THE SECRET MARKET ANALYST
We know that owners of small businesses sometimes do not have all of the time in the world to go around to their competitors. Plus, some of your competitors probably don’t even want you in their stores, as you might be classified as a snooper…
It’s very important to know what is going on in those competitive businesses around you. You need to be subscribed to their email marketing, like their Facebook pages, follow them on social media, and know what sales they are running.
Let’s pretend you are a clothing boutique and that you have identified three pairs of jeans that are super trendy right now and you can’t keep them on your shelves long enough. Then, one day, you replenish your inventory, and now they just sit there. You know that some other boutiques in a 20-mile radius also sell those jeans. You need to find out if those jeans are selling with your competitors without walking into their locations and asking.
What we recommend is the secret market analyst. This is a friend or family member who doesn’t work with you and you send them to do your dirty work. You tell them the products, the features, the benefits, and educate them about those products to the highest standard of knowledge. Next, you send them into 3-5 stores and have them visually take notes or send yourself a text message without making associates at that store become cautious about you:
Compared to the home store (your store), where are the jeans located?
Is the product visible from the front door or entrance?
How is the price listed or tagged?
What is the price?
How many do they have in stock?
The ask a small subtle question, “So I really like these jeans and may have to come back, do you have them in stock often?” The purpose of this question is to show interest while asking to see how popular they are. Then grab something $3-5 and checkout.
Rinse and repeat and another 3-4 stores. Compensate this person with a gift certificate or store credit for what they spent at other places gathering the intel (under $25 preferably); and give them something at a discounted rate for their help. That is far more cheaper than hiring a firm to do it or wasting your most valuable asset – time.
Now take that information and execute. Let’s pretend based on 5 stores visited:
Your price is $48 and the competitor’s prices were $35, $36, $45, $50, $39.The average price was $41 which becomes the average market price (AMP).You are $7 higher than the average price, which means if you could run a sale or show a slash or markdown, you may get more sales on that item.We understand you have overhead, etc.; but if you are 15% higher than your AMP, you may want to change the price.
Your location is back and out of sight of the entrance.Every additional location can see the jeans from the front door.When someone walks into a front door, the first thing that generally happens is a quick peripheral tour of your store.When someone sees something they can put their eyes on, they will know that’s an item they want to check out.
These are just two bullets, but the list can go on. While it’s important to clearly define your pricing and revenue strategy, it’s also very important to know your competition. They too, are trying to make money. Use this knowledge to help you elevate not only your revenue and sales, but use it to strongly develop your business intelligence strategy (BIS). Perhaps I should write another blog about BIS – Another key concept in revenue growth.
The bottom line is that unless you have the willingness to either research your competition or use someone to do it for you, you won't know what your competition is up to. It's key to be ahead of the game. Your mission in your business is to provide your customers something that will solve their problems. Do what you can to know more!
Revenue Growth Masters is a consulting organization that helps small business and individuals elevate their revenue strategies through pricing psychology and personal growth. For more information, please contact us today.