Q: I'm interested in starting a
homebased telephone-answering service. I want to research my
competitors' prices and services, but I don't want to call
them. What's the best way to do this research without letting
them know that I'm a competitor?
A: We understand your reluctance to
phone competitors yourself. Many people pretend to be prospective
customers to get pricing information, but, according to the
businesspeople we've interviewed, they're usually detected
as would-be competitors. Some business owners tell us they
don't give good information to those they suspect of being
potential competitors.
There can still be value in making these calls, though, if
you're upfront about being new in the business and seeking
information. Here's why: If a business is in demand, people
already in business are usually willing to help newcomers. Many
times, business owners turn to other entrepreneurs when they're
overloaded or when they want to refer customers who need work
that's out of their area of specialization or interest. Some
are just happy to give newcomers an opportunity to participate in a
business they've benefited from.
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But when business is not so good, and business owners are
hungry, they're more apt to fear competitors and be
closemouthed when a newbie phones for information. So the response
you get by phoning "competitors" can be a bellwether for
just how difficult it will be for you to make it in the
business.
Here are some more suggestions:
Hit the net. Many business owners now post their prices
on their websites. They know that prospective customers want to
know this information, and posting the price serves as a screen to
save the time of talking with people who are simply price shopping
or who aren't truly prospects for their goods or services. Of
course, this isn't true for all businesses, particularly those
that provide highly customized services or sell very upscale
products.
Hire someone to call competitors for you. This may
involve no more than having them request your competitors'
brochures and other sales materials. But this person must be able
to answer some screening questions they may be asked. Someone with
experience as a customer of the type of business he or she will be
calling, or perhaps someone with experience doing market research
interviewing, is best suited for this task.
Contact similar businesses that you won't be competing
with. For instance, identify answering services in cities
similar to your own (in terms of cost of living, type of industries
and so on), and then contact them by phone, or search for them on
the Web. You can be upfront with them about your plans, pointing
out that you'll be working in a different community.
Check out pricing websites. Depending on your industry,
there may be a trade association or a Web site that collects and
publishes pricing data. For example, Brenner Books has
a nationwide database of prices for "business support
services," including telephone-answering services. It also
sells pricing surveys for editing and writing services, graphic
design, desktop publishing, pre-press, scoping, multimedia and Web
site design. Computer consultants and authors can check out
Realrates.com for prices. Keep in mind, however, that
industry reports are based on national or state averages and may
not be applicable to your community or clientele. But at minimum,
they can give you a ballpark idea.
Talk with customers of other answering services. Find out
if they're satisfied with the service they're getting and
what they expect to pay. As you establish rapport with these
people, chances are, you'll be able to find out what
they're paying now. In the interest of finding out if they can
get a better price for equal or better service, most people will
provide you with such information. Such conversations are also a
chance to discover additional services your future customers might
like to have and what they would be willing to pay for those
services.
One way or another, you'll be able to find out what others
in your business are charging. The next question is: What are you
going to do with this information? What pricing strategy do you
want to pursue? Are you going to quote prices on the lower end of
the range of what others are charging? Are you going to find the
high and low, then split the difference? Do you want to offer
top-of-the-line service and prices higher than the competition?
Keep in mind that for most businesses, pricing is like walking a
tightrope between being neither too high nor too low. Pricing too
low can hurt your credibility as being a business that provides
high-quality service, but pricing too high may result in more
business for your competition. Some companies, though, do quite
well by positioning themselves as premium services and pricing at
the upper end of the spectrum by adding value that enables them to
charge more. They find that the more value they add, the more they
sell-and price becomes less of a factor in making the final
sale.
Regardless of the pricing strategy you choose, the best way to
figure out what people will actually pay is to experiment with
pricing and start getting reactions from prospective clients. If
they're interested until you mention price, you're probably
on the high side. If this is the case, you can ask what they were
expecting to pay and decide what additional value you might need to
offer to get your desired price. If they snap up your offer a bit
too eagerly, chances are, you're underpricing. To find the
balance, some people start low and keep raising their prices until
they get resistance.
To get your business off to a sound start, it's also a good
idea to go beyond simply finding out what your competitors charge.
You should know your competition well enough that you're
prepared to answer questions and demonstrate how your product or
service compares favorably to others.
While it may not be workable for a telephone-answering service,
one way to do this is to order or buy something from all your
competitors. When you do this, work on answering these
questions:
- What is each competitor doing that sets it apart from
others?
- What's special about what it's doing?
- Who are its customers? Who is the competitor best suited to
serve?
- How well are they doing at providing the product or service
they claim to offer?
- How, as a customer yourself, do you feel about the product or
service?
- How could it be improved? How could
you do a better job?
With these questions in mind, you can identify ways to tailor
your business to your personality and the type of customer you seek
to serve. At the same time, determine if there's any new
technology that can give you a competitive edge. You may also find
that if you give people a reason to call you by offering special
benefits like "calls answered 24 hours a day,"
"same-day service," "no overtime charges,"
"free estimates," "free consultation," or other
features relative to your business, then they may gladly pay your
price.
One final tip: If you find over and over that most of your
competitors are doing things in the same way, this is generally a
sign that these methods work. So consider how you might provide the
same thing, but in your own specialized way.
Authors and career coaches Paul and Sarah Edwards' new
book is The Best Home Businesses for People 50+.
Send them questions at www.workingfromhome.com or in care of
Entrepreneur.