It can be tempting to keep an eye on what your competitors are doing. After all, if you know what they’re up to, you can adjust your own strategy to stay ahead. Focusing too much on your competitors can actually be harmful to your business. Here’s why.
Your customers are the most important people in your business. They’re the ones who are paying you and who you need to keep happy.
If you focus too much on your competitors, you’ll start to lose sight of what’s important – your customers. You may begin to copy your competitors’ strategies, or try to one-up them at every turn. This can lead to mistakes and missteps that will alienate your customers and cost you sales.
Your competitors are not the most important people in your business.
“If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.” - Jeff Bezos, founder of Amazon
Instead of competing in an effective way, your competitors will inevitably get a head-start before you. They'll have a better understanding of the market, more resources, and better connections.
Inside of any given industry, there's always going to be one or two companies, or large organizations, that are outpacing the competition. So, unless you can dramatically change who you're competing against, you're unlikely to make any serious headway.
Big companies aren't going to stop as soon as a medium company enters their market. The game won't stop in your favor either. But you can make sure that you're on the winning side.
It’s true that lots of people compete against each other in today’s ever-changing business environment. That's a fact of life; the competition is always there. But it is also true that competition can be healthy.
In most businesses, the goal is to finalize a deal or exceed a quota, and all businesses want to set their price as high as possible. This pressure to compete can cause some companies to compromise on the quality or design of their client or business relationships.
That’s why competition shouldn't be the primary focus of your business. If your primary focus is on making more money – you're only doing yourself harm. If you do decide to step into the arena of competing for business, be sure to concentrate first on creating quality products and outstanding customer service.
"Don't go head to head in a bidding war," says Jarred Ubersohn, a business development trainer. "It's damaging to your brand and company. Make sure your product and service are compelling in the first place.
Sometimes cutting prices while offering a better product for money is good a good thing. You can see supermarket chains get a competitive edge by agreeing with suppliers to get better prices on their products when they meets certain criteria or has certain value prop qualities. However you'll not be able to provide quality when you do this.
While you're open to fix your price however you see fit, know that your competitors will have the same flexibility too. How would your competitors respond to you lowering your prices? Are there those who offer products for the same price or even lower than yours? So thinking about this issue honestly and carefully is necessary. Doing this will only become an endless downward spiral. Your prices can't be a unique selling proposition. There's nothing unique about it.
Use price as a lever to increase market share only if you are certain that you’ll win the war. You must ensure that you maintain a level of quality that will win over your consumers and conquer the market. Never lose sight of the fact that any missteps could impact the quality of the entire industry. Price wars are bad for business. Your primary focus should be on your customers.
Lower prices can often equal higher sales or higher profits. But the truth is that when you underprice your products, you will miss out on money or potential profits.
When you sell more, it's expected that you will have to hire more people to help. At the same time, more sales might create more chances of inferior customer service. Why? People that buy based on the cheapest price point are usually the pickiest. So it might be wiser to leave them to your rivals instead of dealing with that yourself. Let them become your competitor's customer.
This same picky customer problem can snowball in the issue of customer retention. If the only incentive behind your business is low prices, these customers are bound to constantly look for cheaper alternatives elsewhere, constantly comparing your prices to the prices in other shops. When they see a more attractive offer somewhere else, you know what happens. You will lose those hard earned customers and sales.
If you compete only on price, larger company can always go lower, no matter what you currently offer. By doing this, you are missing the chance to grow your businesses with the markets. Simply put, you’re missing the chance to reach a bigger scale.
Lower prices also make it more difficult to be profitable. To compete on price is not an easy task and once you do, it is difficult to get out. Also, lowering prices can often have adverse effects on profit margins.
People act confused when you tell them that undercutting other products is bad idea even as a beginner. They forget that high prices sets a benchmark or a starting point. One that many are not confident enough to do for themselves. Experts know that the price you set signals the value that you can provide.
The cutting-price strategy can be costly to your business. In addition, it’s one of the most disruptive strategies to the market. Competing on price could get you going bankrupt in no time.
There is going to be constant rivalry in the market. Businesses need to find other ways of staying ahead of other businesses. The price point you set should be aligned with the company’s overall marketing strategy. It tells a lot about the company(who it wants to target). If you aren't getting the right pool of customers, perhaps your prices should be adjusted.
The best target audience in today's customer based should be value-based customers. These customers appreciate the value they gain from your offering and recognize your ability to solicit this kind of loyalty. Value-based customers are drawn to your product over time because they understand your potential to provide benefit. They often share what they like with others through word-of-mouth marketing, and this is one of the greatest and cheapest marketing tools your business have available.
Value-based customers should be your prime group for creating long-term loyal customers because value customers realize the potential in your offering. To them, your offering is an investment, one that they want to see mature because there’s benefit for them. They’re the ones who take time to give good feedback, work with you on product enhancements, and evangelize for you with marketing through word-of-mouth, one of the greatest (and cheapest) marketing tools startups have available.
At the end of the day, competition isn’t going anywhere. As competition increases, so do your own resources. You cannot ignore it. Being one step ahead means making the proper plans to take on competitors’ best moves.
The more you spot them, the better you’ll be prepared for them, and the more you’ll prevail over your competitors.
Nowadays, competition everywhere can actually be a good thing. Knowing what your competitors are up to will also help you improve your own business including the three most important areas: internet marketing, and customer attraction and sales.
While you can read everything you want on what your competitors are doing, you won’t learn anything new. Whether it's social media, marketing strategies or price points, everyone's tried everything so far. At any given point in time, there are at least 70 million potential competitors in any given industry sector.
In fact, the closer you are to your customers and the better you understand them and their pain points, the better you are positioned to provide amazing customer service and support, in turn increasing your customer value.
In today’s business world, it’s easy to get caught up in what your competitors are doing. You might be tempted to try and replicate their successes, or even copy their entire business model.
But this is a mistake. Focusing on your competitors instead of your customers is the wrong approach, and it will ultimately lead to failure.
Your customers are the lifeblood of your business. Without them, you have no source of revenue, no one to sell to, and no one who will help you grow your business.
Your competitors, on the other hand, are irrelevant. They don’t matter. All that matters is what your customers want and need, and how you can deliver on that.
So forget about your competitors. focus on your customers, and you will create a successful company that’s built to last.