No matter the size your business, geographic area in which you reside, or your customer base, it's likely that you have competitors vying for your customers' business. The competition is fierce, but before you can determine a strategy to remain competitive, you must first define exactly who your competitors are.
When compiling your list of competitors, you should look beyond your neighborhood. The businesses in your community that offer similar products and services may be your competitors, but so are online retailers or any other business or organization that is vying for your customers' attention and money. You may not just be competing with organizational competitors, but other products as well. For example, if your business is a coffee shop; you not only compete with other coffee shops, but gas stations, bakeries, and grocery stores that sell coffee, as well as fast food restaurants that not only sell coffee, but breakfast, too.
Be proactive in discovering your competitors. You should constantly stay abreast of industry news and innovations by reading trade publications, subscribing to blogs and news sites, and visiting known competitor websites for updates. Consider attending conferences and trade shows to help you stay informed and up-to-date on competitors' progress and latest innovations.
Once you determine your competition, you can strategize how you will position yourself in the marketplace to capture as much business as possible.
It's most effective to narrow your list to two to three competitors. You cannot compete with the entire industry of financial service providers, and if you try, you are ultimately setting yourself up for failure. Answer these questions to help you determine your competitors and how you can position yourself to effectively compete with them:
- Is the competitor a new business offering similar products and services?
Some, if not most, of your competitors are likely going to offer similar products and services as you, but at a different price point. In order to transcend the numbers game, you can stand out from the competition by being the best at [FILL IN THE BLANK]. That 'blank' may be customer service, convenience, value-adds—you name it. It is overwhelming and impossible to try to be the best at everything. So focus on one or two things and set the expectation for excellence throughout your organization.
- Is the competitor an existing business offering a product or service that you currently do not offer?
If this competitor offers a product or service that you currently do not offer, you have to determine if they are indeed a competitor. Do you eventually plan to offer that product or service? Is the return on investment substantial enough for you to even consider offering it? If you find that it doesn't make financial sense to invest the time and resources to offer a product or service that another financial institution is offering, they may not be a competitor at all.
- Is the competitor more established in the industry than you?
This competing business may have more years of experience than you, have a loyal client-base, and be considered "innovators" in the industry; it may seem like you can't compete with them, but every business—no matter what industry—has a weakness or an area where they have room for improvement. Perform a competitive analysis to help you find areas of weakness that a competitor possesses and focus on improving your competency in those areas. For example, if one of your competitors has a sub-par website, you can ensure that your website is optimized and user-friendly.
Once you identify your competitors and determine where you stand in relation to them, you can create specific and actionable goals for improving your position in the marketplace.