So, after years of establishing yourself as the only provider of a service or product in your area, you discover that a competitor is setting up a few shops away.
Your first reaction may be to announce a 90% off sale, or to stand in front of their store wearing a sandwich board for yours. Both tactics can potentially be disastrous. Instead, try these five tips for dealing with unexpected competition.
1. Decide what your point of difference will be
There must be at least one major difference between you and your new neighbour, so decide what it is and play it up. If you are in the coffee business, take a look at what they are offering. Are they laidback? Try becoming a tad more formal. Do they offer trendy, pricey coffees? Then start serving a low price point ‘coffee and a Tim Tam’ combo. If they have ultra-modern furniture, look for ways to make your place cosier. Rather than competing for the same customers, compete for different types of customers.
2. Avoid price wars and opening specials
There is going to be a buzz when the new place opens, it’s inevitable. Don’t let it get you down, and don’t start slashing away at your prices to compete with their alluring opening specials. If you do so, you are in effect telling your loyal customers that you were taking advantage of them! By all means refresh your marketing material to emphasise the products you already deliver, but don’t capitulate and damage the reputation you have earned so far.
3. Make sure you have a loyalty program in place
If you don’t have a loyalty program in place, you should. Regulars love to think that every now and then they get something for free. A friend recently went to the dentist for the first time in years and endured a long and arduous process. At the end, the dentist handed him a bag of free take-home dental products. He said he immediately felt like he had come out on top, even after paying the bill. Everyone wants to go back to somewhere that hands out free stuff, it’s human nature.
4. Focus on the positives of having a competitor
There is a school of thought that says having more than one of a type of business in a precinct is good for everyone. That’s why you see clusters of coffee shops or ice cream outlets in the same area. Word of mouth from each set of customers builds in the community, and attracts more customers. There’s also the old adage that says to keep your friends close and your competitors closer – you will benefit from knowing exactly what the other mob is up to!
5. Introduce a fun, new way of ordering
Office workers can already order coffees or lunch by text, but there’s another communication method to consider that’s cheap and perfect for business. Try starting a ‘fax your order in’ system for your office regulars.
Many businesses still use faxes, it’s just that they no longer use an actual fax machine. They use a virtual one. By subscribing to a service that offers virtual fax numbers, you can receive and send a fax from a PC, which means you can take bulk orders from actual (or virtual) fax machines in surrounding offices. Your faxes can be sent as emails or converted to a traditional paper fax. With fax to email you can receive a paper fax as an email attachment. And because it’s all handled on the internet, there is no fax line to rent and no paper trail.
With a little imagination, it’s not hard to see a brand new competitor as a chance for you to not only to refresh your business, but to have a little fun as well. After all, building great relationships is part of business, even with competitors!