Do You Know Your Competitors?
We often refer to “your competitors,” or “the competition,” but who are these people exactly?
Whether you’re in a small market or a large market – whether you’re the dominant company or the challenger – you probably have in mind the company most likely to be vying for your piece of the market share. So you might be thinking of specific names. That’s certainly one type of competitor. But there are also two other types who could be peeling off your potential.
Direct Competitors
If you were thinking names, your direct competitors were probably the names that came to mind. A direct competitor is someone who offers the same products and services to the same market. They earn money from the same thing you do, from the same type of people. When providing quotes and estimates, who do you go head-to-head against? Who do you lose out to? Who do you win against?
Indirect Competitors
Indirect competitors are a variation of direct competitors. They offer some of the same stuff but have a different goal; they drive revenue differently. For service contractors in a residential market, the large home improvement retailers that provide products for do-it-yourselfers could be in this category. They don’t come up against you directly, but they make it possible for someone to circumvent you. Their marketing can compete with yours.
Replacement Competitors
This type of competitor is harder to pinpoint, but has the same effect: you don’t get the job. This “loss” happens when customers choose to spend somewhere else the resources they could have spent on your service/product. They could be thinking about a bathroom upgrade but decide instead to replace a garage door. Or they install a fence and opt out of security lighting. In other words, the same resources they could have committed to you went somewhere else – and so did their business with your company.