Do You Really Know Your Competition?
November 17, 2018
The smartest business owners I know understand that their competition is not obvious. Here’s a few examples:
- For a small business bookkeeper, the competition is an Excel spreadsheet and a shoebox.
- For the owner of a sandwich franchise like Subway, the competition is a convenience store.
- John Herbert, a business attorney client of mine, told me his competition is the inertia of his clients—the reluctance to take the time and spend a little bit to fix a problem agreement.
- For the social media marketing professional, the competition is the client who thinks having a personal Facebook account makes them a social media expert.
- The owner of a jewelry store once told me his biggest competition is Apple Computer. His rationale? That the decision to buy a nice piece of jewelry may get deferred because of a shiny new Mac which beckons.
- For the financial advisor counseling his client to buy disability insurance, his competition is the client thinking "it won’t happen to me."
For any business owner, understanding the competition is vital. If you want to achieve better pricing for your product or service, however, the stakes involved in knowing your competition are even higher. Recognition of your hidden competitors helps you understand where your customer sees value—or lack of it—in your offering to them.
For example, in his legal practice, John Herbert has developed a flat fee pricing structure. His clients know that the clock is NOT running when they call him. This pricing mitigates the reluctance clients have when they deal with a time-based billing attorney. It’s the “how much is this phone call going to cost me” objection clients have with attorneys, CPAs, and other professionals who charge by the hour (along with silliness such as billing down to the minute, but rounding up to 15 minutes intervals). John’s pricing structure relieves this client concern and actual encourages what he wants them to do: call him.
So do you really know your competition? How you are using that knowledge to build a perception of value to your customers?
(Photo credit: Pixabay)
About me: I’m enthusiastic about how changes in pricing strategy can significantly change profitability for a business and enhance life choices for business owners. I live this passion through Ray Business Advisors, my outside CFO and business advisory practice, in which my pricing is exclusively value-based, not hourly. I work with business owners on how they can change their pricing not just to increase their profits, but better serve the wants of their customers. Click here to learn more or call me at 404-287-2627.