Believe it or not, a relatively large school of thought subscribes to the idea that ignoring your competitors is a smart play. In fact, a staggering 28% of companies proclaim that they aren’t carrying out any formal competitor research at all, which means they are 100% focused on their own operations, unconcerned with the developments and activities of their rivals.
The general reasoning for this “tunnel-visioned” approach is that by focusing on your competitors, you will probably be wasting valuable resources that could be better spent elsewhere. Another argument is that you should spend the vast majority of your time getting to know your own customer base and not your competitors’.
While both of these points do contain some degree of logic, the fact of the matter is that carrying out frequent company research and having a deep understanding of everything happening in your industry is a pivotal aspect of running a successful business.
Buyers only have so much attention that they can invest in deciding whom to patronize, and if you aren’t able to be more visible than others, presenting a clear argument for why they should work with you, then you’re leaving money on the table. And to accomplish that, you need to know what the other firms in your space are up to.
If you’re still not convinced, here are a few of the main consequences of ignoring your competition.
You will concede a competitive advantage
If you have been fortunate enough to earn a competitive advantage, you might be tempted to rest on your laurels. But if you’re not keeping an eye on the competition, all the gains you’ve made can disappear in a moment. Remember, we all know plenty of cautionary tales about industry leaders defeated by the competition because they weren’t paying attention.
Just take a look at Kodak. It was the first brand to make photography accessible to everyday people, which led them to become a household name for pretty much everything photography-related. Unfortunately, while they enjoyed their success, other companies innovated digital photography, which eventually led to Kodak’s demise.
Dell is another company that started out as a pioneer in its field, quickly rising above IBM and Hewlett-Packard to sell computers directly to consumers. However, they failed to pay attention to the mobile trend, which has since taken over. This failure to react dynamically to the market and their main competitors cost Dell severely. Fortunately for them, a recent pivot towards enterprise technology and facilitating the infrastructure for data centers has brought them back to the forefront of the tech space.
According to a recent essay about Dell by Salesforce founder Marc Benioff, all of this recent success can be boiled down to one fact; that Michael Dell managed to “correctly read where the technology industry was headed at the decisive moment.” Of course, the only way for him to do that was to pay very close attention to his competitors so he could see where Dell’s strengths and weaknesses lay and where they could differentiate, subsequently allowing the company to capitalize on the shortcomings of their rivals.
And of course, who could forget the time when a Blackberry was the ultimate high-tech status symbol? Unfortunately for them, this didn’t last long, as other companies effectively bested them with the development of touch screens and apps, while Blackberry failed to match their closest rivals in terms of innovation.
Even if you feel as though you are comfortable with where your business is at right now, the truth is that sitting on your hands won’t keep you there forever. As the old adage goes, “If you aren’t moving forward, you’re going backwards.” Carrying out detailed company research is a fantastic way to keep that spot you worked so hard for by continuing to move forward.
You may miss out on important industry trends
Even pre-pandemic, advancing technology has fueled lightning-fast changes in consumer habits in almost every industry. Then came along Covid-19, which kicked such evolutions into an even higher gear. In just a few short months after the virus first started to spread, we saw huge changes in consumer behavior across all spheres of life, resulting in a surge in e-commerce, changing brand preferences, and higher unemployment.
Of course, staying on top of these trends has never been more challenging, yet more essential to success. Thus, failing to research your competitors to see how they manage these changes could prove a very costly mistake. Since you will not be able to see the impact new industry trends have on their business models and how they engage with customers, you will have no choice but to rely on internal data, which is problematic for several reasons.
While it’s true that simply monitoring your own customer base can yield a wealth of insights into current trends, nowadays, that simply isn’t enough. That’s because internal data is a closed loop that can’t help you identify the best way to capitalize on these trends. For that, you need to keep an eye on what your competitors are doing. After all, if you’re aware of what they’re selling or providing to their customers, and how they’re handling fulfillment and service, it frees you to prepare an effective strategy to counteract theirs.
You lose the opportunity to learn from your others’ mistakes and successes
“Learn from the mistakes of others. You can’t live long enough to make them all yourself,” Eleanor Roosevelt famously quipped.
No matter how confident you are in your operations or how much success you have already achieved, learning from your competitors’ mistakes is one of the best ways to avoid making them yourself. Even indirect competitors that aren’t actively participating in your industry can provide useful insights into things that should be avoided, just as long as you are willing to pay attention.
Let’s take the response to Covid-19 as an example again. Looking at other companies and how their consumers have responded to their activities is a fantastic way to gauge what may or may not work for your business.
Suppose failing to switch to digital sales has left your biggest competitor without any real means to generate revenue while their physical stores are closed. In that case, you have a huge opportunity to seize a competitive advantage by capitalizing on their mistake and focusing your efforts on acquiring their declining share of the market while providing more value to your existing customer base.
The SEO and content strategy of your competitors is another area you could learn from. What keywords are they using to rank in search? Are these keywords effective? If not, then you’ve just avoided throwing valuable time and resources down the drain.
What kind of content do they post on their website? Does it attract plenty of organic traffic, or not? If not, you can use that knowledge to guide you in posting content that’s more attractive to your audience.
And it’s not just small mistakes that matter. Take a look at the large-scale failures, too. Do some research on companies in your sector that have recently gone belly-up. What can you learn from their story? This knowledge is especially valuable in light of the fact that 32% of publicly-traded companies now fail within the first five years of listing, as opposed to only 5% back in the 1970s.
Despite the naysayers, carrying out effective company research is one of the fundamental aspects of running a successful business. This is because failing to keep an eye on your competitors (and the industry as a whole) can come with various consequences, such as conceding your competitive advantage and losing the opportunity to learn from their mistakes.
Above all, you should always keep a close watch on your rivals’ activity so that you can react more quickly to changes in the market while continuously improving your operations.