For any business it's important to know the competition. These are the companies that take business from you, that undermine your relationship with partners, that help shape the perception of your industry in the minds of your target clients...  These are important organizations to identify and keep tabs on.

[Cautionary Note:  Some organizations that I've worked with have a tendency to use their larger competitors as the driving factor in the shaping of their own company.  I see this as a problem – if you really are just looking to be the 'cheaper version of company x' than go for it I guess, but I don't really think that this approach is going to be successful in the long-term.  I think it's important for any organization to set their own tone, to build their own identity and not just to copy their competition.]

As I mentioned above, there are a number of reasons why it's a good idea to know who your competitors really are and keep updated on what they are up to in the market.  Here are a few reasons that come to mind immediately (there are many more):

1. Knowing how your competition sells can help you understand how you (or could) differentiate yourself in the market
2. Understanding who your competitions' profile clients are can help you make decisions about your own profile clients
3. You can learn from their successes or failures – failure and success are both part of every business, but if you can learn from someone else's failure all the better
4. Recognizing where you win and where you lose against certain competition can help you fine-tune your investments in things like marketing programs and materials

Understanding your competition is a fairly introspective activity as you need to be exceedingly honest with yourself and your team.  There can be a tendency to blame non-competitive factors for a lost sale in order to protect the ego of the people involved, but that doesn't help your company in the long run.  We need to be very honest with ourselves if we are going to gather data that is useful and will, hopefully, lead to a future in which we lose far less often.

How to Identify and Start Tracking the Competition

The first step is simple – make a list.  Include anyone that you feel has competed with you on projects or sales efforts.  Make the list by project or deal and include the competitor's name, the prospect's name, the position of the buyer, the type of buyer (price, value, etc.), the nature of the project, the geographic region, outcome, and impact of the competition.

Depending on your organization and the industry in which you operate, it might be a very short list (ex. commercial airplane manufacturing) or quite long (regional convenience stores).  The size doesn't matter – what matters is the completeness.  You want as many of your competitors listed as possible.

Once you get the names of the organizations (or people) on the list you will need to go back and update the rest of the deal information as it will be very useful as you work to understand your true competition.  Impact is a particularly big issue.  If you won the project, but the competitor cost you 50% of the margin because you had to lower your cost...  That's pretty damn important...

Once this initial list is created you should go back and start building a dossier on each competitor –  ask some questions and note the answers.  Who seems to be their profile client?  How do they position themselves in the market?  What makes you different from them?  Are there ideas, positions, processes, etc. that you can learn from (positive or negative)?  Where do they operate geographically?  Who to they sell to in their target accounts (c-level, directors, purchasing managers, etc.)?

After you have a handle on your current competition and have answered some questions for yourself you should put in place a mechanism for tracking your future success (or failure) against your competitors.  If you have a CRM solution in place, the best way to do this is to take advantage of the competition tracking features of the CRM – you will typically be able to associate one or more competitors with individual opportunities.  Tracking this accurately should be fairly easy for the sales team once it's set up in the CRM, and capturing this information (along with the outcomes and after-sale debriefing feedback) will help to keep you ahead of the competition.

Periodically it is also good to take a look at your competitions websites and marketing material – things change over time and understanding your competitions' direction and sales strategy will be important.

You should also keep this information handy and go through your findings with both your sales team and any executive committees or client councils that you have in place.  Identifying and tracking your competition can be a very insightful exercise and is critical for fine-tuning both sales and marketing efforts.

Remember – don't let your competition define your business, but don't ignore them either.  You can learn from your competition, whether you win or lose against them, and you can benefit from both their successes and failures.  Also, prospects are looking for an opportunity to compare in order to help them judge worth – if you don't understand how you should be valued and positioned in relation to your competition, the prospect probably won't understand either.

Alex Crittenden