How To Compete With Large Competitors

[TreyAllDay]

Hello Everyone,

We often find ourselves in these situations where we're facing competitors with much larger budgets, staff, and general resources. However, personally I've tried to rewire my thinking to seek out opportunities that my large competitors might be missing.

What are some of your favorite methods for competing against larger competitors, and what advice can we give to our fellow entrepreneurs looking to enter competitive markets?

 

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[Thomas Baptiste]

THIS is huge! I'm actually facing this exact problem everyday under my current internship. I work for a relatively young telecommunications company. On island there are 2 HUGE telecommunications companies that basically have a monopoly on the market. The mentality here is that it's impossible to compete with those 2 big boys, but we're actually doing it. Our main competitive advantage is the level of our customer service.
Everyone on island at this point knows how poor customer service is from the big boys, and here we are giving really exceptional service. It really surprised me to see weekly numbers improve over the past couple of weeks. After some new equipment went up, and we were able to provide service to a new area, people dropped the big boys to use our service. Part of it is keeping the customer happy and part is playing on the weaknesses of the competition.

Regardless, i'm interested to see the process of others that had a difficult time converting leads (especially those that were already using the service of a competitor).

 

[TreyAllDay]

Awesome to hear @Thomas Baptiste.

In my experience - one of the biggest advantages any new entrepreneur/business needs to be aware of during the starting years is:

AGILITY!!!!

I think this ties into what we all know:

Successful businesses aren't built on IDEAS, they're built on strong execution. Smaller businesses can't compete solely on "ideas" because, once an idea gets big enough larger competitors will just put their massive resources into it.

But you can out-execute them by being agile.

Just an example: a newer company I worked for was agile enough that it gave it's phone-order staff full autonomy to solve any customer's problem by any means. It's larger competitor had an escalation process that took days/weeks and customers were sick of it.

Even now - I am trying out new content on my website to catch search trends of potential customers. My larger competitors can't do that.

 

[Real Deal Denver]

There are only 3 ways that I have ever utilized that seemed to work.

1) Be better. Often times I had to raise my prices to offer a superior service, which I did. I was pleased to find that there is a market that will pay extra for better service.

2) Be cheaper. I hate this tactic. But I will say it's a useful tool to get customer's attention. @Johnny boy has a fantastic thread about lawn mowing. He advertises a cheap rate, but everyone ends up with a more deluxe package. I can see using it as a lever so the customers discover what they want is not actually the cheapest option anyway. If Johnny can do this with lawn mowing well, I think it could be adapted to almost anything. If someone does take the cheap option, make it very enticing for them to trade up. They won't be looking at the total price, only the difference of what they could have. And eventually most of them will realize that, hey for only a few bucks more they can get the package they really wanted in the first place.

3) Out-market them. This one I absolutely love, and am well familiar with it. There is usually enough business for everyone. In other words, there is no King Kong that is going to take ALL the business and leave nothing left over. I compete with some true idiots. The reason they get business is simply because they are out there shaking the bushes and making noise. They get attention. It's very true that it's a numbers game. The more you talk to, the better your chances are. I am also going up some VERY qualified people in my business that are excellent at what they do. Hard to compete against that - but I am. I have implemented a CRM marketing campaign, and guess what - it's working! It takes several "touches" to clients to become familiar to them. I don't just touch them though. I make my touches very worthwhile. I impress them with some valuable knowledge that they can use - and I do it in a classy way that makes them stop and notice it. My competitors are good, so they don't feel the need to do this - and they don't. They sit on their butts and think they're untouchable. Nobody is untouchable. Giants have always stumbled. Look at Sears, IBM, Xerox, the ENTIRE US auto industry, K-Mart, Woolworth's, RCA, Kodak - the list goes on and on and on. They all were more or less out-marketed. They didn't stay nimble and keep up with their customer wants. My marketing is not bland talking that says nothing interesting. I say something that makes people think. My favorite example of this is when I buy mayonnaise. One brand has "real mayonnaise" on their label. I love it. They are making their competition look bad. I don't know what the difference is, but they have planted a bit of doubt in me - so I buy THEIR product! It works! On a crowded shelf full of the same product - they stand out! I don't know if it's still true, but Budweiser used to be the number one beer. Maybe they still are? They sure weren't the best - but they did a bang up job of marketing. That must have worked because they were number one for a very long time - maybe still are...

One more tactic that I am launching this week - and it WILL work. I am only doing this for the very plum big accounts that I want to break into. I am giving them TOTALLY free service to try me out. I want to PROVE what I can do for them. All I am asking for is a chance. I am telling them that if I'm not better than what they have now - fine - now they know they have the best. BUT - if I'm right, which I'm betting I am - then they have everything to gain, and nothing to lose.

These are very tough accounts to break into. I have tried many ways, over a long time. We'll see how it goes. Sometimes you just have to put on the gloves and step into the ring. I don't want to do things this way - but the rewards will be worth it if it works out. Of course, you have to be DAMN SURE you ARE better than your competitor before getting into the ring. I do not sulk away quietly... I go for the gusto! (That's an advertising slogan, but I can't remember from where...)

You can make remarkable progress if you go at it slow and steady. Keep up your efforts on multiple fronts. Sooner or later, results will start to trickle in. Everything adds up. Never stop marketing. Set aside time for it each day. It is the life blood of your business!

 

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[TreyAllDay]

You can make remarkable progress if you go at it slow and steady. Keep up your efforts on multiple fronts. Sooner or later, results will start to trickle in. Everything adds up. Never stop marketing. Set aside time for it each day. It is the life blood of your business!

View attachment 22891

This is all AWESOME info!

I agree with you on being better, honestly - if you are simply better and develop a productocracy, competing and advertising don't matter anymore. This is my end goal.

For this reason, I am doing something similar - offering a "Free" version of my software with limited features, and I am very sure that people will begin telling their friends OR upgrading once they hit their limits. Just need to get your products in the right hands and show you are better.

 

[TreyAllDay]

And just another note - I had just posted in another thread about how I've used price to find a niche.

We offer our product (software) for about 50% less than competitors - our competitors charge thousands more because they package the product with rollout plans, implementation managers, training sessions for the company, etc. All the bells and whistles - we found a large customer base that does not want or need that, they want to do it themselves on their own time.

 

[Get Right]

I compete with the big guys a lot. I ask my potential clients how long it will take for the CEO of "big company" to call them back. BTW - Here is my cell number.

 

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[Sanj Modha]

Don't overestimate your competition and underestimate yourself.

I run and manage a lot of e-commerce stores but I don't see Amazon as my competition. You know why? They don't buy ads on FB or Adwords like I do.

My competition is the newsfeed and Google Shopping. I honestly don't lose sleep over Amazon and I've never seen Mark Cuban worry about e-commerce pitches on Shark Tank because of Amazon either.

That being said there's a lot you can do that your competition can't such as a personalized service, custom made, hand made, customer service with a real person vs generic email responses and so on.

 

[Sanj Modha]

I compete with the big guys a lot. I ask my potential clients how long it will take for the CEO of "big company" to call them back. BTW - Here is my cell number.

Yep, no big CEO will do this.

 

[Frank H.]

Good posts! In my opinion, big business = scared business. They are afraid to take risks and apologize immediately if they irk a few of their customers. Gillette is a textbook example of this.

 

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[0dysseus]

There you go. When you're small, make size an advantage.

Check out Paul Graham's blog, he talks a lot about these things if I remember correctly, and he's been around the block a few times.

 

[Fabio1]

@Frank H, what do you mean with Gilette as a textbook example? I read that they're also one of the examples of big companies that lost a big portion of their online marketshare to the Dollar Shave Club due to price and marketing.

Are there other examples of small companies poking the big bear?

I'd like to tell you some good examples from the Netherlands. There's a REALLY GOOD entrepreneur who's made his hobby out of poking the bear. His name is Michiel Muller and he's very successful in making big companies feel uncomfortable when he's entering their markets.

He entered the competion with all the big, billion dollars earning oil companies like Shell by introducing unmanned petrol stations (don't know if this is an English word). All the people around him said "don't do it, they're too powerful. They have the best lawyers and it's just not possible. Despite all the well-meanted advices he accepted the challenge.....with success. At the end of 2017 the 190th petrol station opened his doors.

The next challenge was entering the market of a road assistance company. There was only one in the Netherlands so they had a monopoly position. Not anymore. They lost hundreds of thousands customers due to Unkle Muller entering the market.

His latest project is Picnic, an online company where you can order your groceries and they deliver them at home. This market was dominated by the two biggest grocery stores in the Netherlands. He started out of the blue in 2015 and at the end of 2017 his company made a revenue of more than 100 million euro and created more than 9000 jobs.

So in every market he enters, the ground starts shaking. He is the living example that proves that's possible to enter EVERY market, no matter how big. How? By looking very close to the NEEDS of the customer and taking advanatge of the weak points of his competitors.

If you want, I'll try to make a list of the specific tactics that he used in the examples above.

Here's a little movie in which he tries to encourage people to take action and DO something. Maybe the place where you end up is not you're desired final destination, but it increases the chance of discovering new opportunities.

Sorry for the bad English, but i'm working on it.

View: https://www.youtube.com/watch?v=k5-rAL73msg

 

[GuestUser4aMPs1]

Some things come to mind.

- Find out what complaints your competitors' customers have about their offer (i.e. slow customer support, software is unstable, etc.) Solve those complaints.

- Find out what competitors aren't doing that repels customers from buying (i.e. missing core features, etc.) Do that.

- Look across industries to see if another industry's offering can ultimately solve the problems of another (i.e. Let's say your customer is an executive, and their problem is they're miserably disorganized. One solution could be project management software, another could be a personal assistant). If it's compelling enough to cross pollinate across industries, then introduce a product or service that combines those offers.

- Solve problems customers didn't even know they had.

 

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[Ernie McCracken]

Service. My water heater went out a couple weeks ago. The large local plumbing chain didn't answer the phone, took 4 days to come out, looked at it for 5 minutes, and charged me $200 to tell me they could come back and put a new one in "sometime late next week." Another solid week of ICE COLD showers in January was the best they could offer.

I called a local one man operation that I found on YELP. He picked up the phone, told me it would cost $1900 (OUCH), but he could get it done within 24 hours. Sold. He easily made $1200+ gross margin in 2 hours.

 

[Frank H.]

@Frank H, what do you mean with Gilette as a textbook example? I read that they're also one of the examples of big companies that lost a big portion of their online marketshare to the Dollar Shave Club due to price and marketing.

Are there other examples of small companies poking the big bear?

I'd like to tell you some good examples from the Netherlands. There's a REALLY GOOD entrepreneur who's made his hobby out of poking the bear. His name is Michiel Muller and he's very successful in making big companies feel uncomfortable when he's entering their markets.

He entered the competion with all the big, billion dollars earning oil companies like Shell by introducing unmanned petrol stations (don't know if this is an English word). All the people around him said "don't do it, they're too powerful. They have the best lawyers and it's just not possible. Despite all the well-meanted advices he accepted the challenge.....with success. At the end of 2017 the 190th petrol station opened his doors.

The next challenge was entering the market of a road assistance company. There was only one in the Netherlands so they had a monopoly position. Not anymore. They lost hundreds of thousands customers due to Unkle Muller entering the market.

His latest project is Picnic, an online company where you can order your groceries and they deliver them at home. This market was dominated by the two biggest grocery stores in the Netherlands. He started out of the blue in 2015 and at the end of 2017 his company made a revenue of more than 100 million euro and created more than 9000 jobs.

So in every market he enters, the ground starts shaking. He is the living example that proves that's possible to enter EVERY market, no matter how big. How? By looking very close to the NEEDS of the customer and taking advanatge of the weak points of his competitors.

If you want, I'll try to make a list of the specific tactics that he used in the examples above.

Here's a little movie in which he tries to encourage people to take action and DO something. Maybe the place where you end up is not you're desired final destination, but it increases the chance of discovering new opportunities.

Sorry for the bad English, but i'm working on it.

View: https://www.youtube.com/watch?v=k5-rAL73msg

Thank you for the informative post! It was interesting to learn about Michiel Muller and his accomplishments. I'm always rooting for the longshot underdog like him. Are there any other interviews with him or autobiographies? If not, do you know of any other low key entrepreneurs that share how they became successful? Lately I have been listening to interviews with successful entrepreneurs and they share incredible wisdom and philosophy about financial freedom, purpose and habits.
Furthermore, I'm glad to hear that he followed the commandment of listening to the needs of others and not oneself.

I am very interested in hearing the tactics that he used to compete with Shell and launch Picnic. Also good video, I liked how he talked about the importance of creativity, accepting unpredictability and taking risks.

 

[Fabio1]

@Frank H, yes, there are more interviews of him and he even wrote a few books, but unfortunately I assume they’re only in Dutch.


As promised something about his tactics to deal with the large competitors;


About the unmanned gas stations he’s very clear. He says it’s a simple concept using simple mathematics (where have I read that again?): manpower is very expensive, as well as the shop, the bulletproof counter and the required space. If we can cut these costs, we can make the gas cheaper (which will attract more customers).


But how to organize this big operation? He talked for example to technology companies and said “we don’t know anything about technology and we also don’t have money. But if you can develop the technology, we promise we’ll use a large number of them and secondly, you can use the same technology for other clients of yours (adding value for them also).


For the customers it was not only cheaper, but also faster; research showed namely that a normal refueling took 4 minutes, whereas refueling at an unmanned gas station only takes 1 minute. So they needed less pumps and less space and could easily position their stations in far more locations than a conventional gas station.


With regard to the road assistance company, they used an already existing company (Euro assistance) that focused only on other companies (b2b). Besides the formality of the contracts, the only thing he had to do was requesting a new phone number that lead to Euro Assistance. It’s all about using other companies as a leverage for your own.


The online grocery store was a very different story. It was the only market in which product were more expensive online than in real stores and people didn’t want to wait for the delivery and also didn’t want to pay for the delivery. After developing a way in which they could take away these main complaints of the customers, the advantages for the customers became their pitch “we deliver all products for the lowest price at home for free”. Which customer can say no to that? When opening their first “store”, within 24 hours 5000 people signed up. A golden shot at MJ’s gumball machine? Was it luck?


People could see it this way, but reality is that they took a calculated risk after doing proper homework. Organizing the logistics, finding good employees who can propagate the values of the company, creating the required software etc. was without any doubt a huge job.

Btw, their own logistics, software, people, supply chain etc……looks like it was important to have everything in control (where did I heard that before?)

To summarize his thoughts:

1 look for a business model and a niche

2 Make sure you are the best at something (hit them where it hurts, beat your competitor at its strongest point

3 Think big, start small and scale fast

4 Take advantage of subscription models

5 Know who your most profitable customers are and provide value for them

6 Work together ( synergistic effect)

7 Dare to make mistakes (if something permanently doesn’t work, stop, and try something else)

 

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[Kid]

Become large.