When starting out your business, chances are you’ll have a fierce competitor in your market trying to squeeze out any new entrants. It can feel like you’re a tiny mosquito on a gorilla’s butt but take heart. The best thing about being significantly smaller than a behemoth competitor is they stand to lose a lot more than you.
It’s important for every startup and small business to keep a close watch on your competition and capitalize on their mistakes. Making the right move at the right time may create a huge windfall of success for you.
Here are 6 tips to capitalize on a competitor’s mistake that will turn their headache into your profits:
- Be the first to spot a bad move in the making. Make sure you know more about your competition than they know about you. Staying on top of your competitor’s email newsletters, press releases twitter feed, website updates, product videos and anything else that is publicly available. Doing this will allow you to understand bad moves in the making and be able to plot your response. One thing I have learned is that competitors pay for mistakes over a long period of time. You’ll have lots of time to exploit the mistake to your advantage – you just need to be able to start it early enough.
- Take a stand: Make some noise. Don’t be afraid to get your hands dirty with your competition. If they raise they prices, decry foul on your website, newsletter, twitter and every other avenue to say how much their price increase sucks. Don’t be afraid to call a competitor out on the mistake they’ve made. Have a little fun with it and crack some jokes about it. On one ventures, we have an actual GougeMeter that allows you to see how much our competitors are gouging their customers with enormous pricing. Chances are you’ll strike a chord with other people who feel the same way.
- Create a promotion in honor of the mistake. As existing customers are feeling the effects of the mistake – whether it be a price increase, huge service outage, a political issue, or whatever – have a promotion ready that is exclusive to your competitor’s existing customers. It lets your competitor’s customers know you’ve noticed and are thinking about them. They will begin to consider switching with a promotion just for them.
- Don’t be afraid to lose money for the new customers. When acquiring customers from a competitor, don’t be afraid to lose money for the first year or two. We have offered a free year’s worth of service to switching customers before knowing we would lose money. Sometimes you need to do something drastic to get people to switch to you. This also important because you want to think long term with your converted customers. You want to have them for years to come. When we have lost money on a converted customer, we have always been able to make it up in subsequent years from their service.
- Make an easy transition for customers switching. Don’t mess this one up. The one place you can make a massive mistake causing customers to flee back to their former love is to make the transitioning to your service a nightmare. It’s imperative that the whole process is seamless and easy. If it’s not, you’ll likely lose those customers forever.
- Treat your converted customers like gold. When you get a newly converted customer, you want to treat them like royalty. Send them a starbucks gift card to say thanks. Personally call them each year. When we had a big account switch over to Webconnex, we ordered frozen yogurt to be delivered to their entire office. You’d think we walk on water now! If you treat your new customers well, they will tell other people about their process in switching and how happy they are.
I find a lot of inspiration in the story of Thomas Edison who is rumored to have had near 1000 unsuccessful tests in the invention of the light bulb before he had a breakthrough. Any normal human being would be discouraged after a few failed attempts, let alone 1000 failed attempts.
Thomas Edison had a great attitude regarding his trial and error adventure. A journalist once asked him, “Were you ever disappointed after failing so many times?” to which Edison replied, “I never failed. I just know 999 ways not to make a light bulb.”
For far too long, people have put all their eggs into the wrong basket. They foolishly believe that there is some magical world where someone has made it in their career. It’s a world of no worries, fears or uncertainty. Everything is predictable. You have your steady salary (including pay raises every 10 months), your health benefits, your retirement, your vacation time, your promotions. Everything has a time, place and schedule. As long as you keep breathing, you know what to expect.
One of the books that changed my life was The World Is Flat by Thomas Freidman. He takes you thru an amazing journey of how the world and its billions of people are virtually at your finger tip. Businesses that have offices around the world that work continuously, following the sun, while integrating thousands of people and technologies around the world technology in collaborative union for enterprise.
Working with so many different people in my life, I can spot people who will be successful in about 45 seconds. I simply listen to them and look for their attitude. I like to call it the Eeyore attitude – the famous Winnie the Pooh donkey. You know the people with this attitude… “Nobody likes me. Everything is terrible. It probably won’t work anyway. Why bother trying, I will probably fail anyway.”
You can build it, they can come, but that doesn’t mean they will use it. This is a painful lesson in entrepreneurship. We seemingly sacrifice our life for an idea and commit tremendous resources, time and money to seeing it through. Being a part of too many ideas and startups to count, I have become a little more cynical in ideas. Not because I am a pessimist… anyone will tell you that knows me that I am the eternal optimist and believe every idea has potential if it is tweaked right. Let me explain.