Know Your Competition
Originally published: 07.01.18 by Mike Moore
To position your business in your particular market, you need to know who your competition is, and what they’re doing.
What do you stand for?
Before evaluating the competition, you’ve got to know what your company stands for. That doesn’t mean just putting a statement of core values up on the wall. What principles are most important to you? Being the most ethical company in town? Supporting your community? Offering the highest-quality HVACR products and services on the market? Creating a family-like atmosphere for your employees? Whatever your answers are they will drive the way you do business.
This isn’t just when you’re starting out. Whether you’ve been in business for 3 months or 30 years, it’s good to step back every once in a while and review what your business stands for, and whether you’re still operating according to those values.
What’s your strategy?
Before you launch into evaluating your competition, consider these other characteristics of your own business.
- What is your pricing strategy?
- What’s your marketing strategy?
- What business segments are you in (Add-On replacement, Residential New Construction, Retail, Commercial, Plumbing or Electrical)?
- Are there any adjacent customers, beside your core group, that you could draw in to expand your customer base?
One example of pulling in adjacent customers could be targeting customers who are specifically concerned about being “green” and offering up and coming, highly efficient mini splits.
Now, you’re ready to look at the competition.
Whatever business segments you work most in, you probably have a good idea of who your direct competitors are. Consider also, the companies who draw their business from the customers who are adjacent to your main customer base. If you’re looking to enlarge your share of market, you’ll be competing in some areas where perhaps you haven’t previously.
Got your list? Good. Inasmuch as you possibly can, the thing to do is preform an unbiased SWOT (Strengths, Weaknesses, Opportunities, and Threats) on those companies. This can be a touch tricky, because of course you’re not privy to the inside of their operations. However, you can draw quite a bit of insight from observation.
You might ask, “How can I ignore my biases when looking at my competitors?” Put yourself in the customer’s shoes. If you needed services, how would you view the companies on your list, based on the information available? Some areas to consider include:
- Do they have a strong web presence? This includes a well-designed, attractive website, with at least the company’s services, contact information, and some “About Us” info readily available.
- How is their branding? This extends to how their technicians dress, how the service trucks look, and whether all the branding is consistent, across the different points of customer contact.
- Do they get good reviews online? Online reviews are a highly useful tool for gauging customers’ satisfaction with a company. Stats vary somewhat between sources, but according to a 2017 report from Podium, 93% of the consumers surveyed indicated that online reviews influence their purchasing decisions. The same study also showed that businesses need at least an average star rating of 3.3 for consumers to want to interact with them.
- What is their pricing strategy? Sometimes customers will share competing bids they’ve received from other companies. You can use this knowledge to extrapolate whether the other bidders lean toward a high-end, middle of the road, or low-end approach.
- How busy are they? One way to guess this is to drive by the other businesses during a typically very busy time of the day, such as early afternoon. If several of their service trucks are parked at home base, their service schedule probably isn’t very full.
Of course, you’ll want to be very ethical when checking out your competitors. Your good name and reputation are some of the most valuable assets for your business.
SWOT Analyses aren’t built in a day.
Depending on how many competitors you’ve identified for your analysis, this process may take you some time. That’s all right. Neither brands nor business strategies are built in a day. Also, depending on the size of your operation, you may be able to delegate some or all of this research. However you go about it, if you’re the owner, it’s important to take time to work on your business, and not only in it.
What do you want to do?
Having analyzed all of your main competitors, you can figure out exactly how you want to position your company. You know who your competitors are, and have done the research to figure out roughly how they are doing. Now, take a look at your market. What gaps are not currently being filled?
For instance, in a residential sector, perhaps there’s a lack of companies selling and servicing very high-end equipment. Or perhaps your area is seeing a boom in commercial new construction, and those builders need a reliable source for efficient systems to meet ever-more-stringent standards. It could also be as simple as most contractors in your area not offering much in the way of after-hours or emergency services.
How can you bring the disruption?
Generally, if you think about something disrupting business, or disrupting your market, that sounds negative, right? The 2008 recession and housing crash certainly brought an unwelcome amount of disruption to almost every industry. At Lennox, we’ve been challenging ourselves and our customers to think of disruption in a different way. Consider the gaps you’ve identified in your market; the things someone could or should be doing or offering, that no one is (or very few are).
Is there a unique way you can fill those gaps? It doesn’t have to be earth-shattering. Sometimes the simplest innovations are the easiest to overlook. Or, it could be something that completely revolutionizes your market. Ride-sharing services, such as Uber and Lyft, are fairly recent examples of how a fairly simple twist on transportation turned the taxi industry on its head.
Usually, innovation in business means making or offering the same thing, better. An improved version of the standard product or service, if you will. Disrupting your market means doing something new and different, not just better.
This brings us back to your strategy.
You’ve analyzed your competitors, noting their strengths, weaknesses, opportunities (where they could improve) and threats. You’ve looked at your market, and considered where there might be a demand that isn’t being met. Your mind is probably full of ideas for how you can serve the customers better than your competitors. Good. You know your business better than anyone else. And now you know your competition than you did before.
The HVACR industry has been around for a while; over 100 years. In that time, what’s possible in the area of environmental control has changed in amazing ways. Not only can we precisely heat and cool a space, we can monitor it from practically anywhere, filter and eliminate dust, allergens and germs, and run systems with a level of efficiency that would have been astounding only a few years ago. With all the new technology at your fingertips, now is a great time to leverage the strengths and resources available to you, and find a unique way to fill the gap(s) for your customers.