Good competition should help you win

Your response to the appearance of strong competition should help you deliver more value for your customers. I say “should” because only winning companies seem to consistently grasp this concept.

In sports, champions will play above the level of their competition. Less successful teams and players will play down to their competition. This theory applies to business, in general, too.

When your competitor makes moves in your marketplace that surprise you, customers usually take notice, too. Loss of sales is an obvious immediate negative impact.

In response, begin by gaining a deeper understanding of what value your customer sees with your product and service. Then, create the blueprint of what you need to do to stop others from leaving — and gain back those that left.

This sounds simple. The process, however, can be difficult because sometimes it is a challenge to determine exactly why a customer leaves you to buy from a competitor.

When price is identified as the issue, in my experience, price is not the only issue. When you match low prices without a detailed analysis, you simply erode your profit margin.

You must determine what customers value before reacting. Aside from price, the major factors that determine their concept of value includes components such as quality of product, level of customer service experience provided and ensuring availability of the product when requested.

The mindset required to effectively respond to a competitor’s move is to say, “Challenge accepted.” Exemplary leaders will be able to marshal their teams to determine major factors of value and create a plan to assess current delivery of those factors.

Where there is a weakness, a correction is required. If a factor is a strength, it needs to be reinforced.

The intensity of value that your customer sees is the sum of the factors they really want. The focus on these factors of value will strengthen your company’s priorities, systems and culture and allow you to charge a price premium.

For example, with respect to culture, consider employees’ mindset. If your company is losing customers because of lower value and employees see no response from leadership, they may leave, too. This will cause a double-negative impact, because you will also incur the cost to replace these employees. It will likely be harder to attract new ones because your declining sales may result in you not being seen as an employer of choice.

Here is a three-step process to help you determine where and how you can increase value intensity:

First, winning organizations know determining the areas to be improved is the first step. Prescription without diagnosis is malpractice, as the saying goes. Asking customers directly is an effective way to do this. However, many companies may listen to the customer without really hearing what is being said. Knowing the factors delivering value guides your allocation of resources for the correct improvement projects.

Second, get your team’s input. Your employees have the first-hand knowledge of customer likes and dislikes. Ensure your front-line employees know how their role fits into the overall delivery of value to customers. Consistently explaining this can help adjust the corporate culture in a positive way. You will improve the level of attention to detail by employees who can separate winners and losers in a competitive marketplace.

Third, let customers know what you have done. This is not a time to be quiet about the added value you now provide. If advertising or new sales messages are required, this is where you must shout from the rooftops.

Responding to a competitor can be an important move for a company when done correctly. If you ignore the competition or do not apply a structured approach to respond, you will be left with a dwindling customer base — and potentially an end to your business.

Tim’s bits: Leading companies continually work towards improving the value intensity of their brand that is the foundation of the winning game plan. Unless you determine what factors require improvement, you cannot achieve meaningful results. Use a disciplined approach and be grateful for your competitor for urging you forward.

Tim Kist is a certified management consultant, authorized by law, and a Fellow of the Institute of Certified Management Consultants of Manitoba

tim@tk3consulting.ca