The Customer Defines the Competition

Conversion from opportunity to customer is the name of the game.  Most companies face a number of challenges as customers move from consideration to consumption.  One of the challenges you must overcome is winning against the competition; whether the competition is another company or an internal option. Competitive intelligence can be just the leg up you need to improve your win rate.

Marketing organizations often forget that is the customer who defines the competition. Most organizations underestimate the competition and have all but eliminated their competitive intelligence/market intelligence capabilities.  And with resources running lean, conducting competitive intelligence on large number of competitors may not be possible. Here’s an approach to help you hone in the competitors worth further analysis and a plan of attack.

Conduct Recon to Hone Your Competitive Intelligence

Before you commence any competitive intelligence gathering, do a little recon work. Where to start?

First, talk with your customers. It’s very possible that some of your current customers also buy from your competitors.  It is important to find out why your customers turn to your competition. Without asking “why,” you will never know whether the customer might be misinformed about us or is just “automatically” following a buying pattern that was established long ago and not questioned. Consider integrating the ten open-ended questions below into conversations with existing customers who you know are buying from the competition. The answers will help reveal their motivations, buying attitudes and preferences. Or better yet, use a professional third party to ask these questions in order to ensure consistency and objectivity.

1. What does the ideal supplier relationship look like?
2. How do you measure success with your suppliers?
3. When selecting a supplier, what measurements do you use?
4. When you started buying from your current suppliers, what criteria did you use to make your selection? Based on your experience since then, what would you change?
5. On a scale of 1 to 10 [1=not important,10=very important], please indicate how important each of the following in terms of repurchasing from an existing supplier:

• Service Quality
• Product Quality
• Product Availability
• Support Availability
• Location
• Price
• Expertise
• Reputation

6. For each of the items above that you rated an 8 or higher, would you tell me what is your definition of ‘quality?’ and share an instance with me when your expectation for quality was not met. What was the outcome?

7. In addition to the items above, what else would be important when deciding to purchase again from an existing supplier?

8. If all of your suppliers score equally high on each of your criteria, what else goes into your decision when making the final choice?

9. Going into the future, say a year from now, what criteria do you think will be most important reason for continuing to buy the same or more from a supplier?

10. What steps do you recommend a supplier take to secure more of your business?

It’s possible upon concluding these conversations that you need to establish a clearer stronger value proposition to adequately differentiate yourself from the competitive set. Positioning is key to establishing a distinct reason why a prospect should buy from you as opposed to your competition. When a company fails to distinguish itself and its products, the sales process becomes bogged down in increased objections and price negotiations. Spending time on differentiation will keep a prospect from viewing the offer as a commodity where the only important factor is price. In an effort to differentiate yourself start by knowing:

1. Who are the three primary competitors you are selling head to head against?
2. Their competitive strengths and weaknesses
3. Their positioning
4. The prospects’ perception of the competitor
5. Why prospects buy from them

Second, ask your sales people what companies they typically come up against and who they lose against. With the information from your recon, see if you can group the competitors into categories. For each category identify the top 3 competitors worth researching extensively.

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This list will help you hone in the competitors worth further analysis. For each of the competitors on your list, use the Internet, colleagues, customers, partners, your sales team, trade associations, and other resources (think social media platforms and networks) to capture and document the following:

• Competitive Products/Services. The products and services they offer that compete with yours. Make note of how the top three competitors position their offering.

• Pricing. Describe their pricing strategy such as price points, discounting practice, average bill rates (if service), average size of sale, etc.

• Competitive Strengths. Describe their strengths such as price, quality, location, support, target, etc.

• Competitive Weaknesses. Describe their weaknesses such as price, quality, location, support, target, etc.

• Your Competitive Advantage. Describe how you are better and different from the competition and how will compete against this competitive category and each of the top 3 competitors in that category.

  

Now that you’ve defined the competition, analyze your findings. Bring all the external facing people together and present your learnings for each of  your key competitors in each category. Work together to create a strategy for each competitor. Finalize the details and make sure that everyone has a copy of your competitive analysis and strategy.

Tap an external facilitator for this process to insure you gain the most value from the work.

Keep Adjusting, Your Competitors Are Not Standing Still

The world we live in is dynamic and companies are constantly adjusting, which means so are the competitors. Your periscope needs to engaged at all times.  Here are four best practices to integrate into your competitive intelligence process.

1. Keep your analysis fresh and up to date on the most important competitors
2. Review the list of your primary competitors at least once a year to see if some competitors have fallen off and others have risen.
3. Formalize a quarterly competitive briefing to the management or executive staff. This briefing should include an update of your competitive analysis; with a list of recommendations on how you could improve your company, products/services, or market position in order to better compete.
4. Create a plan to counter competitors and take action. Don’t forget the very important step of making the changes, not just talking about them.

FAQ:

• What does the ideal supplier relationship look like?
• How do you measure supplier success?
• What selection criteria did you use and would you change them?
• How important are factors like service, product quality, price, and reputation?
• What would make you switch or buy more?
• What steps could a supplier take to secure more of your business?

• Competing products/services and their positioning
• Pricing strategy and bill rates
• Competitive strengths and weaknesses
• Your own competitive advantage and plan to win in each category

• Keep analysis current and relevant to key competitors
• Review and update your competitor list annually
• Hold quarterly competitive briefings for leadership
• Develop and execute counter-strategies—don’t just analyze, take action

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