Hermosa Beach, CA

Wednesday, September 08, 2010

In an ideal world for many companies, there would be little or no competition and they would get the maximum return on their investment. But customers don't care about other companies and want the choices and improvements that competition provides.

Seena Sharp's new book, Competitive Intelligence Advantage, urges business executives to reframe their thinking about competitors and their impact on your business. She devotes an entire chapter, "Why Fixating on Competitors is Misguided," to explain what should be obvious but isn't - that customers buy from companies that offer them what they want. Put the lens on the customer rather than on the competitor, and maximize the results your company expects.

Companies that focus on competitors often offer the same or me-too products. Although the company may insist that their products are different, the customer often remains oblivious to those differences, or the incidental differences don't matter.

Far too many executives are convinced that they know better than the customer. And when the customer doesn't agree and doesn't buy their offering, they blame the competition. This clearly illuminates the disconnect between a company's perception and the market's reality.

Department stores have been hard hit during this recession – except Nordstrom. All chain stores, from Walmart to Saks, copied tactics of lowering prices and offering specials, and lowering prices again in every possible configuration. It didn't help because their assumptions were erroneous. Decision-makers believed that lower prices were most important to customers. By listening to themselves and each other, they drowned out what's also important to customers: They want the product, and they want it now.

Nordstom clearly heard the message and responded by creating a new inventory system to quickly locate where an item is, whether in another store or online. The customer has the option of picking it up if nearby or having it shipped. No muss, no fuss, no bother.

This strategy translates to fewer markdowns and faster inventory turns – the lifeblood of profits in retail. By listening to the customer, they learned that the combination of availability and convenience trumps price. If you're surprised by this, then you're not current on what's important to your customers, according to Sharp.

Competitive intelligence (CI) uncovers what customers want, both formally and informally. Formal CI is an organized methodology for finding out what a company needs to know when making a decision and for keeping up with the market and customers. This due diligence uncovers opportunities, potential threats, surprises, and insights.

Informal methods may be the first sign of customers constantly changing desires. Customers reveal the changes that are important to them – if you pay attention. Ask them. Listen to them. Watch them. They often can't verbalize what they want (unless it's the ever-present wish for better customer service) but they will reveal it other ways. Extract this valuable information from those closest to your customers – employees and outsiders in delivery, sales, repair, and customer service.

Don't ignore competitors but remember – they are not the ones who buy your product or service. Business is not a zero-sum game in which one company wins and the other company loses; there can be many successful companies in the same business.

Invest the time to learn what customers want and focus on them. Competitive intelligence provides immediate and powerful insight into the ever-changing marketplace.

Competitive Intelligence Advantage will challenge your thinking about the decreasing value of data, and encourage you to use competitive intelligence to find opportunities that are in your face daily.

Seena Sharp

Principal

Sharp Market Intelligence

Hermosa Beach, CA

310.379.5179