You may know the feeling: you have a great product or service that puts the competition to shame. But the competition is winning far more business than you are. What gives?
As much as we’d like to believe that a superior product or service is the end all and be all of business success, it isn’t. Sometimes the company that offers less wins more.
Here are five reasons why.
The competition is entrenched.
Although the value of ‘being first‘ is usually oversold, it can make a real difference. If you’re selling something that is trying to replace a product that is entrenched in the marketplace, for instance, you may find yourself fighting a steep uphill battle to gain acceptance, even if your product is superior. This is especially true when your product or service relates to something mission critical. In these cases, comfort will often trump superiority. After all, who wants to risk breaking something that seems to work okay now?
What to do about it: be realistic and be strategic. One of the keys to beating entrenched competition and gaining acceptance is having a good grasp of how long it usually takes new products to be accepted in your market and understanding how to approach the sales process. Many companies in these situations could succeed but instead fail because they were unrealistic about what they had to do to break into the market and weren’t prepared for a long battle.
The competition has better marketing and messaging.
Few products and services sell themselves. Even if you offer the best product or service in your market, you can never assume that customers will beat down your doors because of it. At the end of the day, how you market your offering and craft your message makes a world of difference. A competitor with a stronger marketing strategy and more compelling value proposition can easily do more with a lesser product or service.
What to do about it: do some research. Evaluate how successful competitors are marketing themselves and if possible, try to find out what they’re telling potential customers. Two possible ways to do this: employ a shill and get your competitors to pitch the shill so you can gain insight into how they sell. Or try to talk to your competitors’ customers and former customers to learn how they’ve been sold.
Once you know how your competitors are winning customers, you can adjust your marketing and messaging accordingly.
The competition has more competitive pricing.
Not all markets are price sensitive but many are, especially in tough economic times. If you’re selling quality when your market more heavily weighs price, an inferior competitor can easily win business. It’s an inconvenient truth: while most of us would like to believe that quality is the end all and be all, that’s not always the case. When a potential customer perceives that the extra money being paid for a higher level of quality is disconnected from the value of that extra quality, price can play a huge role in a purchasing decision. So if your competition has a better balance between price and perceived quality, they can easily take business away from you.
What to do about it: this is a tricky one. A lot is factored into pricing (eg. materials, labor costs, etc.) and there’s no hard and fast rule for adjusting your pricing because you may or may not be able to change the cost of your inputs. But if you’re consistently losing business to the competition and price is cited as a reason, you have to get a better feel for what potential customers are really looking for in terms of quality and price, not what you think they’re looking for.
The competition has better relationships.
The almighty Rolodex can take a company far. If your competitors have better relationships than you, the fact that their products and services might not be up to par may not always matter. While this is not to say that solid relationships alone will always deliver deals, they can open doors and sometimes opening doors is the hardest part of the sales process. Which explains why an inferior competitor with a solid Rolodex can eat your lunch.
What to do about it: take advantage of existing relationships and focus on building new ones. Most of us have better networks than we often believe. Take some time to carefully sort through all the people you know; you’ll probably connect the dots and find some gems you didn’t know existed.
When it comes to building relationships, it’s easy to get lazy and do most of your ‘connecting‘ online thanks to online social networks like LinkedIn. But the best relationships are still built offline so be on the lookout for in-person networking opportunities. From local organizations to trade shows, there are always plenty of places to meet new people. Finally, if you need to, think about acquiring a Rolodex by bringing on someone who’s well-connected.
The competition isn’t inferior.
Entrepreneurs lie to themselves. If your competition is eating your lunch and you can’t figure out why, it might just be that the competition isn’t as inferior as you’d like to believe.
What to do about it: face reality. Once you accept that your competition may be capable of giving you a run for your money chances are you’ll face up to inconvenient truths about your business and recognize what you need to do to become more competitive.
Photo credit: susansimon via Flickr.