Shopping Your Competition

In 2013 a study was conducted reviewing the week in the life of an NFL Head Coach.  John Harbaugh, coach of the Baltimore Ravens, completed a daily log from Monday to Sunday dissecting the steps taken and time spent preparing for the Sunday showdown.  What was surprising was the amount of time spent analyzing game tape of the opponent; a total of 29.5 hours.  When subtracting the minimum amount of time for sleeping, eating, and socializing from the total of 168 available hours per week, studying the opponent accounted for 32% of total time spent preparing for the game. 

If a successful NFL coach needs to spend that much time studying their competition to give themselves a real chance to win, why is it that most flooring retailers do not do the same?  Doesn’t it make sense that in order to counter the moves of your competitors you need to first understand how they operate and what strategies they employ to beat you?   It seems that flooring owners have coached a team that is too reactive to what is thrown at them instead of providing a playbook to prepare them for all of the trick plays run by their customers.

Spending that much time analyzing game tape may look excessive, however, when you really think about having to look at every move, by every player, on every down it does take that much time.  The devil is always in the details and when a coach can see one crack they fully exploit it; just think Bill Belichick.  For flooring owners that means shopping the competition from greeting to installation.  Just sending in a member of your sales team to look at pricing and product is not enough.  You need to find out how they sell it, how it is priced, the services they provide, the steps taken, and the quality of the workmanship. At the very least they need to be shopped from greeting, through the measure, to the quote.  If you do shop through the install spending the money on flooring that you obviously don’t need or paying for friends and family to be serviced by your competition will pay back in spades with information you gain from the experience. 

You don’t have to take my word for it because according to a substantiated survey conducted by Benchmarkinc, in which several hundred flooring owners participated over a three year period ending 2013, those flooring owners that had their competition shopped monthly, in no particular order, realized the following:

  • Total volume – total net sales
    • $1,492,479 greater than the average
    • $1,879,418 greater than those who do not shop the competition
  • Change in volume – total change in net sales over the period
    • 6% growth for those who shopped the competition, .9% for the average, and -.2% for those who did not shop the competition
    • 40% better than those who did not create a plan
  • Average transaction – average volume per order
    • $48 better than the average
    • $187 higher than those who do not shop the competition
  • Sales productivity – the $’s generated by each full time equivalent that sells
    • $71,137 more per full time sales equivalent than the average
    • $96,313 more per full time sales equivalent those who did not shop the competition

 

Let’s apply some logic to those numbers.  Knowing the tactics of your competitors will help in the following ways:

 

  • Your sales team will be more equipped to handle price objections creating an increase in sales volume because they better understand the competitive landscape
  • Margins will increase because sales associates are going to be less likely to drop the price when customers falsely claim they found the same product at the same price for the same level of service at your competitor
  • If your team feels confident that you provide a superior product and have superior service they will sell as many products as possible increasing your average ticket. They will upgrade the cushion, upgrade grout, sell heating elements, add on cleaning supplies, and many other possibilities 

Allocating 32% of your time to analyzing the competition in the flooring industry is both unrealistic and unproductive; that reference was only meant to prove a point that this practice is important.   The best practice is to have each competitor shopped at least every quarter and relaying those results to your sales team and developing strategies to not only compete but build the framework to an undefeated season.  Some say that ignorance is bliss but that mantra is rarely applicable when it comes to a successful business.