Spy Away

The Expert's Analysis

Pet Assure goes further than most small companies in competitive intelligence, says McGonagle. That probably comes as no surprise to hard-working entrepreneurs out there who can barely find time to run their own businesses, let alone monitor others. But Bloom's personal exposure to competitive intelligence in a corporate environment led him to put CI high on his entrepreneurial to-do list. "The entrepreneur's involvement is the biggest obstacle in small businesses," says McGonagle. "But, obviously, [Bloom] didn't just buy into this; he was the driver."

McGonagle lauds the way Bloom personally oversees collection and dissemination of intelligence throughout the organization. "That's the model for small business," says McGonagle. "He's using it the same as information about profits or regulatory issues."

Another key is managing CI to get the most return for your investment. "One thing that discourages small business from getting involved in CI is that they have so few people, and they're all busy," McGonagle says. Bloom's experience shows you can mount a part-time CI effort that's effective and efficient.

While large companies may have entire departments devoted to competitive monitoring, entrepreneurs need not assign even one full-time person to the job. Simply informing customer-service representatives about your interest in competitive feedback can produce loads of valuable information, McGonagle says. "If no one asks them about it, they don't tell you about it," he adds.

Bloom's competitive shopping gets high marks from the expert. "It's something that surprisingly few people do: become a customer of the competitor," McGonagle says. "People don't realize how important it is to get on [competitors'] mailing lists and get catalogs." You can learn all kind of things, including, if you pay attention to what else you start getting in the mail, whether competitors are selling the names on their customer lists to other marketers. You can then gain an advantage by crafting a customer-privacy policy that promises not to sell names to list brokers.

Using trade shows, industry periodicals and clipping services is basic CI, McGonagle says. Likewise, many firms find that partners, such as the veterinarians in Pet Assure's case, can be useful sources. Bloom gets extra credit, however, for employing investors to collect information. "We tend to think about suppliers, customers, sales forces and employees," says McGonagle. "But there, he's tapped into something I've rarely heard about with entrepreneurs."

Using CI to scope out potential acquisitions, as Pet Assure is doing, provides an unusually high return on investment, McGonagle adds. Quietly monitoring buyout candidates is far preferable to making direct information requests. Even preliminary formal negotiations require hiring expensive lawyers and accountants to audit the financials. Worse, before revealing anything, firms may ask you to promise not to enter their market for months or years. "That's a big price to pay if you decide you don't want to dance," notes McGonagle. "If you do it yourself with CI, you may not get all the information you need, but you don't have the restrictions."

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This article was originally published in the March 2000 print edition of Entrepreneur with the headline: Spy Away.

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