Do You Really Know Your Business Competitors?
Well, do you? We’re not asking you to describe what you know about your competitors—what they’re capable of or what sorts of individuals comprise them. We’re asking if actually you know who they are.
At this point, you’re probably running a mental checklist of industry leaders and firms that might have recently outbid you for valuable clients. Sure, these could be current competitors. But the question you’ve got to ask yourself is, “Who do my clients think my competitors are?”
Because the truth is that buyers and sellers of professional services usually have very little overlap in who they think is competing for buyers’ business. Have your staff make a list of your competitors; have your clients do the same. Turns out, these lists will have little in common.
In a recent study, we asked 1,500 buyers and sellers of services who they believed sellers’ competitors were. The results were surprising. Turns out that there is rarely more than about a 25% overlap in who you think your competitors are and who your clients think they are. There are two reasons for this:
- Sellers usually have very distinct ideas about firms and their capabilities. This “insider” understanding of their industry will heavily inform their list of business competitors. You might find yourself thinking, “Firm X could never take on a project like that.” Potential clients, though, rarely have the technical knowledge or insider bias to differentiate between vendors in this way. As a result, Firm X is in the running.
- Sellers are looking for solutions to problems and often see multiple ways of addressing those issues. A dip in revenue could send Firm Z looking for a consultant to help them reign in costs. Or, instead, they might look to combat red ink by hiring someone to help them launch a new product. Or retrain their sales force. There are myriad solutions to most problems, and some solutions might have nothing to do with your industry or your usual competitors.
The second reason above makes it particularly difficult to know who your competitors might be — it’s likely that some are well outside your area of expertise, or even your industry. Your competition for any specific job is not necessarily narrowed down to those who would solve it using tools or strategies similar to yours. Instead, virtually any firm capable of solving the same sorts of problems that you can is potentially in the running.
Before you win the bid, you need to make sure you’re in the running in the first place. This is difficult with so many variables at play.
[quote style=”boxed”]Key to meeting your clients’ needs is sharing an understanding of their problems.[/quote]
A great way to get an understanding of their problems is to define the problem to the client in a very specific way. Create a narrative around their problem and present your services as the happy ending to the story.
Invest in research in the industries and types of firms that you’re best suited to understand and help. Discover their needs and show them your unique approach to problem solving. If you offer a compelling solution that shows a deep understanding of your clients’ needs, it barely matters who your competition is. In the end, everything comes down to you versus your clients’ problems. Own that competition and all others will be moot at best.