I received a great question from Karen about how to best handle when a competitor goes out of business. Here's the question:
Chuck,
The nearest competitor to us closed on Monday. Is there any way we can capitalize on her closing without appearing as over zealous or gloating . How or what should we advertise to capitalize on the closing? Or so we just let nature take its course.
Thanks,
Karen
This can be a difficult situation since you certainly don't want to come off as happy that your competitor has failed because you want to make their customers comfortable with choosing you as the alternative. Here is my answer to Karen:
Hi Karen,
When a competitor goes out of business is certainly no time for gloating. Besides the obvious fact that someone just had to give up on their own dream business, there's the loyal customers who had invested a lot of time and money with this business because they either like the service, the products, or the owners. Sensitivity is key, but you definitely want to make these customers start to love your business just as much.
Here's what I would suggest:
- Make an honest appraisal about all the good things about your failed competitor's business. Why did customers enjoy going to that business instead of yours? Are there things that you can learn from and modify for your business? Think about the physical environment, the product and service selection, and their customer service.
- Try to determine the cause for their failure. Was it poor finances or management? Bad product or service selection? Shoddy customer service? If some of these were factors in the business failure, then can you use these (in a tasteful manner) to craft your own marketing messages or improve your business?
- Were you friendly, or at least cordial, with the business owners? If so, there may be a way to approach them to discuss the best way to help their customers find alternatives, and hopefully your business. This would have to be handled with a lot of sensitivity and tact, but if the business closed for reasons other than economic – perhaps they were just tired of running a business – then it may be possible. Just be careful and empathetic.
- Try to determine how the failed business used to attract customers and browsers. If there is a local newspaper or other advertising vehicle (cable access, radio, coupons, etc.), the other business used, then take a look at the pricing and whether it makes sense for your business.
- Think of a way to get in to the local newspaper with a new product or service, or a special event. If you could pull together some kind of special event around a charity or a holiday quilting class, it would give you an opportunity and reason to talk to your local business editor about the competitor's closing (bringing in how the economy is affecting local businesses) and how you would love to welcome customers to your business. You could even write up an article yourself so you get across what you want to say. They will probably re-write it, but at least you will give them a starting point.
- Poll your customers (do you have a mailing list or email list?) about what you can do to make the customers from the other business more comfortable, and how you can improve your business. It's a great time to bond with your list, and many of your customers may know people who frequented the other business. Let your community know that everyone is welcome, and you will be doing your best to make your business even better now that you're the only game in town.
- You could have a special discount sale for customers coming from the other store. Of course, you want to make sure you have a sale for your existing customers as well so they don't feel left out. Have some fun with it, and make sure everyone feels welcome.
- Try to get referrals. You can ask people if they know of customers of the other business. Let them know that you're doing everything you can to make sure the needs of the quilting community in your area are being taken care of to the best of your ability. If you want, give them an incentive to refer new customers (a good idea any time) by giving out cards they can sign and hand out. When someone brings one in, the referrer gets some kind of discount or points towards some small item.
- Just work on making your business the best possible. Provide excellent customer service and listen to the needs of your customers. When you deliver an outstanding experience for the customer, they will be more likely to spread the good word about you and your business.
When a competitor fails, it can be a great opportunity to pick up new business, but you're right in being cautious. Don't ever bad-mouth the failed competitor, and always show sympathy. Word gets around about a poor attitude, so you definitely want to err on the side of being empathetic and supportive.
Good luck, and here's hoping you have even more success.
Chuck
I hope this helps anyone who has suddenly found themselves with a little less competition.
Chuck
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