Keep a watchful eye on your competition

What are they doing that you aren’t?

Ulrike Baartlet, owner of Escape Day Spa, said she scoped out her competition for products and services as she was planning her new building; she incorporated things she liked, omitted things she didn’t like, and always tried to make sure she offered more than her competitors did.

Heidi Schiller
   When Ulrike Baartlet decided to open a full-service day spa in Bellingham a year ago, she knew she needed to measure who she was going up against, and she knew she wanted Escape Day Spa on King Street to be better than the rest.
   Her first task was to develop a SWOT analysis, which is an assessment tool the Small Business Development Center suggests using as a roadmap to evaluate competition. The SWOT analysis, which stands for strengths, weaknesses, opportunities and threats, is a template used by a business owner to analyze their business and their competitors.
   SBDC director Tom Dorr said the SWOT analysis is a good starting point for any business owner who wants to gather competitive intelligence. The analysis is a way to organize what type of information a business owner needs to gather.
   As part of her analysis, Baartlet started going to all the major spas in the area and getting services, doing reconnaissance on their prices and aesthetics, what Dorr calls “empirical analysis.”
   “You have to look at what they are doing, service-wise, what they look like, and then try to do everything just one step better,” Baartlet said with the hint of an accent from her native Germany. “I checked out my competition in terms of facility and menu and what they offered, and basically tried to do a little bit extra.”
   She gathered her competitors’ price and service lists and researched their Web sites.
   From her excursions, she made decisions about what her spa would look like and the services it would provide.
   “I made sure if the biggest spa in town had a relaxation room, we wanted a bigger relaxation room. If they had a fireplace, we wanted a fireplace and a waterfall,” she said.
   The idea was to see what the competition was offering, and then up the ante with her spa.
   “In our services, (because) they do a hand massage, we make sure we do a hand and a foot massage. I tried to do things like, okay, they have one hydrotherapy tub, we’re going to have two hydrotherapy tubs. If they can do three pedicures, than I’m going to do four.”
   Because Baartlet has been in the industry for more than 20 years — she started out as an aesthetician — she has kept abreast of industry trends by going to conventions and reading spa-industry magazines. From this insider knowledge, she also realized medical offices were starting to compete for spa customers who wanted medical-type facials, and so she checked out the services of dermatological clinics, as well. Because of that analysis, she decided to combine the medical-facial techniques with traditional spa facials.
   Baartlet also looked at the “flow” of other spas, meaning the customer’s journey from start to finish throughout the building, especially taking note of irritating noise issues.
   “I learned from other spas’ flow problems, like hearing noise from the pedicure rooms in the relaxation room,” she said.
   A year later, business at her spa — complete with a fireplace and waterfall, a large relaxation room, and all the extra services she gleaned while doing her SWOT analysis — is good, she said. But she continues to get massages and services from other spas and even has dinner with some of the other spa owners and managers on occasion to discuss the industry and solve problems together.
   John Raasch, owner of Mindfly — a local Web design and development company on Holly Street — said he has the advantage of frequently doing sub-contracted work with his competitors, which enables him to glean elements of their success.
   “If I see someone doing something really well, I’ll consider doing it myself,” he said.
   For example, one of the Web-design firms he works with sent out a newsletter recently informing customers and business associates of the company’s news. Raasch thought it was a great idea and adopted it for Mindfly.
   He also subcontracted from a firm who had had success in radio advertising and is considering getting a radio spot for his company now.
   In the world of Web design, Raasch said staying abreast of the competition is extremely important because the industry changes so fast.
   “You have to learn from what the market is doing because the environment is constantly changing,” he said.
   Raasch also peruses Web sites constantly, checking out design trends, which are always changing.
   “Artists always look at other art,” he said. “Designers always look at what other people are doing for inspiration.”
   For example, many Web sites went through a phase of having textured backgrounds, but now that seems to be a very passé design element, he said. Ultimately, it’s important for Raasch to listen to what his customers like and he also thinks it’s important for customers to check out his competition.
   “I encourage a prospective new client to check out other Web companies out there,” he said. Getting referrals and looking at other design companies’ projects are a good way to do that, he said.

Other techniques
   Dorr said talking with customers is a valuable way to find out what a business’s competition is up to.
   “Ask them what so and so is doing, listen to your customers,” he said.
   This is a technique that Baartlet first used to even decide she needed a bigger spa in the first place after owning a small spa in the Bay Street Village.
   Customers kept saying they liked her facials, but they liked going to spas that offered more services than hers did.
   “I found a lot of people would say, ‘You know, I really love your facials the best, but I’m going to go to the Chrysalis because they have a steam room,” she said.
   Peggy Platter, who has owned Sojourn — a women’s clothing store on Railroad Avenue — for 12 years, said that while she doesn’t check out her local competition, she does listen to her customers. Recently she found out from one that a local department store at Bellis Fair has started to sell one of the lines she sells in her store.
   Platter said that independent women’s clothing boutiques typically don’t sell the same lines because companies prefer to have just one outlet for their clothes, which relieves some of the stress of competition in that industry.
   Instead, Platter stays competitive by scoping out clothing shops in Los Angeles and New York City, as well as getting advice on stylish trends from vendors at clothing markets in those cities.
   Dorr also recommends looking up competition through Dun & Bradstreet, a subscription credit-rating service that evaluates companies’ creditworthiness. The service, which is constantly updated, can also provide information about a business’s number of employees and promptness in paying bills, among other useful criteria.
   He also suggested talking with vendors, who will oftentimes discuss how well businesses are doing. For example, a restaurant may want to talk with their food distributor about which local restaurants seem to be doing well and which ones aren’t.
   “And if you really want to get competitive, you can talk to a business’s neighbors about how they’re doing,” he said.
   Checking The Bellingham Business Journal to see if any competitors have had any tax liens, judgments or bankruptcies on file is also a good tool, he said.

The value of competition
   Since Platter opened Sojourn 12 years ago, the competition in her retail sector has grown considerably, and she thinks it’s great.
   “It’s good. It gives people choices to be fashionable and it keeps people, like Western students, shopping in Bellingham,” she said. “They don’t have to go to the mall anymore, or to Seattle and Vancouver. I’m also getting more and more customers from Seattle coming up here to shop.”
   All of the new independent clothing stores that have opened up in the last several years downtown have created a district — a shopping destination — which is good for business, she said. And at this point, none of the women’s clothing stores seem to be overlapping in terms of who they are marketing to — they are all fairly distinct from each other, she said.
   “There’s always the risk of someone trying to open a shop doing exactly what you’re doing,” she said. “But right now, everyone is working their own market.”
   Baartlet said that having competition is a good thing because it keeps her on her toes.
   “Then people can truly choose for themselves and see the difference, it’s kind of like a democracy — people should have choice. And I think there’s enough to go around. But I still think my spa is the best, because that’s what I try to go for,” she said. “And if it isn’t, then I find out and then make sure it’s better.”

Helpful Web sites to assist a business in analyzing its competition:
Provides a free SWOT analysis template and description.
Access to a subscription service providing information on businesses, including creditworthiness and number of employees.



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