When starting out your business, chances are you’ll have a fierce competitor in your market trying to squeeze out any new entrants. It can feel like you’re a tiny mosquito on a gorilla’s butt but take heart. The best thing about being significantly smaller than a behemoth competitor is they stand to lose a lot more than you.
It’s important for every startup and small business to keep a close watch on your competition and capitalize on their mistakes. Making the right move at the right time may create a huge windfall of success for you.
Here are 6 tips to capitalize on a competitor’s mistake that will turn their headache into your profits:
- Be the first to spot a bad move in the making. Make sure you know more about your competition than they know about you. Staying on top of your competitor’s email newsletters, press releases twitter feed, website updates, product videos and anything else that is publicly available. Doing this will allow you to understand bad moves in the making and be able to plot your response. One thing I have learned is that competitors pay for mistakes over a long period of time. You’ll have lots of time to exploit the mistake to your advantage – you just need to be able to start it early enough.
- Take a stand: Make some noise. Don’t be afraid to get your hands dirty with your competition. If they raise they prices, decry foul on your website, newsletter, twitter and every other avenue to say how much their price increase sucks. Don’t be afraid to call a competitor out on the mistake they’ve made. Have a little fun with it and crack some jokes about it. On one ventures, we have an actual GougeMeter that allows you to see how much our competitors are gouging their customers with enormous pricing. Chances are you’ll strike a chord with other people who feel the same way.
- Create a promotion in honor of the mistake. As existing customers are feeling the effects of the mistake – whether it be a price increase, huge service outage, a political issue, or whatever – have a promotion ready that is exclusive to your competitor’s existing customers. It lets your competitor’s customers know you’ve noticed and are thinking about them. They will begin to consider switching with a promotion just for them.
- Don’t be afraid to lose money for the new customers. When acquiring customers from a competitor, don’t be afraid to lose money for the first year or two. We have offered a free year’s worth of service to switching customers before knowing we would lose money. Sometimes you need to do something drastic to get people to switch to you. This also important because you want to think long term with your converted customers. You want to have them for years to come. When we have lost money on a converted customer, we have always been able to make it up in subsequent years from their service.
- Make an easy transition for customers switching. Don’t mess this one up. The one place you can make a massive mistake causing customers to flee back to their former love is to make the transitioning to your service a nightmare. It’s imperative that the whole process is seamless and easy. If it’s not, you’ll likely lose those customers forever.
- Treat your converted customers like gold. When you get a newly converted customer, you want to treat them like royalty. Send them a starbucks gift card to say thanks. Personally call them each year. When we had a big account switch over to Webconnex, we ordered frozen yogurt to be delivered to their entire office. You’d think we walk on water now! If you treat your new customers well, they will tell other people about their process in switching and how happy they are.