For Small Business Owners & the Self-Employed

Insider Secret:

Spying on Rivals: Competitors May Hold the Keys to Your Success

Competitors are excellent sources of business information. Are you taking advantage of what they have to show you?

by Alex Goumakos, CPA

Note: The following is adapted from Chapter 16 of Gold Mine Tactics: The Business Owner's Success Manual.

In order to succeed in today’s marketplace, you need to give your business the competitive edge it needs.  One way to gain this competitive advantage is by collecting strategic information about your competitors.  This information, better known as competitive intelligence- is simply the gathering of information about a competitor in order to acquire a new, previously unknown competitive advantage or to protect an existing one.

Simply put, competitive intelligence is spying.

Whether you consider it unethical or inappropriate, the fact of the matter is, spying on competitors is a tactic that many businesses in highly competitive industries and markets use on a regular basis. And it certainly isn’t anything new. Companies, especially large ones, engage in business espionage not only consistently but with gusto too!. Without regular and organized spying activities, many of these companies would lose their competitive edge altogether.

In the retail and merchandising environment, for example, many believe that spying on your competition is crucial to success. I believe that competitive intelligence should be used as an integral part of any company’s feedback strategy -- not just retailers and merchandisers. Every business owner needs to know what he or she is up against.

What You Should Know About Your Competitors

1. How they’re viewed. For example, are they viewed as high quality, high price, or low quality, low price?
2. What attracts customers to them?
3. What are their strengths?
4. What weaknesses do they have?
5. What products and services do they sell?
6. What brands do they carry?
7. What prices do they charge?
8. How does their quality compare with yours?
9. Are customers satisfied with their service?

The only way to stay ahead of the competition is to know exactly what it is that they’re up to. Depending on the type of business you’re in, you can be anywhere from a day to forever ahead of your competition. In other words, unless you know what’s going on, you can easily lose market share to a competitor.

Keep in mind that your competitors are most likely checking up on you too! As a result, you can’t afford to be complacent in today’s marketplace.

Strategies for Collecting Information from Your Competitors

1. Buy from them. The best way to spy on your competition is to purchase from them. Buying from your competitors allows you to experience first hand their products, services, packaging, delivery and attention to detail. You can capitalize on this information by improving your own products and services in ways the competition lags. For example, let’s say you sell fitness equipment. The information you’ve gathered from your competitive intelligence efforts suggests that your competition isn’t providing installation and training on the sales of its new fitness equipment. You simply take advantage of this by adding value to your own products by offering customers free installation and training. You can also use this information to justify charging a higher price if you can convey to potential customers (through sales messages) that you in fact offer more value than your competition.
   
   
2. Keep files on them. You may find it highly beneficial to keep actual files on your competition. I know a few gold mine business owners who do this. They keep copies of competitor advertising and promotional material as well as product pricing. They look for competitor ads in the newspaper, on television, radio, direct mail and billboards. By reviewing these files on a regular basis, these business owners are able to keep tabs on exactly what their competition is up to. Keeping files on your competitors also allows you to identify their habits and trends. For example, you could find out how often they advertise, offer sales, discounts and so forth. This information can be extremely useful, especially if your competitors are highly successful. By modeling their success and tossing in a few creative strategies of your own, you could put yourself in a position to chip away at some of their market share.
   
   
3. Conduct visual surveys of your competitor’s premises. Observing a competitor’s store location, showroom, parking lot or other physical structure can tell you a lot about their business and its customers. You could take notice of any number of things such as signage, décor, customer vehicles, dress, age, and so forth. If your competitors have a website, visit it.
   
   
4. Visit industry or professional trade shows. This is an excellent way to find out what competitors are doing. Since people tend to lower their guard at trade shows, the amount of information they will divulge is oftentimes very surprising. In fact, recent research indicates that quite a few trade show attendees are simply participating for the express purposes of gathering competitive intelligence. Keep this in mind if you’re participating in a trade show. If you do participate, make sure you walk around and mingle with others. Send employees or others to visit competitor displays if you want to remain anonymous.
   
   
5. Interview or hire your competitor’s ex-employees. Of course, you shouldn’t hire anybody unless they’re expressly qualified for the position. However, a competitor’s ex-employee can be an excellent source of competitive intelligence. One business owner I know thrives on finding out information from his competitor’s ex-workers. It’s not unusual for ex-employees to apply for jobs at competitor establishments. If you come across a competitor’s ex-employee during a hiring phase, by all means take the opportunity to ask plenty of questions.
   
   
6. Talk to their customers. Although not the easiest thing to do, questioning a competitor’s customers is a great way to find out what makes a competitor attractive. One business owner I know actually questions customers right in his competitor’s parking lot! While lurking in your competitor’s parking lot could get you into a lot of trouble, there are many bold strategies you could employ. For example, you could direct advertising and promotions towards a competitor’s customers. Offering discounts and special incentives to your competitor’s customers is a great way to gather information and introduce your business at the same time. I know the owner of an auto repair shop who offers a 15% discount to any competitor’s customer. All the customer has to do to qualify for the discount is produce a competitor invoice or sales receipt. And of course, the customer is quizzed about the competitor.
   
   
7. Use the Internet. The web is a wealth of competitive intelligence information. Use it to see what others are doing. Visit public record databases to get the key information you need such as statistics, potential litigation, and data regarding competitor ownership. In
   Gold Mine Tactics: The Business Owner's Success Manual I reveal several excellent websites where you can conduct searches of public state and federal public databases.

How one Gold Mine Business Owner Found the Key to His Success

A small business owner I know developed a very profitable niche after studying his competition.   Gary S. (not his real name) operates Fitness Emporium (not his real business name) and sells fitness equipment like exercise bikes, weights and treadmills.

Gary was stuck between a rock and a hard place.  His competition included several major sporting goods chains that had just recently moved into the area.  They sold equipment similar to his and at reduced prices. 

While most owners would have panicked, Gary went on an intelligence-gathering mission.  He and a friend of his set out to visit the competition.  And visit they did.

In a matter of a couple of days, Gary visited nearly every single competitor in his immediate market area.  His spying activities clued him in to one important fact: his competitors were NOT providing installation AND training on the sales of new fitness equipment.  In addition, he discovered that many of his competitors were selling lower quality fitness equipment.

He immediately put this information into use by reworking all of his advertisements.  He then mounted a vigorous media campaign, including radio and TV, where he focused on setting himself apart from his competition by providing customers with high quality, free delivery, and free installation AND training. 

By doing this, Gary was able to increase his sales despite his competitor’s lower prices.  He also managed to acquire a reputation as a fitness equipment guru.  Gary’s referral business increased dramatically as a result.

It DOES pay to spy on your competition.  What you find out could be the difference between true success and perpetual mediocrity.