How to Keep from Losing Customers to Larger Competitors

September 8th, 2009 by | Print

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I know that one of your primary concerns as a solopreneur is, “How do I keep larger competitors from stealing my customers?”

 

Larger companies have benefits that can attract your customers’ attention and sometimes capture their business. They tend to have deeper pockets for more advertising and brand awareness. They often have a support team to service their customers’ needs – whereas you are a company of one. They have the perception of stability due to their size. They can create multiple products and services in the same amount of time that it often takes you to create just one.

 

These are all benefits – but not for everyone. In business, bigger isn’t always better. I know, I know, insert your own joke here. But, it is true that there are advantages to being a smaller solo enterprise.

 

What are some of your benefits as a solopreneur?

 

  • Quicker response times
  • Greater flexibility
  • Better individual attention

 

And your bigger rivals know this, so they will work hard to compete against you in each of these key categories often using the fear factor strategy with your customers saying that you are unreliable, unstable and unable to support the their many needs.

 

So what can you do to defend yourself, or better yet, go on the offensive?

 

Don’t Try to Play Their Game

Just because something worked for Goliath doesn’t mean that it will work for David. In one-on-one sports (boxing, MMA, fencing), the winning combatant often creates a game plan to maximize their strengths while taking advantage of their competitor’s weaknesses – and then sticks to their game plan. They stay focused and they don’t allow their competitor to bait them into a contest of competing at a game plan of their competitor’s strengths.

 

Perform a frequent review of how your larger, successful competitors conduct their business (their products and services, their pricing, their marketing, their USP), but don’t assume that their success is a formula for you to follow. They have a different set of strengths, weaknesses and circumstances than you do.

 

However, knowing how they compete will allow you to create effective strategies to take advantage of their weaknesses. And when you run into that customer that can’t make up their mind as to which company to go with, you will be able to provide an intelligent, definitive answer as to why doing business with you will benefit them.

 

So if you can’t beat them, don’t join them. Change the game. Often you will find that there are customers that have been waiting for new options that better fit their needs. How do you change the game? Define your USP.

 

 

Define Your USP

Since you are a solo entrepreneur competing against a company of many, you will (and should) be choosier about who you decide to support. How do you decide? It’s all based upon your well defined USP.

 

What is a USP? It is your Unique Selling Proposition. It’s what sets you apart from the pack to attract the proper customer base. It defines how you are uniquely qualified to solve the equally unique problems and needs of a specific niche of the larger market. Let your larger competitors have the rest.

 

Too often, solopreneurs want to grab whatever business they can by servicing the “everyone” market. This will dilute your uniqueness giving better odds for the bigger companies to steal your business.

 

Don’t know how to define your USP? I wrote a post titled, “Finding Your USP”.

 

 

Know Your Limits

I’m a big Clint Eastwood fan. As Dirty Harry in Magnum Force utters, “a man’s got to know his limitations”. If you set up your business right from the beginning, you took inventory of your strengths, weaknesses and bandwidth. You are an army of one competing against a larger force.

 

Now all successful entrepreneurs stretch their limits, stepping outside of their comfort zone. As a matter of fact, we often bite off more than we can chew and hope that we don’t choke. The key here is you should have a good sense of your limits. You know how much work you can get done in a given day. The math is easy, (1 person x 24 hours) – (family, paying bills, eating, sleeping, a little R&R) = total hours of productivity.

 

Create the greatest chances for success by not stretching yourself too thin. Here are some keys to maximizing your bandwidth:

 

  • focus on an appropriately sized customer base
  • stick to your core competency
  • be predominately strategic about the business that you want to capture and not opportunistic
  • when and where possible outsource and create joint ventures

 

 

Partner Up

Just because your legal classification is a sole proprietorship or a Single Member Limited Liability Company (SMLLC), doesn’t mean you can’t give your customers the service of a larger corporation. Unless you truly want to go solo (which I advise against), your best chances for success will come through two strategies:

 

  1. outsourcing your weaknesses
  2. creating joint ventures

 

We just finished discussing that you have less bandwidth than the bigger companies. You can improve your bandwidth by outsourcing your weaknesses. If your strengths are in sales and marketing and your weakness is accounting, why would you waste hours of your day trying to balance your books instead of handing them over to a pro? Sure it will cost you money, but so does wasting your time. How much time did you take away from marketing your company to new customers and closing new sales because you thought you had to save a few dollars doing your own accounting?

 

Are you losing business to bigger competitors because your customers are looking for a “one-stop-shop” that can service all of their needs? Trying to become an expert on all subjects is impossible. If your customers have more needs than you offer products and services for, find a company of similar size, values and market focus offering complimentary products and services to partner with; this is known as a joint venture (JV).

 

In the JV scenario, you will need to decide if you act as the general contractor so your customer has a single point of contact or if you simply pass your customer along to your JV partner. Whether out of fear or control, you may choose to act as the single point of contact, but realize that this will add extra work to your day, plus you get to play middle man on issues that you most likely will wish you weren’t in the middle of.

 

So how do you decide? Each scenario will be different. Your customer’s wishes combined with your trust factor of your JV partner and their previous performance will often be your guide. Hopefully, you will identify trustworthy and reliable JV partners and your customers will welcome the opportunity to work directly with them.

 

 

I know losing customers to larger competitors is one of the primary concerns of a solopreneur. However, it is only a danger if you don’t adapt and take advantage of the options and strengths that you have that are often weaknesses of the larger companies. If you do, you can turn the tables and take away customers that they can’t properly support.

 

All The Best,

Doug Dolan
The Solopreneur’s Guide

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