Teaming up with the competition? It sounds counter-intuitive, since by definition any customer your competitor gains supposedly means a corresponding loss of revenue for you. Certainly this is an accepted truth in the “old school” business model.
But times are changing, says Erin Schwartz, a guest blogger on thoughtLEADERS LLC. In the modern business world, there are ways of working with the competition that can “actually enhance your business.”
What are the possible benefits of cooperating instead of competing?
When you and your competitor offer customers the same products or services, you’re both trapped in a “dog-eat-dog” business culture. The only way to win is by lowering prices, which Schwartz calls an “uninspired business model.”
A better alternative is specialization. Finding a way to differentiate your product can ultimately lead to enhanced business results “because you’ll have an easier time focusing and striving for improvement.”
The niche you develop may appeal to a smaller market, but in all likelihood you’ll have a lock on that market.
A willingness to refer customers to another business (if and when they’re in a better position to meet those customers’ needs) builds goodwill and respect among your customer base. “That respect will likely lead them back to you when they have needs that align with your specialty,” Schwartz notes. A like-minded competitor will return the favor and, upon occasion, refer people to you.
When you can establish a cooperative relationship with a competitor, many surprising things can happen. Sharing information can generate more effective and cost-efficient ways to do business and save money—always a win-win.
Your customers will benefit from improvements in products and services that come about as a result of positive intra-industry relationships. As Schwartz notes, “these improvements benefit the companies, which invariably find loyal customers through this process.”
He cites cases of business owners who pair up with similar companies to offer training and educational sessions on issues related to their businesses.
For example, two financial planners co-sponsor a seminar on retirement planning. One business owner focuses on which accounts to open to minimize tax burdens, while the other discusses long-term care insurance. In this case, it’s unlikely one financial planner took customers away from the other.
“Instead, they both gained exposure that they might not have received if they hadn’t worked together,” which can eventually lead to increased business for each one.
The global economy has forever changed the way we do business. The more competitors you have in your space, the more you can work as an industry to increase demand. With enlightened competitors, it’s possible to collaborate in ways that benefit your customers and enable your business to grow.
Wherever possible, look for ways to move beyond a “Me-Against-Them” business model and see how working with a competitor can benefit you both.
How can you work with a competitor to grow your business?
Thanks to Smallbusiness.co.uk for the image.
