Competition is a fact of business life. As professional operators, we need to have policies in place for our competitors just as we do for our customers and for our employees. This month’s question is one that all of us should examine. Our answer is based upon our 22 years of experience in the metropolitan Atlanta area. With all of these tips concerning your competition, please keep in mind what we learned early in our business careers — “always consider your customer before your competition.”
Question: We have several competitors with actual physical locations in our area in addition to several brokers that advertise that they serve our marketplace. What are some general tips and strategies for dealing with competitors?
Answer: The first step in this process is to identify all of your competition. In addition to those competitors whose units you actually see in your area, use social media to research companies that advertise that they serve your area. You may find companies with whom you are unfamiliar.
As far as classifying your competitors, we generally considered each on a scale of “friendly” to “non-interactive” to “unfriendly.”
- “Friendly” - We had competitors in our market who worked on a professional level. We earned the business for certain jobs and they earned the business for others. They may attend some of the same homebuilder’s association meetings or chamber of commerce events. One of our common goals was to work to raise the standards of our industry by providing quality, professional service.
- “Non-Interactive” - We had several competitors that we only knew from seeing their units on job sites. They would not attend training or certification classes and did not interact with our company.
- “Unfriendly” - We had less than a handful of these competitors over the years and we tried to not let them influence our business relationships with other competitors. While instinctively you sometimes want to “go to war” with these companies, it can both harm your own company as well as those in your marketplace.
Tips for Interacting with These Types of Competitors:
In general, attempt to communicate with competitors where possible but never, ever communicate about pricing. Price fixing is a federal crime as the Federal Trade Commission writes:
“Price fixing is an agreement (written, verbal or inferred from conduct) among competitors to raise, lower, maintain or stabilize prices or price levels. Generally, the antitrust laws require that each company establish prices and other competitive terms on its own, without agreeing with a competitor. … Price fixing is a major concern of government antitrust enforcement. Individuals and companies that knowingly enter price-fixing agreements are routinely investigated by the FBI and other federal law enforcement agencies and can be criminally prosecuted. Potential penalties include lengthy terms of imprisonment (up to 10 years) and large fines (up to $1 million for individuals, $100 million for companies, or twice the gain or loss from the offense). Where appropriate, the FTC may also bring a civil enforcement action.”
Keeping this in mind at all times and knowing that each PRO and each market is unique, we have used examples to illustrate the tips that we are suggesting. Modify these examples to match those of your company, your competitors and your service area.
Friendly competitors
- Offer help when needed. For example, a huge event may require more units than one company can provide or specialty equipment is required that the competitor may not have.
- Refer business to them for an area that you do not service and ask the same from them.
- For units more convenient for them to service, deliver your unit and contract them to service.
- Share pertinent information that may be of interest to the competitor. Examples: “Our driver saw one of your units tipped over on Main Street” or, “Our driver just pulled into the local wastewater treatment plant and it is closed today due to an equipment problem.”
Non-interactive competitors
- Look for an opportunity to interact as in the examples discussed above regarding their units being tipped over or common interest items such as the local treatment plant closed.
- Pass on leads. “We received a call from an area that we do not service. Do you or do you know someone who does?”
- “There is an industry show coming up soon. You may want to consider attending.”
Unfriendly competitors
- In general, do not stoop to their level. Don’t get into a price war. Know your company’s cost of doing business and adhere to those numbers.
- Don’t go onto job sites with their units and kick them off by offering better pricing.
- Don’t criticize them by name to customers or to potential customers.
Successful strategies versus all competitors
- Concentrate on your company and your company’s strengths. “We are locally owned and operated.” “We have been in business for this many years.” “Customer service is our prime objective.” “Our route service technicians are all industry-certified.”
- Speak about competition in general terms to a customer or a potential customer - “Unlike our competitors in this area, our company uses barcodes to register each unit that is serviced.”
- Do not speak about specific competitors by name nor respond to gossip about them or other companies.
- Be aware of your competition in terms of their pricing and product offerings. Some PROs will periodically conduct anonymous price surveys of their competitors to ascertain pricing for basic once-a-week or twice-a-week servicing, including delivery and pickup charges. While this in no way should influence your company’s pricing, you will have an idea as to how your company compares to other companies in your market. Your cost of doing business is specific to your company and you should not let a competitor dictate your pricing structure.
- Instill in your company a respect for all competitors. You must respect the competition and remember these companies remain an option for the customer.
FINAL THOUGHTS
Competition is a part of business. Act and react to your competitors in a positive manner. Your competition can make your company stronger and better.
