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Why Staying Close to Your Competitors is Essential

10/14/2015 06:17 EDT | Updated 10/14/2016 05:12 EDT
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In The Godfather (1972), Don Michael Corleone offered sage advice to his mobster colleagues in the midst of a large turf war: "Keep your friends close but your enemies closer." It's a phrase that has endured in all walks of life.

Implementing a marketing campaign to win new customers has often been likened to waging a war with all its inherent strategies designed to vanquish one's competitors, often at any cost.

In today's competitive business arena, there are many good reasons to stay close and often collaborate with your competitors -- as long as you find your niche and stick to it. Leaders in many industries are locked in mortal combat to gain market share and boost their company's share price. But many know one another personally and often get together at conferences and socially to talk a bit of shop and share insights about their industry to their mutual benefit.

Here are five reasons to keep in touch with your competitors:

#1: You may be better able to help your clients meet their needs.

I have several strategic alliances with some competitors and often work with them on large projects where a client relies on our expertise equally. In 30 years, I have never had a bad experience and will refer clients to other consultants when it serves the needs of the client. When you put a client's goals before your own, you are often rewarded through referrals or more work from the client as you have earned their trust. Lawyers, accountants and other practicing professionals can enhance their reputation if they refer a client to a competitor who specializes in an area that is not in their wheelhouse. Referring clients can be a two-way street and while there are no guarantees, making qualified referrals on behalf of your competition can only create good will.

#2: Compare strategic notes about corporate culture.

Gaining an understanding of your competitors' corporate culture and management's leadership style (and effectiveness) can help you enhance your corporate culture and leadership style. You can also learn what motivates teams (and what doesn't) before you make moves yourself. For example, if your biggest competitors are reducing employee turnover by using a new spin on telecommuting, take note and consider it for your organization.

#3: You need to know your competitors and what they are selling.

This will keep you proactive in your service offering versus reactive (which can make you very late to market). You can do this by encouraging your team to monitor their social media activity, and track their media coverage, product reviews by users, and product announcements. Attend their conferences and public speeches and stay informed at all times.

A great example of a situation where a company was blindsided by a competitor is the Nokia/Apple situation. Before entering the mobile handset space, Apple was viewed as a personal computer maker, but they were able to broaden their product offering with surprising agility. You have to be aware of your competitors in a broad sense so you don't underestimate a competitor's ability to change course quickly and challenge you unexpectedly.

#4: Industry members need to offer one voice.

Should legislators offer proposed changes that could hurt industry participants, it will be much easier to speak in one voice and leverage strength in numbers if you are on good terms with your competitors. Getting active in industry associations is a good way to keep an eye on your competitors and possibly identify shared opportunities that may arise in the community sponsorship arena, for example. This can boost the public's acceptance of your collective industry. Selectively sharing information to your mutual benefit can also help strengthen the industry. Even in a hyper-competitive business arena, a give and take approach shared by competitors still has a place.

#5: You can often avoid being blindsided or low-balled

There is a good chance that, despite working together on certain aspects of business prospecting and industry initiatives, your competitors won't play fair. It's not that they are all flawed, they may simply see doing business differently from you. This can involve undercutting, spreading rumours about you or your organization, and stealing employees and customers. It was ever thus. It can sometimes be hard to detect who is a potential alliance and who is out to vanquish you. That's where your allies in the industry (including your vendors) can be helpful.

In business, it is never wise to burn a bridge. Who knows? You may one day purchase a competitor's business -- or vice versa.

While you don't want to give away competitive information, positioning yourself and your company as principled and collaborative will go far in attracting (and retaining) the kind of employees you want on your team.

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