For those of us who follow Tech news, this week has been pretty exciting. Google+ has grown in leaps and bounds, reaching 10 million users within just two weeks of opening the service for a limited trial phase, and analysts are predicting that, if Google can quickly roll out more Facebook-esque features like applications and fan pages, then their social media site may truly stand against the social media behemoth that is Facebook. Of course, Google is notorious for their ridiculously long beta phases, so the future of their foray into social media is not yet set in stone. However, Facebook is not the only company looking at new competition. UK-based Spotify has announced that it will open up registrations to Americans, allowing those of us in the states access to their music streaming service. Online radio is already a crowded field, and the entry of yet another competitor bodes ill for the likes of Pandora, Grooveshark and Last.fm, especially as Spotify is entering the market with quite a bit of buzz surrounding it.
As I was reflecting on these events, and the responses the existing companies have made to these new threats, I realized that, while major corporations have the capital to deal with new competitors, smaller businesses do not. Often times, when a competitor rolls into town, small business owners begin to sweat and hope that brand loyalty will be enough to keep their edge. Unfortunately that is typically not the case, and many small businesses end up failing because of a refusal to step out of their comfort zones and change. As I have experience dealing with competitors in the same field that I work in, I decided to write out three ways for small businesses to survive new competitors.
Social media has made this immensely easier than it used to be. Before marketing became so beholden to social media, owners used to have to send a friend to scope out a competing store or office if they hoped to learn anything about the new guys. Thankfully, most new businesses will maintain a Twitter account, a Facebook page, or at the very least, a website of some kind. Follow the evolution of these pages. What are they posting? What customer segment do they seem to be targeting? Is any of this difference than what you do? Patrol the waters and note any slip-ups or strengths. For example, there are many companies that do not use social media properly. Spamming the heck out of their Twitter feed with the exact same sales pitch over and over and over again is going to do two things; alienate their followers, and reveal that they do not seem to value personalization. Posting coupon code after coupon code on their Facebook page shows that they are trying to increase sales volume and are willing to take a short-term cut to revenue to get it. If they only have a website, at the very least you can determine how they are trying to market themselves. Take this reconnaissance, and use it for the next step.
Even if you and your competitors are offering nearly identical products, the two companies will not be exact copies of one another. You are the older company, and probably have the better-known name. But name recognition alone does not guarantee survival. What did you learn from step one? If you see them offering coupons with prices you cannot compete with, focus on customer service. Short-term prices mean short-term customers, and while an initial sales boost is nice, all businesses should concern themselves more with the long-term. So create a good rapport with your customers, and consider establishing a way to keep in contact with them. This is easier for businesses that can offer a subscription model for their product or service, but if you cannot think of a way to keep the sales channel open, good customer service can go a long way to establishing repeat customers and getting your name known. Remember to toe the line in this endeavor. Don’t lock yourself up in your office and refuse to open communication channels, but at the same time, try not to annoy your customers by jumping down their throats. If you can offer something to your customers, like information related to your product or service, while not directly selling it, that will put you in a good position when they do decide to buy. Do not be afraid to test the waters a little bit before jumping in, but remember that, if you do not evolve, your competition will instead.
While I can offer broad advice to those looking for it, the fact of the matter is you, as an experienced business owner, know more about your product and the market you operate in than I do. So do not forget that, once upon a time, you were the new kid on the block. You went through exactly what the competition is now, and though you weren’t fighting for market share at the time, you could probably think of countless ways you would have muscled into the market with your company. Your own experience should be your closest advisor when trying to stay in the market. Ask yourself what you would do if you had to compete with yourself. That may reveal quite a bit about your competitor’s business plan, which in turn helps you with distinguishing your company from the competitor’s. Putting yourself in someone else’s shoes is time-tested advice, and in this case very applicable.
Facebook is not Google+, and Pandora is not Spotify. Each one has its strengths, weaknesses, business models and target members. While I doubt the owners of these online giants are seeking advice on how to compete, many small business owners face the same problems as these giants everyday without an army of business analysts and marketers. While competition is scary, it is good for the sector. It forces change, allows choice and ensures the market does not stagnate. So when facing a new competitor, just remember that the small differences can make all the difference.
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