Saturday, May 19, 2007

Turn Your Competitors into Allies

By Shel Horowitz

1. Get to know the other people in your niche. When you notice a new arrival in the marketplace--or if you enter a market new to you--pick up the phone and get acquainted. Become active in trade associations in your industry, and in your geographic area (for example, Chamber of Commerce, neighborhood business association). Participate in Internet discussion groups with others in your own or closely related fields. Talk shop, discuss approaches to problems, let each other know about events or opportunities of interest. Know each company's Unique Selling Proposition (USP)--the key reason why it makes sense to do business with that company--and that way, you'll know when and where to refer accounts that aren't quite right for you.

2. Market together, cooperatively. I remember a wonderful newspaper co-op ad from all my local florists, who teamed up just before Mother's Day. The headline: "You wouldn't buy your groceries from a florist! So, why buy your plants from a grocer?" The ad copy emphasized higher plant quality, expert knowledge, and various other benefits, and then listed full contact info for 11 different flower shops.

By joining forces, the consortium could afford a big, noticeable ad. An ad one-eleventh the size would have been easy to ignore, but this one filled a quarter-page (in a large-format newspaper) and demanded to be noticed.

Another example: in publishing, many small presses will include a flier for a complementary book from another publisher as they ship out orders; for the very low cost of printing and mailing the fliers, participating publishers get to reach an entirely new audience. Sometimes, publishers will even sell a bundle consisting of their own and other firms' books, gathered together at a value price.

It's not just small companies doing this, either. Some of the largest and most fiercely competitive corporations in the world engage in joint ventures regularly. The first car I ever bought new was a 1988 Chevrolet Nova, which was essentially identical to the Toyota Corolla. Built by Chevrolet to Toyota's specification, it was a marvelous car, and about $2000 less than the same car with the Toyota nameplate. Fifteen years after production ended, I still see a lot of them on the road. Similarly, the popular Ford Escort wagon was really a Mazda, etc., etc.

Think about the package delivery business. FedEx and the United States Postal Service have a very interesting arrangement; the USPS subcontracts intercity air transportation of Express Mail and Priority Mail to FedEx, which gets a substantial new revenue stream and utilizes otherwise wasted air freight capacity. And meanwhile, FedEx has installed thousands of drop boxes at post offices around the country, thus helping its consumers avoid pick-up charges and making shipping with the company incredibly convenient.

For service businesses, sometimes your biggest competitor is not another company, but the idea of doing it yourself. Certainly, this is true in my business. Most people believe they can write well--and few of them understand the difference between putting sentences together on paper to convey information--something most people can actually do themselves--and writing materials with a sharply defined focus and a powerful call to action, or a news hook. Only a very small percentage of businesses ever hire outside professional copywriters. Large firms hire this skill internally, and many small firms use their own (untrained) marketing departments.

In my business, two of the largest revenue streams are marketing copywriting and resume writing. On the resume side, our "market share" went down sharply after large numbers of people started having access to PCs and laser printers, and it went down dramatically again after Microsoft started bundling a resume template in Microsoft Word. During the boom times when companies would hire any warm body, people could get by with that approach. But now, in a leaner economy, many of our resume clients bring a document they created in this template--because it hasn't been landing job interviews. We can easily see why these self-written resumes haven't been working; they don't properly highlight the client's strengths or minimize weaknesses, the format may not be appropriate, and the writers haven't focused their resume on their target market: people who hire employees with a particular skill set.

3. Refer business to each other. Typically, you will each have areas of specialization that you do better than others. So if you get an inquiry from someone best served by your competitor, you satisfy the customer by playing matchmaker. And your competitors will do the same for you. I have some competitors--and complementary businesses--with whom I pay or charge a referral commission, and others where we simply pass appropriate clients to each other.

My business started primarily as a typing service, but very quickly, I branched out into writing resumes and marketing materials. I joined a local association of secretarial services, and because people knew my specialties, I got a lot of resume work through referrals.

At the same time, after my first two tape-transcription assignments, I decided I really disliked that part of the business and began referring those jobs out to other services.

This cooperation always had three winners: the client, of course, who got the best providers for the services they needed; but also my competitors and me: we didn't let the things we disliked get in the way of doing what we enjoyed and excelled at, yet we were able to keep our clients happy when they requested those services.

Here's another one of my "competitors," Wendy Kurtz, MBA, APR, CPRC, president of the PR firm Elizabeth Charles & Associates , talking about how this works for her:

I disagree with the premise that there are only two types: winners and losers. All too often, we as professionals tend to overlook the basic concept we learned in childhood, "Do unto others as you would have them do unto you." I have found that some of my best referrals have come from vendors and those competitors with whom I maintain a sense of "we're in this together," rather than "we're out to beat each other to the top."

4. Subcontract with each other. If one of you has too much work and the other has too little, doesn't it make sense to work with a professional that you trust and even it all out?

5. Create temporary joint ventures, where each of you is a partner. After all, if fierce competitors like Apple and IBM could join together (with Motorola as a third partner) to develop the Power PC chip architecture, surely you and your competitors can put aside your differences. These could be equal or weighted partnerships.

6. In some cases, if you work so well together, and enjoy advantages of scale, increased buying power, and so forth--and your corporate cultures harmonize well with each other--a permanent merger or acquisition may even make sense.

7. Be there if your competitors fold; if you've maintained strong positive relations, if you've cooperated on several projects, if your competitor leaves the business, *you* will get the referrals.

In the earliest days of my business, one of my competitors called me up and asked me if I needed any office supplies; he wanted to place an order with a large mail-order wholesaler and didn't have enough to make the minimum. That phone call has saved me thousands of dollars, because I wasn't aware of this very inexpensive supplier. I not only added my order to his, but for the past 20 years I've ordered from that company--at a deep discount over anything I could find locally.

And yes, this competitor later moved out of the area. He was one of several who sent all their clients to me when they closed their shops.

I got the initial call--and the later referrals--because we were on friendly terms and had often sent each other clients.

Excerpted from Shel Horowitz's Apex Award winning sixth book Principled Profit: Marketing That Puts People First.

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