The idea of reaching out to your competitors might be the last thing on your mind. After all, you’re vying for the same customers. What if you unintentionally reveal a key strategy—or worse, end up comparing yourself to them and start doubting your own abilities?
Any entrepreneur who has striven to build a business knows that the secret is in hard work and execution, not only in the secret sauce. You also know that, even though your competitors may offer essentially the same product or service as you, there are inherent differences between them. That's where the opportunities for alliances exist. There is even an industry buzzword for it now: “Coopetition.”
Win-Win Solutions
Coopetition represents a beneficial aspect of capitalism, where competitors can coexist and thrive within the market. Often, there is ample space for multiple players to offer similar products or services, each catering to different segments of the customer base. Some offerings may perfectly suit one group, while others are better tailored to meet the needs of another, creating a dynamic and diverse marketplace.
In many cases, companies provide slightly different versions of the same products or services. While the distinctions may be subtle, there's no need to engage in a fierce rivalry akin to Coca-Cola vs. Pepsi or McDonald’s vs. Burger King. Instead, focus on standing out in your own way. Think more along the lines of the value your customers are buying from you, and set out to mix the competitive with the complementary. Rivals Apple and Samsung pooled some of their technologies to become titans of the cellphone industry. DHL and UPS struck a mutually beneficial deal where the former paid the latter to ship packages using extra room UPS had on its planes.
The more I thought about that, the more I understood the needs of specific customers and how to best serve them by working with others in my industry. At Butter Beans, our healthy school lunch service, our type of customer is keen on convenience and menu variety. Other service providers may see a different value proposition, like how quickly lunch can be eaten.
Winning with Camaraderie
When meeting with prospective clients, I can glean what is important to them in the first one or two conversations. I might feel a service like lunch-food provider Red Rabbit is a better fit. I have told prospective customers this, and saved us all a bunch of time. Red Rabbit did the same for us. They did not provide lunch servers with their offer and we did. If Red Rabbit met a prospect that wanted lunch servers they would suggest considering Butter Beans. As a result, we both benefited from our competitive camaraderie.
How do you achieve mutual support and respect? Take time to build relationships, an approach that can have significant benefits for you. Here are five reasons why I recommend getting to know your competitors:
Learning From Each Other
At the urging of an advisor in the early stages of building my first business, I got to know my competitors. I saw them from time to time at RFP pitch presentations and trade shows, and eventually became friendly enough to enjoy lunch with some of them.
One day, my insurance broker called with alarming news: my insurance company was either going to increase my premiums by tenfold or cancel my coverage altogether. I was stunned. The issue? We had recently started offering cooking classes, and the insurer wasn’t willing to cover that aspect of our business.
After pulling myself together, I called one of my competitors to ask him who his broker was and who he had for insurance. He gave me the info and within a week, I had a new broker and new insurance at a much cheaper cost than my previous company quoted.
He was in the same industry and willing to share information that would help our company. I have never forgotten how much I appreciated his help that day.
Sharing Resources
You can’t do it alone, so use what you have. Remember to ask for advice when you need it — and who better to help than someone who has been through this before.
Many businesses face seasonal fluctuations or require part-time staff for various reasons. This often means they can’t provide full-time work to their top employees, risking losing them to companies offering more consistent hours. However, there’s a smarter solution: collaborate with your competitors. By sharing employees during downtime, you can create a win-win situation that benefits both businesses and workers alike.
Just make sure you have an agreement not to “steal” each other’s staff, or ideas, and this can work well. There may be other resources, such as delivery vehicles, that you can also share to cut costs.
One Good Deed Deserves Another
As I relayed earlier in this article, friendly competitors can be a great source of leads. I routinely receive two or three leads a year from competitors who came across prospective clients that fit the Butter Beans mold better than their own.
The other school lunch vendors are happy to recommend a service they trust, since they still want to be helpful.
There are plenty of times when I did the same. If a prospect called me for a quote and I could tell from the conversation that they really wanted to go with another firm, but needed a certain number of quotes to award a contract, I was happy to provide them with information to help.
Once you figure out your ideal client attributes, you’ll recognize them when they come your way, and they’ll recognize your value. At that point, it is about finding the best way forward to support each other.
Growing the Industry Together
Industries evolve over time. Improvements, efficiencies and enhanced quality make things better every year.
I invited my competitors to see our operations at client sites and they invited me to tour theirs. We were able to learn from each other, grow our best practices, and make things better for ourselves and our customers. You may even decide to do a joint venture, create new software, strengthen standards and other industry game-changing activity.
A Definitive Approach to Cultivating Meaningful Relationships
As you grow and operate your business you develop short-, medium-, and long-term goals. If you decide to become larger, you may be searching for an acquisition at some point.
If you’re looking to exit, you may be searching for a buyer. By having strong relationships with your competition, you can size up if any of them would be useful in these scenarios — if not for a transaction, then for support.
I hope these examples are helpful to you in figuring out how “coopetition” may work for you. The moral of this story is to get to know your competitors and realize that you can be stronger together!
Belinda DiGiambattista is a serial entrepreneur, business coach, and outsourced financial controller, and can be found at www.belindadi.com
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