September 26, 2014
Don’t let the competition define your external growth strategy. Instead, plan for the people who matter most ─ your customers.
Let’s face it ─ we all care about what other people think, and in business that often means measuring how we stack up against the competition. While it’s important to keep an eye on competitors, it’s unwise to base your strategy on what they do. Playing catch-up is not a winning formula for three reasons:
Rather than worrying about your competitors, focus on what matters most: Your customers. After all, without them, your business would cease to exist. Obvious as it may seem, leaders easily forget this when they are preoccupied with outperforming their rivals.
So how can you break free from a competitor-focused mindset?
1) Look at the big picture
I suggest using tools to broaden your perspective. For example, the Five Forces Model developed by Michael Porter pushes you to see beyond the competition and consider how suppliers, market changes, new technologies, or customer demand may affect your business in the future. The model helps you see that competitors are just one of many factors and draws your attention to a bigger picture when creating your strategic plan.
2) Determine your ideal customer
Not all customers are created equal. Just because your competitors target young, professional millennials doesn’t mean you should, too. Based on your vision for the future, you may want to focus on selling to a different consumer demographic, or even to other businesses. Would you prefer one million low-margin customers or 1,000 high-margin customers? The choices you make will affect every aspect of your business, from product development to marketing campaigns. Focus on knowing who your ideal customers are, not someone else’s, and then pursue them.
3) Ask your customers
One of the simplest and most effective ways to understand your customers is to ask for their feedback. What do they think about your current products and services? Where is there room for improvement? The principle may seem obvious, but it’s often neglected: Customers can be your greatest source of information — and inspiration.
4) Anticipate future demand
While your current customers may have many great ideas, there’s a limit to the insights they can provide. The fact is, customers often don’t know what they need until they are offered it. As Henry Ford said, “If I had asked people what they wanted, they would have said faster horses.” You need to use a variety of tools, including your own best judgment, to anticipate future demand. The key is to bring this all-important question into focus. What will your customers (and potential customers) want tomorrow? In a year? Ten years from now? Your skill in answering this will determine the long-term success of your business. Of course, future demand is always uncertain. No one can be one hundred percent accurate in predicting customer needs, but you can reduce uncertainty through careful research and strategic analysis.
So the message is clear. Don’t be hypnotized by the competition. Thinking about customers first allows you to be demand-driven and develop a plan for strategic growth. With this future-thinking mindset you can create sustainable success for your business, regardless of what your competitors do.
For more business insights and strategies, sign up for our free management newsletter.