BN A trusting lamb won't get much sleep

Dear Dave:

The management at my company does a fairly good job of planning and also is effective at selling the products that we carry. I do not think we do a good job of watching and evaluating our competition to learn what they are doing or are planning on doing next. Who in our company is responsible for watching the competition and how can we do it better? -- Compete Pete

Dear CP:

You came to the right person, because throughout my entire business life, I was very sensitive to what the competition was doing, and I made it a point to always keep my eye on them. It might be that I was just somewhat skeptical and untrusting by nature and I wanted to make sure that nobody was able to eat my lunch, as they say.

When I first started in sales, an older sales rep, who had been a salesperson all of his professional life, told me, "Make sure you are always very jealous of your business." Meaning, be guarded, protective, and aware of what you have and what others might want to take from you. This controlled state of awareness should serve you well, because in business, rule one-- or rule eight …; it really doesn't matter what number the rule -- is: "NEVER TRUST AND COLLABORATE WITH YOUR COMPETITION!"


I know there will be people responding to this statement with expressions such as, "Oh no Dave, you can unite with your competition to become something even better in the marketplace."

To this I will relate what Woody Allen said, "The Lion and the Lamb may lie down together, but the Lamb won't get much sleep." So, I repeat, do not trust them, and watch them closely.

Systematically, there is much you can do to monitor the competition and anticipate what they might want to do. A sales credo is: "Keep the competition so busy watching you that they do not have time to develop and work their own strategies." This means that a proactive, assertive type of sales and marketing strategy might be the best course of action.

However, another sales credo states: "Let the competition stick their neck out in uncharted waters and make the first mistakes. You might then learn from them, and then work your plan without making the same mistakes your competition made.

This second form of thinking makes me a bit nervous, because what if the competition is nothing but successful and all you can do is try to play catch-up. Their first mover strategy just told customers that they absolutely want their business and are doing positive, proactive, creative, and constructive things to get it.

Let's review a basic plan that might help you, and remember, try to get input from as many company members as possible in fleshing-out this plan.

1. Do a SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis. First, thoroughly list all of your strengths, which might include your key competencies, distinctive products and services, great people, good marketing, etc.

Now, list your weaknesses -- things you do not do well. This might include late delivery, constant backorders, poor customer relations, or anything that you see as vital elements that are deficient or scarce.


Next, do a mental inventory of all internal and external opportunities for growth, quality improvement, and customer satisfaction. This might include market expansion, new customers, new products and services, new systems and processes you could incorporate, etc.

Finally, list the threats or those inhibitors that will hold you back. These things are items you can control or change (they might be some of your weaknesses) and items that you cannot control, but might be able to adapt to (economy, trends, new laws, etc.).

2. Do a competitive analysis. This is drawing a simple table where you list all of your competitors and then try to determine, for each one, how they address and satisfy the 6-P's that I discussed in an earlier column (Products they offer, Prices they charge, Places they sell their products, Promotions they use, People they have or communicate with, and the Politics they face and address. Plot these things for each customer and see how they stack up against each other and you.

3. Do a 6-P analysis of your own company and compare it to the competition profile you created to get a comparative snapshot picture of what is going on at this moment.

4. From your SWOT and 6-P analysis, develop a plan for your own business that takes advantage of the weaknesses of the competition and also allows you to do more of what you do best.

5. Here's the biggee. Ask your customers how you are doing; ask them if there are things you could better; ask them about the things you do not do well; ask them how you stack up against the competition; and ask them for ideas on how you or any company could improve.

Many businesses fail to ask customers for their opinions, and this might be due to their not wanting to hear what customers really see and believe, or they just don't do it. Dave says, "DO IT!" It's amazing what you will learn.

The key to all of this is that this is an ongoing process and not something you do once a year or whenever you are in trouble. Also, get the viewpoints and input from as many people as you can. Include your sales team, management, administrative staff, production employees, and all others, including suppliers and customers. If you can, and if you can find people that "will sing like a bird" and divulge secrets, ask your competition what they are doing. It's amazing how much you will learn from them, even if they lie.


Finally, try to create a "prowling" mindset within your company that urges all of your employees to listen, observe, read, and come forward with what they hear and see in the marketplace. An open communication system is vital for futuristic, competitive, proactive thinking verses the perpetuation of a closed system where people only talk about things after it is too late.

In conclusion, data is only one piece, and what you do with the data is the challenge. Take your information and turn it into plans, education, and procedures for improvement.

Sadly, businesses, as well as many colleges, often are excellent at compiling information, putting it into neat little colored binders with gold leaf lettering, and stacking them on shelves as monuments to exploration and achievement. Nothing positive happens until information and data becomes constructive action.

Dear Dave:

I have a question about extended warranties that companies are always trying to sell as an "add on" to the warranty that comes with the product I buy. It does not matter what I buy; somebody is always asking me if I want to extend the warranty for two or more years. Often, the warranty price offered is close to the purchase price of the item.

Do these warranties make sense, and aren't the sellers actually saying they have little faith in the product, so you better protect it, because it is sure to break down or fail? My company has no extended warranty plans and maybe we should. -- Warren T

Dear Warren:

I know people will hate my response, but "it depends." It depends on the complexity of the product, the amount of usage it gets, the history of failure you and others have experienced, and the price you are willing to pay for repair if the product fails.

Customers ask themselves: Are the sellers really saying that the product is "guaranteed to fail" and because of this fact, I need warranty protection? Is the price I pay for the warranty worth it when compared to taking my chances and, if something was to break-down, just to go out and replace it with a new one? Also, they ask, if I buy the warranty, how much time must I invest, how long would I be without the product during repair, and how much customer service involvement do I really want to go through?

The seller of products, by offering extended warranties, has just entered the insurance business and asks you to pay a premium for protection that it is hoped will never be needed or used. Essentially, it is a large profit producer beyond the profit made from the sale of the item alone. That is why the warranty pitch from store personnel actually exceeds the amount of attention they provide telling you about the actual product features and details.

The seller hopes you never have to use the protection plan, that you might forget about it, or, if you do use it, they still make money on it because the total cost of all parts and labor -- even replacements -- still is less than the profit made from the sale of the warranties, overall.

After I first graduated from college during the age of Disco, I worked at Montgomery Wards -- remember them -- in the major appliance department. Extended warranties were somewhat new then and we were paid large commissions for getting customers to purchase them.

A typical customer comment was, "Are you telling me that you do not trust your own product and something bad is going to happen to my wash machine, refrigerator, stove, etc.? We were trained to say, "Oh no, Mr. or Mrs. Customer -- Ms. was not used too often then, especially in Southern Minnesota -- we are saying that we have so much confidence in the product and in our ability to make any needed adjustments that occur from routine use, that we will offer you an opportunity to add to the life of the product beyond the normal life and that is our guarantee."

It almost seems like double talk now, but most people looked at us with those glazed over eyes and thousand yard stares and believed the pitch and, possibly, just bought the warranty out of general confusion and were trying to get me to shut up.

Now, one can buy a protection plan for virtually anything from cars to houses. This creates a competitive challenge for many sellers, and they must have and offer some form of an extended warranty, just to be on an even keel with their competition.

The rule for the customer is: The more complicated the item; the more parts and technology involved in the product; and the more I know that others have experienced difficulties associated with normal use of the product, the more I might need an extended warranty protection plan. However, if the prices of these warranties scare people and they seem inordinately high, customers will make conscious decisions that they will throw the dice and take their chances on the "normal" life the product. This might be indicative of the "throw away" culture we live in; if it breaks, I will just toss it and get a brand new one.

Over the years, I have bought many service protection plans, extended warranties, etc., and I often have found it necessary to use them. Generally, I was satisfied with the service I received, but, over time, I grew less confident in my expectations of the initial quality present in the products I purchased. Wouldn't it be neat to live in a world where extended warranties or protection plans would not be needed, and things just worked well for many years, like the refrigerator my folks had for 28 years?

David Conrad is the coordinator of continuing education and the Leadership Institute for Winona State University in Rochester and an adjunct professor of management for several regional colleges and universities. He founded Persuasion Skills Co. in 1998, training personnel in sales, management and leadership. To comment or ask questions, send e-mail to All questions not dealing with financial or accounting concern will be addressed.

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