For a long time, Lois Melbourne didn't worry much about competition. When she and her husband, Ross, started TimeVision Inc. in Irving, Texas, in 1994, they were pretty much the only company using human-resource databases to create specialized software for organization charts and corporate phone directories. Today, however, the 28-person company has at least two direct competitors, a Canadian company and a Belgian firm that popped up in 2000.
Now, says the 36-year-old CEO, "we look at a lot of things when we look at our competitors. We look at who they're selling to, we look at feature sets, and we look at service offerings." Melbourne searches the Web and employs a clipping service to gather news about her rivals. She visits competitors' booths at trade shows and quizzes others in the field to see what they know about rival products. She calls competitors' support lines to see what help she gets.
Melbourne is in good company, according to a PricewaterhouseCoopers survey that found high-growth companies are increasingly interested and active in gathering competitor information. Responding to the accounting firm's Trendsetter Barometer March 2002 survey, about one-third of fast-growing companies' CEOs said competitor information was more important than a year ago. Sixty-five percent said competitor information was no less important today, and just 4 percent considered it less important.
"As things become more competitive for the companies that have survived the downturn, it's imperative that they understand what their competition is doing," says Steve Hamm, who heads PricewaterhouseCoopers' U.S. middle-market practice. As many customers remain reluctant to buy, he says, sales-hungry companies search for new and more receptive markets.
What D'ya Know?
Before you start looking, ask yourself what kind of information you want. Most CEOs look for pricing changes, new product initiatives, corporate strategies, operating or financial information and changes in management or staffing levels. In addition to product pricing, Melbourne looks for information about implementation and support costs. In the technology industry, she notes, those costs can easily exceed the cost of the software license.
Next, think about where to get the information. If you're like the Trendsetter Barometer companies, your own sales force will be the most important source of competitor information. You should also look at trade and industry magazines and newsletters and other published sources, trade associations, ex-employees of competitors, industry analysts, market research with competitors' customers and public officials. Find what works best for you. Melbourne doesn't rely much on her salespeople and uses trade associations, ex-employees, market research, analysts, and officials little or not at all.
Don't forget to apply an ethical filter to everything you do in competitor information gathering. Melbourne stops short of employing illegal or unfair means of gathering information. "We don't do anything that compromises anyone's integrity," she says. "We don't call and pretend to be someone else to find out any type of information. I'm very adamant about that."
Finally, consider some unexpected benefits you can get from having better competitor information. Melbourne, for instance, says competitor information can have a powerful effect on company morale. "Sometimes it fires up the troops to know what competitors are doing," she says. "It's like 'Oh, they took another one of our features, so now we have to fight harder.'"