Should I research my competitors?

We are working on our three-year strategy, and realise that we have lousy information about our competitors. What should we do?

I don’t think anyone would argue with me when I say that a business needs to have a good understanding of its competitors, but in truth very few SMEs do.

I was reminded of this last week at a planning day for a client. We were talking about the competitive environment of the business and the management team were sharing their knowledge about the company’s competitors. I think it’s fair to say that the information they presented was largely anecdotal and generously embellished with personal opinion!

This wouldn’t matter except that the business was using this type of information when making strategic, pricing, positioning and people decisions. And they are not alone. Many SMEs are using lousy competitor information for decision making (especially when it comes to pricing), and relying on knowledge that they have tripped over in the normal course of business, rather than information they have actually, and actively, gone out to find.

Businesses that are disciplined about scanning the competitive landscape give themselves a huge advantage, and it’s not hard to do. It’s really about deciding what information you want to collect and then regularly seeking it out and reporting back.

One business I know gives each member of the management team a competitor to track. To keep the investigation focused the team members have 13 pre-agreed topics to seek information about and twice a year the team gets together to explicitly share the information. Of course important developments are shared as and when they occur.

You can do this too. To give you a hand, here are some suggested topics to find information about, grouped together under themes:

Information about the product:

• product portfolio
• pricing policy
• promotional campaigns

Information about the customers:

• customer perceptions
• customer loyalty
• brand reputation

Information about the business:

• financial performance
• financial structure
• supplier relationships and economies of scale
• distribution channels
• number of employees
• investment in training
• investment in product development

Clearly some of this information is hard to get a hold of and the point is not to turn your employees into undercover detectives but rather to encourage them to keep their eyes and ears open for particular information. It will also take time for this information to bubble up so it’s important to keep the project running continuously and not just make it a one-off.

The point about giving each person in the management team responsibility for a competitor is not only to ensure the job gets done, but also to provide a central place for everyone in the business to take competitor information to. It’s so much more valuable to funnel the information into the whole of the business than just share it with the water cooler and the chap from accounts.

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Julia Bickerstaff’s expertise is in helping businesses grow profitably. She runs two businesses: Butterfly Coaching, a small advisory firm with a unique approach to assisting SMEs with profitable growth; and The Business Bakery, which helps kitchen table tycoons build their best businesses. Julia is the author of “How to Bake a Business” and was previously a partner at Deloitte. She is a chartered accountant and has a degree in economics from The London School of Economics (London University).