This year’s sales figures got you down in the dumps? Wonder what happened to that jackrabbit start this spring?
Wouldn’t it be great if all the months were May and every day was a weekend? I know – it’s tough to keep the momentum going all year round. As a small business owner, you face a wide variety of challenges. If it isn’t the weather then it is probably that box store that just opened up in town. Competition is fierce and the only way to survive is not just to compete – but to compete and win. The best way to make that happen is to know your competition and to know just where you stand in comparison.
Get Out Your Pencils
I know you hate it, but how about some homework? Well, school is in session and we are going to grade you and your competition. For you to be successful, you need to know as much about your competitors as you do about your own business. A competitive analysis, which is where we’re going with this, allows you to identify your competitors and evaluate their respective strengths and weaknesses. Knowing how you compare can help you focus your efforts on the opportunities, as well as areas for improvement.
Step 1 – Identify your competition
Take a map and identify the Top 10 competitors in your shopping zone. This might be 2 to 3 miles for heavily populated areas, or 20 to 30 for rural areas. First, identify your primary competitors. If you are a landscaper, then look for other landscapers. If you are a florist, then a florist, etc. For our example, we’ll concentrate on other garden centers.
Next, look for your secondary competitors. These might not compete head to head, but they sell products similar to yours. This would include the nursery departments at the box stores, perhaps a specialty store offering garden accents. Oh, and don’t forget the grocery store. Settle on the Top 10 – that should give you a decent list.
Step 2 – Set up the score card
On a sheet of paper, create a grid to cross reference the competing stores (including yours) with key areas for comparative analysis. You can select whatever elements you feel are important. In our exercise we will work with 10 key factors to watch. The rules are simple – for each item rank, all 10 stores from highest to lowest – 10 for best, one for worst.
Step 3 – Determine your position
Ready? Find out what position on the pecking order your company stands vis-à-vis the competition. Try to be objective. It might help to go through this exercise with your staff. You might be surprised at the insight they might bring to the challenge. Rate each of them (again, 10 for best, one for worst) in each of these categories:
• Location. Who has the best location? Simple question, try not to rationalize or score for a ‘destination’ garden center.
• Pricing. You can determine this by shopping, scanning the ads or even from a Web site. Who is the high price leader? The high price point creates the impression of over-priced, so keep that in mind when scoring you and your competition. Highest is not necessarily the category leader.
• Products. Range of relevant products; quality, selection and availability. Who features the best new introductions? The best quality?
• Services. Keep objective – who delivers? Who has planting capability? Which store offers design services? Be specific, but be thorough. There might be opportunities here.
• Warranty or guarantee. Who has the best one? Is the guarantee policy promoted? What is your policy on customer satisfaction? Is it easy to return product? Is there price protection?
• Value. This is a tricky one. Try to think from the customer’s perspective. It isn’t expensive if you deliver the experience. Think Whole Foods. Who has the best product at the best price? Is pricing clear and understandable?
• Ambiance or shopping experience. OK, this is where you should be able to gain some ground. What is the total experience like? Easy to park, attractive to look at? Is it shoppable? Are there good displays? Effective signage? Beautiful product? Helpful staff?
• Staff. Let’s talk about staff for a moment. Who is best staffed? Is it easy for customers to identify them? Who has the most helpful staff? Are they knowledgeable? Friendly?
• Information. Who knows the most? Do you know more than your competition? Where do customers go to get their questions answered? Do you have a Web site that provides solutions, or at least access to an expert? Do you send out newsletters? Hold seminars? Teach customers how to do it for themselves? (Ouch, could be some tough competition here).
• Marketing and advertising. OK, another tough one. Who has the best ads? The most professional? Which one covers the key areas? Is it in newsprint? Direct mail? Who has the best strategy? Who does the best job at defining and establishing a market position? Who features regular advertising? No fair padding your score here.
Now, this exercise might take some time. Don’t try to rush through it. It might be beneficial to shop your competition – all of them. The more effort you put into this, the more benefit you stand to receive. You’ll accomplish this by establishing a meaningful strengths/weaknesses and opportunities/threats analysis of your business.
Step 4 – Score yourself
Since each category has a range from 1 to 10 – and you have 10 competitors, the perfect score would be 100. So, add up the score. No gold stars are given, but 90-100 is still an ‘A;’ 80-99 a ‘B’ – you get the drill. You’ll find there is always room for improvement, even for you top performers. A side benefit is understanding how your competition scored. You might find that your competition comes from an unlikely store. The nice thing about this technique is that it identifies opportunities as well as vulnerabilities on an item-by-item basis. Concentrate on keeping up those grades! The bottom line is to leverage your strengths and take advantage of your competitors’ weaknesses.