Most building materials companies aren’t prepared to deal with, or prevent, a competitor from taking their customers.
They guard against losing customers by providing consistent product quality, customer service that’s good enough and charging less than they’d like to. When they start losing customers, it frequently comes as a surprise. They just weren’t expecting it. There’s a philosophical reaction of, “This isn’t fair!” Or there’s an angered one of, “Who do they think they are?” They don’t think the other guy is smart; they think he’s evil or dishonest. But that type of thinking won’t lead to an effective response.
This is one of the times when clients call me. They’re losing sales to a competitor and need an objective assessment and recommendation from an outsider.
They almost never call me when things are going well, so they’re not prepared for a new competitor showing up in the market or for an existing competitor to change. They assume that, for the most part, all is good in their world and they have a solid place in the market. Unless the economy takes a nosedive, they assume there will only be small changes in their product category.
If they are a market leader for businesses of their size, they rest comfortably. The idea that they could face a major competitive threat is not even on their radar screen. And if they’re a smaller business, they are too focused on the larger competitor to see the threat of another small-sized operation.
As long as the economy is good, everything’s is good and the only things they see as threats are the loss of a major customer or a competitor lowering their prices. In other words, it’s not that they don’t expect any competitive threats; it’s that they’re looking for them to come from somewhere expected and predictable.
The biggest competitive threat is the one that comes from where you least expected it to. You have an idea of how to react to the most common threats, but you are probably not prepared for the unexpected.
I met with the marketing leader for one of the largest building materials companies. I asked him what his biggest concern was. He told me he was most worried about being outflanked.
That’s smart thinking. In military strategy, you are constantly watching and defending your flanks. If you want to attack someone, you try to outflank them. It is usually not too smart to make a frontal assault—that’s where they’re expecting to be attacked and where they’re most prepared to defend.
When companies hire me to help them grow their sales, I always assess their competitor’s strengths and weaknesses to look for ways to outflank them. No matter how successful a competitor is, no one is great at everything, so I can always find at least one weak spot that can be exploited.
How to Protect Your Business
Military generals stay prepared by imaging all the ways they might be attacked. Building materials companies should do the same thing. At least once a year, you should do a competitive threat assessment.
To do this, you’ll need some outside perspective, someone who can tell you:
1. Where you’re vulnerable?
2. How they would attack you if they were your competitor?
Your annual sales and marketing plan and budgeting process is a great time to do this.
Early Warning System
Another part of being prepared for competitive threats is making preparations on an ongoing basis.
I have two clients who make me a part of their weekly group sales conference call. My main job is to listen in and figure out what is working and what isn’t. I’m also listening for what competitive issues the sales people are facing each week.
We are also using tools like Google Alerts to gather all the information we can about competitors.
Based on this, we make regular reports and recommendations to their sales and marketing leaders.
You need an outside perspective because you’re too close to your competition and tend to underestimate them. You also don’t usually recognize totally new competitors until they have already built enough sales for your customers to accept them as a viable alternative to your company.
Not seeing it coming and not being prepared means the successful competitor will continue to grow while you’re still figuring out how to respond. You’re also giving them time to work out any problems they may be having with their new approach.
In a world where products are going to be delivered by drones and Donald Trump can become President, you need to be prepared for anything. The impossible is now possible, and these changes happen very quickly.
A competitor can turn you into yesterday’s news overnight.
The best way to compete is to make yourself a better informed and nimbler competitor. Watch your flanks!