Why Your Business Needs Competition
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You Need Competition In Order To Succeed in Business
For some businesses, it would seem that being the end-all for all customer needs is ideal. What better way to make money than to have a monopoly where all customers must turn to your business without any choice for an alternative? This would certainly mean that any company, being the only company, for everyone, would be extremely profitable. However, it does not necessarily mean that your business is actually good nor are customers actually happy with it. In an earlier confession, the ways competition makes your business stronger were discussed. In this confession, we discuss why your business needs competition.
Why Does My Business Need Competition?
You are not the best no matter what your family, friends, or a few customers told you. You have an insane amount of room for improvement, both for employee satisfaction and customer satisfaction. You might think your product is top-notch, but some other company out there, probably located in China or even in the United States and will outsource to China or India, will make it better and cheaper. There used to be a stigma that anything made from a "third world" country was of low-quality and made from cheaper materials.
This may have been true a decade ago, but in order for these countries to keep business and employment opportunities, they have actually had to learn to produce top quality products, sometimes even more superior to the original. While some areas of these countries might still be considered "third world" because of their massive landmass, there are many more developed areas with more English speakers than in the United States. The rise of English speakers have certainly led almost all major companies in the United States to seek out a different type of workforce who could speak English, but could provide much cheaper labor.
Meanwhile, as certain groups including many political figures advocate for a higher pay rate, specifically to increase the minimum wage, more and more companies are opting to find cheaper ways and alternatives to still run their businesses while maintaining a steady flow of customers. Many of these alternative ways are through the use of computers and a great reduction of employees. The new competition is no longer human, but computers are becoming the new labor force and do it without the need for benefits, time off, vacation time, or a demand for pay raises. More importantly, they are doing it without human error, so productivity is increased and so are profits. While not necessarily a bad thing, it will force many [unemployed] workers to now find a skill that is in demand so they can make a living.
What Does Competition Do For My Business?
The fact that companies have competition means a few things:
- Another company has found a way to make exactly the same product
- This other company offers better:
- Customer Service
- Customer Support
- Loyalty lies in the brand
I could list a dozen companies and their big competing counterparts, from search engines, to restaurants, to SaaS (Software as a Service), to companies and even freelancers. For everything that you offer, there is always another company or someone else who will offer cheaper and more affordable. This competition creates more demand that prices drop and technology gets better.
Whether you are the competition or you have competition, you will acquire loyal customers and then customers who will always go for the better pricing alternative. When it comes to software, sites like AlternativeTo exist not as the competition to anything, but to offer insight into the competition. For example, if I am not happy with the Google search engine, where can I turn to that will offer me a similar or identical product? AlternativeTo would offer me other websites like Bing, Yahoo, or DuckDuckGo. The largest mobile providers, AT&T, T-Mobile, Verizon, and Sprint are constantly in competition with each other, even offering to pay the bill to acquire new brand loyalty. Typing in a company name and "alternative" will almost always lead to the competition.
Keeping Up With The Competition
The competition is always competing with you, whether you choose to acknowledge it or not, and they will always seek to have an edge over your company. When they have an edge, they are receiving those customers that your company is not getting. Any time they get a customer, that is a customer your company has lost. The good news is that when your competition messes up or the customer is unhappy with them, you are likely to receive a new customer. The bad news is that it could take years before that even happens. Keeping up with the competition remains important to try and keep your customers and potential customers away from your competition.
If you choose not to spy on your competition, for whatever reasons, you are losing a battle. The very moment your competition drops its price is the very moment your company should be looking to either:
- Offer a better package
- Offer a better price
There used to be a time where larger corporations would ignore their competition, or refuse to update their technology and "get with the times", only to find themselves losing every customer to various competitors, and being driven out of business, because they were too ignorant or arrogant to care about "the little guy." With more and more "little guys" springing up everyday, every corporation, large or small, has competition, and there will always be customers who will flock to the competition, simply because the bigger corporation does not care about the "little customer", despite the fact that many "little customers" are what keep the business going.
As for other businesses, just to throw out a few names off the top of my head of once-dominant companies that are either continuing to fail or have failed: Radioshack (1921 - present but disappearing), Blockbuster (1985 - 2010) , Oldsmobile (I used to drive one, 1897 - 2004), Woolworth's (1879 - 1987), Loehmann's (1921 - 2014/15ish), A&P (1859 - 2015), Borders Group (1971 - 2011), Amoco (1889 - 1998, bought out by BP), Circuit City (1949 - 2008), CompUSA (1984 - 2012ish), Sleepy's (1957 - 2017, merger with Mattress Firm), Frank's Nursery & Crafts (1957 - 2004), Sam Goody (1951 - 2006), Waldenbooks (1933 - 2011), J&R (1971 - 2014), KB Toys (1922 - 2009), Egghead (1984 - 2001), Compaq (1982 - 2002), Price Club (1976 - 1997), Eastern Airlines (1921 - 1991), Trans World Airlines (1930 - 2001), Pan Am (1927 - 1991), WorldCom (1983 - 2002), Polaroid (1937 - 2001), Two Guys (1946 - 1982), and Pathmark (1968 - 2015, went down with A&P).
A little side note is that my Dad worked for Pathmark his entire life and retired with a full pension. He would be one of the last people in the work world to retire with a pension. Now it is pretty much IRA, 401k, or social... nothing. While he was no longer associated with Pathmark after his retirement, we kept up with the news and it seemed as if A&P was buying all the Pathmark stores to ensure their swift death. Ironically, it too, would become defunct. If you lived in the United States between the 1950s and the 1990s, it is likely that you have heard of at least one of these companies listed. These companies are now defunct or being phased out with each passing day, and it is unlikely that any of these companies will ever be seen again as a business in operation. There are even hundreds more "Ma and Pa" shops or smaller retail outlets that I knew of when I was growing up as a kid that were either single stores or small franchises, but are now obsolete, erased by time and competition, and not even listed on the pages of Wikipedia. For a complete list: List of defunct retailers of the United States.
All of these companies were huge, well known, and popular. They were certainly making money during their time. They made their mark in history, but they are now gone. Most of them were acquired by other companies that are now well known, such as Walmart, Amazon, Target, Best Buy, etc., while others simply went bankrupt or became obsolete, due to new technology, or other companies offering better pricing. Whether these companies were ticking time bombs or not is a testament that regardless of what your business does: your competition is out to acquire you or bankrupt you. There are plenty of companies and there will be plenty of companies in the near and distant future that are destined to suffer the same fate.
Competition is not an ally to your company, but remains a necessary evil: to prevent your company from becoming a monopoly. As history has shown: society, especially a capitalist society, is not fond of monopolies. To the consumer, this is great, because it creates competitive pricing and new technology, all of which they get to indulge and enjoy. To your competition, however, if you are getting business, it means they are not, and they are looking for ways to get more customers, keep customers, and even steal your customers. This is not to say these other companies are awful or mean: we simply live in a capitalist society which thrives on competition. If the opportunity presents itself, why not?
Competition Advantage: Failure To Communicate
One thing that major corporations fail at most of all: customer service and support. They are happy to provide you with a business phone number for sales and acquire you as a client, but the time comes where you really need to rely on the company for their support by getting in touch with a live person who can help you, and unfortunately, they are nowhere to be found. Navigating their website, trying to find an email, using the contact form, may yield no reply for weeks at a time. Getting a hold of someone who could possibly be considered human is nearly impossible.
Google is a prime example of this. Pretend you have a problem and you are trying to contact Google and get a response from a real person. Go on, I'll wait. Let me know in the comments what you did, how fast you did it, and if you were able to get a hold of a live representative via email, chat, or phone. After you have tried that, navigate to Google Business or Google Ads (1 and 2 - two different numbers here) and see how fast and easy it is to get a hold of a live person when contacting their sales number because they want to sell you something.
I get it, as a business, it costs money to fund the support team and any business would feel they are losing money because all of their FAQ and forums are online, where the answers may possibly already be there. Most people feel more comfortable talking to a live person because it helps with their frustrations, they now have a real life person to blame their problems on, and they also have someone from the company, representing the company, who will actually listen to them. That is an extremely important factor for any business. Providing some means of communication to your customers, whether it is by contact form, live chat, or phone, will keep customers more loyal, and in the long run, they are willing to spend more money on your products because they have the confidence to know that no matter what happens, you have a support team there to help them.
The power of zero is an amazing thing! By that, I mean, you can almost always hit 0 on your phone to get a live representative. Not always, as some companies have made that even harder. It seems they are trying to prevent you from contacting them. Dial A Human is a website directory with a listing of numbers for many businesses that get you a human immediately. There is something about live support that goes beyond anything that could be provided by a computer, a search box, FAQ, or even AI. It is a fantasy for any company to think that providing support is a drain on their resources and a waste of money. The truth is that you don't really need a support team. You need a better product. A product that is so flawless and easy to understand that none of your customers ever need to contact you.
The Illusion of Competition
Some massive corporations have gotten smart about creating the illusion of competition. If you have ever driven around your state or anywhere in the United States, you may have seen it. There are intersections where there are four gas stations on all sides, all charging a relatively similar price, though rarely ever the same exact price. The interesting case being that if you were to track down the original source, it is likely that all four gas stations are getting the same gasoline and oil from the same distributor, who owns all four gas stations. Thus, in fact, being a monopoly, but since all companies are listed under different names, they are able to bypass monopoly laws.
There were times and there are still times where Microsoft, being the massive software corporation it is, goes through antitrust and monopoly lawsuits, but have actually invested money into their competition. Microsoft has a history of investing in Apple and Facebook products. Why would Microsoft want to invest to its competition? Maybe it does not see it as competition, but rather, a helpful source of driving people to use its own products. If people get tired of Apple products, they will surely turn elsewhere, and probably to Microsoft. Or, Facebook and Apple are just good investments, and if they are going to make money, Microsoft may as well make some money with them.
There are many other massive corporations doing similar things to create the illusion of competition as well. Walmart and Target, whose stores may have become too big, have or are currently experimenting with opening "little shops" or "family markets" in their surrounding areas to try and give people that sense of community again, instead of looking like a massive store and completely eliminating all of their competition.
Personal Experience With The Competition
I always tend to go with the smaller company and give them my business rather than the bigger guy for several reasons, as listed above: the pricing is usually better, the customer support and service is usually better, and often times, they really do genuinely care more about retaining and satisfying their customers than the big guy is. For smaller businesses, however, losing a customer is actually devastating. An unsatisfied customer will always go somewhere else.
Companies, large and small, no longer have the luxury of telling the customer, "It is our way and you will abide by it whether you agree with it or not." There is always another company who has seen these flaws and stepped up to become "the better company." For this reason, your company should never be arrogant enough to believe it is the best and the only. It never will be because of the Capitalist and Consumer society that we live in.
Keeping the customer satisfied should be one of the single most important components in an organization's policy. It does not mean the company has to bend over backwards for a customer, but at least be willing to work with a customer and hear them out, especially if the demands are reasonable.
Learning From The Competition
The company that chooses to learn and do something about its own products and pricing because of the competition will stay in business. As long as a company chooses to see others as competition, it has the best chance of remaining in business and keeping customers, regardless of whether it offers a better price or not. Brand loyalty comes to mind when it comes to pricing. Many customers are willing to stay with a company because of the customer service, because it takes into account the length of time someone has been a customer. There are even companies that record the birthdays of its customers and send an email, a letter, or a phone call. Being that personal makes a huge difference.
The competition knows what your company does not, and for the things your company does not know, they are acquiring your potential customers, because they have learned that business is not only about providing a product or a service to the customer, but actually treating the customer as a person with needs, wants, and wishes. Whether the competition offers a discount, a free month, or simply reaches out to the customer every few months to check up on customer satisfaction with the service, these small moves go a long way in being your competition.
When your company stops treating customers as a personal valued customer, it has already lost a customer. Customers are not dollar signs or numbers, they are, in most cases, working individuals who trade in hours of their labor and time at work to purchase your product or your service. When you treat customers as working class people who are giving you business, every single customer should be priority number one.
Be The Competition
Every company that exists is competition for another company, whether it is the challenge of coming up with better plans, solutions, or pricing. When your company decides to be the competition, you have begun your journey into being the business that everyone turns to, and not just as the alternative, but the company that begins to acquire brand loyalty from its customers.
You must be the company that stands out, makes a difference in the lives of people, not just by providing a service or a product, but by remaining a human company with real people helping real people in the world. Standing out and being different will always make you the competition, and in most cases, the better competition. When it comes to acquiring new customers: How do you stand out from your competition? What makes you better and more important? Why should a brand loyal customer switch to your business? What are you going to do that the other company isn't doing? When you find the flaws in these other companies, you are the competition and will remain the competition.
Being the competition is important because not only is your business there to "piss off" the other company, but you are driving them to be innovative and forcing them to come up with new solutions to deal with the competition from your business, whether it means developing new technology or better packaged plans, but your company is actually a major source in changing the economy for the better, because as other companies become your competition, your company is forced to improve as well. Your company must keep up with all of the competition, as they are still your competition, just as much as you are theirs.
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- No matter what your mother or your customers told you, your business has an insane amount of room for improvement.
- You might think your product is top-notch, but some other company out there, probably located in China or even in the United States and will outsource to China or India, will make it better and cheaper.
- The competition is always competing with you, whether you choose to acknowledge it or not, and they will always seek to have an edge over your company.
- I always tend to go with the smaller company and give them my business than the bigger guy for several reasons: the pricing is better, the customer support and service is better, and often times, they really genuinely care more about retaining and satisfying their customers than the big guy is.