you get added value for your money, or you always go to one cleaners because your clothes look or smell better. Once you stop selling product and start selling benefits your profits will increase. Here are five aids to implement this concept:

- Educate: Conduct consumer education campaigns using speeches, seminars and meetings where you provide information that demonstrates why you are better than others. Look in the classified ads or phone book under "associations" and offer your services as a free lunch speaker. Be sure your talk solves problems and isn't just an ad for your business. Teach your listeners and they will become customers; lecture them or try to "sell" them and they will go to your competitor.

- Inform: Start a customer newsletter that features customers who have solved their problems using your product or service. Add your customers to your sales force by letting them tell others why they bought. Post copies of the newsletter in your place of business and hand them out like popcorn. This type of newsletter is a version of the famous word-of-mouth advertising campaign that has the reputation as being the best sales tool ever invented.

- Train staff: Teach your sales persons how to educate customers on the benefits of your product or service. Build a feature-benefit list that will help them present your materials to existing and new customers. Tie your training program together with an incentive program that pays salespeople for increased sales and you will see profits soar and sales person retention improve.

Conduct employee-training sessions (on your time) in the art of one-on-one tutorial selling where your sales people learn to teach the customers the use, value and benefits of your product rather than just the price.

- Re-package: Re-package your products and services from just "what you sell" into a "why you buy" system that includes the benefits expected by your customer. Include not only the product, but also the training on its use, applicable support and maybe even financing.

- Deliver what you promise: Promise less that you can deliver, then deliver more than you promised.