Sault Ste Marie Innovation Centre Competitive Market Intelligence Workshop June 18, 2008 Speaker David Lithwick is a partner at Market Alert Limited (www.marketalert.ca ), a Toronto based competitive intelligence consultancy He has 25 years experience in CI, including completing over 800 studies David has written, in conjunction with the Marketing Research Intelligence Association, a manual on competitive and sales intelligence techniques He also co-authors a monthly CI column in VUE Magazine Prior to joining Market Alert, David worked as a CI analyst for a major bank and as an account manager in advertising, servicing SC Johnson, Wendy’s and Pfizer Let’s Begin Definition Active CI - gather intelligence on your competitor to learn about their capabilities, strategies and intentions Defensive CI - prevent competitors from learning about your marketing initiatives and your employees from leaking sensitive information What CI Is Early warning of threats and opportunities Approximations and best views of the market and competition It is not a peek at the rival's financial books Means many things A research scientist sees it as a headsup on a competitor's new R&D initiatives A salesperson considers it insight on how their company should bid against another firm in order to win a contract Short and long-term Can use intelligence in immediate decisions, such as how to price a product or use the same data to decide on long-term market positioning (Source http://www.fuld.com) What CI Is Not Crystal ball There is no such thing as a true forecasting tool Intelligence will give you good approximations of reality Database search Databases not replace human beings who need to make decisions by examining the data and applying their experience, analytical tools and intuition 20th century invention (Nathan Rothschild, cornered the market on British securities by receiving early warning of Napoleon's defeat at Waterloo.) News story Too broad and not timely enough for managers concerned with specific competitors and competitive issues Example A pulp and paper company needed to know if a new competitor was going to start competing aggressively on costs Their CI supplier tracked down from the internet a profile of the rival firm's CEO, which said that to save $, the CEO takes buses versus a limo to visit their firm's plants This was a tip that the competitor will compete aggressively on costs Example A bank hired a CI firm to see whether any competitor will preempt them in being the first to offer internet banking The CI supplier subsequently discovered that ING Direct was planning to enter the market shortly The supplier tipped off a major newspaper who interviewed ING Direct, got confirmation and then published an article on the front page As a result, the bank fast tracked their launch before ING was able to enter the market Example Getting information on a privately held start up venture proved to be very challenging for a hi tech company, until they discovered Deja News (www.Dejanews.com ) which allowed them to tap into some online discussion groups One participant disclosed that the start up had posted job openings on one Usenet group That posting was a road map to the start up’s development strategy Best Practices Competitors are regularly monitored versus conducting CI in reaction to a threat Formal set of ethical guidelines in place for collecting CI CI is tracked to see: a how many people are using it b how they are using the findings c what their level of satisfaction is with the CI d what impact CI has on the company’s overall business performance 10 What Can You Do? Ask the prospective customer “who you use now, for what products, why you want to switch” And then press them to sign up today Have your IT dept provide you with information on these “trojan horses”, such as which clients frequently sign up and leave shortly If one of these individuals tries to sign up again, they can be “red flagged” and their application rejected 58 Eliminating Leakage Sales and Customer Service Loaded with large amounts of information In regular contact with competitors Feel compelled to help Your Website Being scanned regularly by your competitor for references (e.g product claims, job postings) to use when probing your employees for sensitive information Suppliers Leak sensitive information about your company in their advertising materials, discussions with prospective clients and personal resumes 59 Case in Point John H is the Sales Director for Jack Rabbit, a snow shoe manufacturer Recently he was invited to speak at the national conference of winter sports manufacturers John was asked what strategies he found helpful in landing WalMart as a new customer His reply - onsite product training sessions for the Wal-Mart store staff Unbeknownst to John, the person who asked the question was a sales rep for Jack Rabbit’s direct competitor, Atlas Within months Atlas won the Wal-Mart account by not only offering onsite training, but also a 1-800 support line exclusive for Wal-Mart employees to call with questions relating to Atlas products 60 Website Exposure Source Competitor Will Press Release Email asking for more details on a subject mentioned in a release Career Ad Be tipped off to changes in your staff (e.g new dept) or market focus (e.g new product launch) Product and Services Info Pinpoint gaps in your products and services and could then use this information when making sales presentations to customers “Who We Are” Reconstruct your organization chart to pinpoint weaknesses in your staff resources and/or poach employees 61 What Can You Do? Have employees sign confidentiality terms (when hired & leaving) Advise your receptionist to tell callers who claim they are students to put their inquiry in writing Get reps to follow a script when making sales calls or attending a trade booth Make it clear to suppliers that they cannot work for a competitor whose product competes directly with yours (Please see handout – “Loose Lips Sink Ships”) 62 Special Applications 63 Mystery Shopping Acting as a customer, shoppers carefully observe and report their shopping experiences Onsite, phone calls or email Competitors frequently shopped as a benchmark Why is this important - some sectors up to 30% of new customers leave and not return because of a bad sales or service experience Has anyone been involved in a mystery shop? 64 Evaluating Sales Personnel Greeting Needs assessment Product knowledge Use of a sales tool (e.g brochure, price sheet) Cross selling other products Closing the sale Follow up Professionalism (polite, helpful, enthusiastic) 65 Telecom Shop You work for a new telecom, “Horizons Plus” One of your first tasks is to develop sales aids You decide to a phone shop to learn more about your competitor’s sales performance Scenario: “I am considering changing my phone company and would like some information about your company to help me make a decision” 66 Telecom Shop (Cont’d) Call Center Rep  #1 #2 #3 • Waited under minutes for contact Yes Yes Yes • Probed shopper’s needs Yes Yes No • Listened to shopper’s expectations Yes No No • Took time to answer questions Yes Yes Yes • Explained rates Yes Yes No • Explained payment options Yes Yes Yes • Cited clarity of phone calls Yes Yes No • Cited state of art technology No Yes Yes • Cited long distance savings Yes Yes Yes • Cited long distance phone card Yes Yes No • Led conversation Yes Yes Yes • Tried to close Yes Yes No • Cross sold other product offerings No Yes Yes • Offered to email material Yes Yes Yes Total # ‘Yes’ scores 12/14 13/14 8/14 % 86% 93% 57% Very Good Excellent Good Rating 67 New Market Assessments As an intelligence tool, CI can also be used to assess the viability of entering a new market before investing significant time and energy Develop prospect lists Pinpoint volume, sectors to target and buying criteria Uncover hidden barriers to entry 68 Would Better CI Have Averted These Product Failures? Pudding Chocolate Bar – no attempt made to investigate other companies who had already failed with a similar product Tahiti Bath Foam – relied on only source for volume projections Quick & Easy Pasta Dish – did not gauge level of awareness of Betty Crocker frozen meals generated by US TV border advertising 69 Sales Intelligence Report Ice Cream Dessert Co Targeting Food Chain Market Position Budget 20% sales growth $25M sales/yr $1.75 M Up 10% from last yr Current Supplier’s Weakness Level of Satisfaction with Current Supplier How to Win the Business Next Steps Rigid invoicing policy Low Agree to use client’s shipping company Determine if there is a conflict of interest Cash flow problems Frequent shipping errors 70 Your Turn You have days to decide whether to invest $3 million in selling wind turbines to the Canadian residential market After that your competitors will be able to bid for the turbines The only data you have is a report from a consultant eagerly endorsing wind turbines and some data from Statistics Canada on electricity consumption in Canada – – – – Who will you speak to? How will you contact these people? Who within your co can help you? What does your gut tell you? 71 Wrap Up 72