Whether you’re starting a new business or have been running one for years, knowing the strengths, weaknesses and offerings of your competitors is vital to your company’s success.
That’s why small business owners must make market research an integral part of their business strategy, says Scott Gingold, CEO of New York- and Eastern Pennsylvania-based Powerfeedback, a market research company. “If you don’t know what’s out there, how can you respond to market conditions properly?” Gingold says.
Keep tabs on your competitors and stay a step ahead with the following tips from Gingold:
1. Pose questions to customers and vendors
If a prospective customer says they’re using your competitor, ask them about that company’s strengths and weaknesses. Ask similar questions of your competitors’ vendors, or ask them to complete an industry survey. Maintain a database of this information and look for trends—like issues with billing or delivery—that you can emphasize in a sales pitch.
2. Employ social media Web sites
Social media Web sites like Facebook and Twitter can connect you with a company’s employees and customers. Search Facebook’s groups and fan pages to see what your competition’s employees, alumni and customers are saying. Conduct a survey on Twitter by raising questions about the industry. You’ll get a flood of immediate responses.
3. Check public records for complaints
Check with your Better Business Bureau, state attorney general or chamber of commerce for possible complaints about your competitors’ businesses. Weave this information into your sales presentation, taking caution not to criticize your competitor. Instead, emphasize what your business does better.
4. Mystery shop
If your competitor has a brick-and-mortar presence, do some mystery shopping to see how they treat customers, how their products stack up and how knowledgeable their employees are. If you’re not in retail, fill out an inquiry form on the company’s Web site or call, fax and e-mail them. See how long it takes them to respond, and take note of the nature of the response.
5. Leave it to the professionals
You might be hesitant to pay an outsider to do your research, but it may help your bottom line in the long run. Market research firms can help small business owners write questionnaires, since they’re experts on writing questions to elicit complete answers. They’ll also be better able to interpret the results of the information you’ve collected.
Gingold suggests conducting a wide-ranging study of your competition on a bi-annual basis, but cautions against dedicating too much time to the project. Over time, asking questions about your competitors should become a reflex, Gingold says. “If you’re not asking questions, you’re missing a golden opportunity to know your competition.”