Knowing your customers and what makes them buy from you is important. It’s also important for you to know and understand your competition. Remember, your customers are sometimes only one click away from being someone else’s customers so know what might make them change their buying habits. It’s always good to know and revisit the following things about your competition:
- Products & Market Emphasis – you certainly know the products they sell that compete with yours. But do you understand their new product development / introduction life cycle? You should.
- Positioning – how do they position themselves within the market. Does their competitive position change over time? For example, is someone who was once tangental competition now direct competition?
- Technological Capabilities – what types of technologies do they use to put into their products, to sell their products or support their products? An important part of the technology review is how they utilize tools like the web compared to you.
- Management – who are the members of their management team? Are they changing their team and does the change bring them additional credibility in the market place?
- Company size – this is a hard one to gauge. Think about how closely you hold this information to your vest. Do what you can to find out about their size, number of customers, market penetration, etc. Key pieces of information to gather include revenue, operating profits, number of employees, etc.
- Resources – this is an often overlooked metric. The resources of a company refer primarily to it’s owners and/or investors. This information allows you to gauge their staying power in the event of economic downturns, price competition, the size of customers or contracts they’re able to service.
Once you know this information, perform a SWOT (strengths, weaknesses, opportunities, threats) analysis on each competitor and yourself. Discuss what you find with your sales people, your service & support people, and potentially your customers. Understanding how you compare is the first step to increasing your business and making it more profitable.