What Is Your Competitor Up To? Obvious and Little-known Research Techniques
Occasionally a story appears in the media that’s out of Jimmy Breslin’s classic novel (and later a film) “The Gang That Couldn’t Shoot Straight.”
Three goofballs tried to sell Coca-Cola Co. trade secrets to PepsiCo. Inc., and Pepsi alerted the feds. It’s a delicious tale of an FBI sting, $30,000 cash stuffed in a Girl Scout cookie box and a test tube containing a sample of a new Coke drink. This emphatically is NOT the way to do corporate research.
At the end of this story are links to The New York Times and Washington Post accounts of this nutty saga. They may require (free) registration.
On the same day this story broke, reader Lee Simonson e-mailed me with a revolutionary idea on how to do research on a competitor.
I wrote Lee a long e-mail saying the idea was a start, but a lot of other techniques existed. He wrote back saying, “Please feel free to incorporate the concept with anything else you have cooking. It’s a story that has to be told.”
“Always see a salesperson once,” said my first mentor in business, publisher Franklin Watts.
In his e-mail to me, Lee Simonson echoed those sentiments. A CEO is a fool not to talk to “the salesperson on the phone or sitting in his office—the SAME person who just saw his two main competitors and knows every bit of news and trends happening in the CEO’s market. Rather than a treating the salesperson as a nuisance, the CEO should be doing the opposite—picking his brain for every ounce of competitive intelligence!”
When an employee departs from a company, the first people contacted about a possible position may be competitors. It matters not whether a non-compete agreement is in play. See the person and do some serious brain-picking. Sitting before you may be someone who is bitter, angry and talkative. You are under no obligation to hire.
If You Do Nothing Else, COLLECT DATACARDS!
List rental is a huge source of free money. It costs pennies per thousand to run a list get it into the hands of a lettershop. In return, the list owner can pocket $100/M or more (sometimes a lot more) in rental income.
A list of 100,000 names that rents for $100/M means $10,000 gross revenue every time the list is “turned” (rented). Turn it four times a month, and you get $40,000 a month or $480,000 a year (minus commissions to manager and broker)—a nice pinch of change for doing virtually nothing.
Ralph Ginzburg, a publisher who went to jail for the risqué mailings he sent out for Eros magazine in the 1960s, died last week. As I was reading his obituary, I remember that one of his business models was to create a screamer of an ad (“YOU’RE BEING ROBBED!”) for a dinky four-page magazine called Moneysworth, which brought in a ton of subscribers. Ginzburg made a fortune—not on subscription revenue, not on advertising, but on list rentals.
Brian Kurtz, the marketing wizard behind the great success of the Boardroom publishing company with its plethora of newsletters and books, once said, “All datacards are guilty until proven otherwise.” And someone else—I forget who—remarked that some of the greatest fiction in the world is created by datacard writers.
It’s true that many questionable promises can turn up on a datacard made by an eager list owner.
But if you want to find out how well or how badly a company is doing, get the datacards and do some arithmetic. You’ll find the total number of customers (or subscribers or donors). Here, too are the hotline names—those customers that came in during the last 30 days or three months. The datacard gives the average unit of sale, which means you can multiply out the numbers and get a ballpark sense of what’s happening.
In addition, lists are updated to reflect changes in numbers of names. For the serious corporate snoop, it makes sense to grab a new datacard every six months (minimum) to see whether your competitor’s business is growing or shrinking based on the addition or attrition of customers.
AOL is an example of a business tanking, having lost 3.1 million members during the 12 months ended March 31 of this year—down to 18.6 million members from a high of 30 million-plus in June 2001.
The situation is so catastrophic that AOL is seriously considering changing its business model from paid to free and relying entirely on advertising.
Gleeful competitors were able to watch AOL’s descent into hell simply by counting members. You can do the same for any company that rents its lists simply by amassing a set of datacards.
The information on datacards is far more precise than the rigged and hidden numbers in the annual report of a public corporation and in many cases the only place to pick up dirt on a privately held company.
Seattle direct marketing guru Bob Hacker introduced me to the process of reverse engineering as a technique to discover whether a competitor’s product is threat or not and whether it’s making money.
Let’s say that you receive a mailing that offers a product competitive with what you’re selling. Do two things immediately: (1) Order the product and send it to Taiwan for a cost estimate,and (2) send the mailing package out to a printing consultant for a cost estimate.
When the numbers come in, put yourself inside the guy’s head and figure out his marketing strategy—which lists he’s renting—and estimate his response. This information, combined with what’s on the datacards, should give you insight as to how he’s doing.
Become a Customer—a Regular Secret Shopper
One way to find out if a company is doing badly is to order product on a regular basis. Is fulfillment fast? How good are the customer service reps when you call or e-mail? Are returns handled promptly, or is the experience aggravating? If everything is irritatingly s-l-o-w, chances are the guy is saving money on customer service, which could be an indication of trouble.
Once you’re a customer, you’ll start receiving promotions via mail, e-mail and phone. Save these. If you see the same promotion coming in over and over again, it’s obviously working and making money. In the immortal words of Dorothy Kerr, former circulation director of US News & World Report, “Steal smart.”
Surf the Internet
The Web is rife with information about your competitors. Use Google, Find Articles and LexisNexis. Download stories, press releases and articles and add them to your files.
Unhappy customers can let fly on the Internet. This past July 5, the Washington Post’s Kim Hart wrote a story titled, “Angry Customers Use Web to Shame Firms: Blogs, Videos Are Tools of Retribution.” Cited were two appalling stories that were all over the Internet like a cheap suit last week—the tale of the AOL member who wasn’t allowed to cancel service and the Comcast repair man who fell asleep on a customer’s couch.
Also check out [yourcompetitorsname]sucks.com or sux.com. You might discover what the other guy is doing wrong and how you can steal his customers by doing the opposite. Another site is www.epinions.com, which reproduces consumer comments—both positive and negative.
One high-energy direct marketer used the Internet to land new clients for his agency. First, he would hit the Web sites of competing agencies, all of which proudly listed their roster of clients. He would then visit the clients’ Web sites—for which the agency was presumably responsible. This was followed by a call to the company CEO with a low-key offer to come by and chat. It generally got him an appointment. (Many CEOs use Frank Watts’ rule to always see a salesperson once.) At the meeting, this agency CEO would start with the “Aw, shucks ...” approach. “Gee, I’m not sure I have anything to bring to the table, but here are my thoughts.”
He would thereupon unleash a killer PowerPoint presentation entirely devoted to what his agency could do for that specific company. By the 10th screen, the potential client was salivating. By the 20th screen, the agency had a new client.
Whenever You Fly, Take a SkyMall Catalog to Study
In terms of consumer market research into merchandise and retail trends, nothing beats the SkyMall catalog found in the seat pockets of airliners. Here are actual pages from dozens of top catalogs—the design, copy, pricing and merchandise selection. These are the best-selling items that bring in the most business and are presented in the most powerful way.
When I was writing for Catalog Success magazine, I once did painstaking analysis and matrix of an entire SkyMall catalog—by category, by item, by price point. Although identical items aren’t permitted to run in the same book, equivalent pieces of merchandise are to be found. In the issue I analyzed, the most popular item—believe it or not—was nose-hair clippers. A total of seven were being offered from various catalogers. This said a lot about America’s mania for personal grooming and hygiene. Through SkyMall, you can frequently discover what’s hot and what’s not long before the retail numbers have been collected.