A HubSpot.com Then Vs. Now Infographic highlighting how running a small business has changed over the past five years notes that six out of 10 business owners said it’s more difficult to run a business now than it was five years before. Of these, 40 percent say that direct competition is to blame. Let’s take a closer look at marketing budgets and some of the marketing measures that might show you where competitors are outspending – and outpacing – your organization on growth initiatives.
10 Telltale Signs Competitors Are Outspending You on Marketing
1. Competitors Are Using More Digital Marketing Channels than You
The same HubSpot.com infographic referenced above notes that 84 percent of business owners said they use more online marketing channels now than they did five years before. With new digital marketing apps, platforms and tools emerging every month, it’s fair to surmise that if your competitors are using more digital marketing channels than you, they are outspending you on marketing investments in both time and money.
2. Your Competitors Have More Social Followers and Engagement
Organic reach for business pages and updates has fallen steadily over the past few years as changes to social platform algorithms give preference to businesses that are willing to pay for reach, likes and follows. Given the reality that brands must “pay to play,” if the rate at which your competitors are adding social followers is better and you are constantly seeing their posts in your newsfeed in the form of “sponsored posts,” there is a good chance they are outspending your business on social marketing and ads.
3. Your Competitors Websites Have More Pages and Posts
Google’s search algorithm favors sites that consistently add high-quality content, and quality content is known to drive web traffic, subscribers and follower engagement. Competitors who are leveraging online content to attract website visitors via organic search, email and social media click-through may be outspending your organization on content marketing in money and time.
4. Competitors Are Emailing their Subscriber Lists More Often – or More Creatively – than You
In study after study, email marketing consistently tops the list of most effective marketing channels business owners use for generating sales. Furthermore, more than 90 percent of U.S. adult internet users also use email and seven out of 10 say it’s their preferred method for receiving brand communications. Given all that, it should not surprise you if competitors are using email marketing to acquire customers and generate sales. If you find that competitors are out-emailing you in terms of frequency or quality, there’s a good chance they are outspending your business’ marketing budget on email marketing for one simple reason: It works.
5. Your Competitors’ Customer Experience is Improving
Nothing helps to differentiate a business from the competition or generate word-of-mouth and referrals so much as the customer experience. If the customer experience (and consequently, online reviews and ratings) of one or more of your competitors is consistently improving, chances are that they are outspending your organization in this area.
If you aren’t in the habit of anonymously shopping the competition to evaluate the experience it provides to its customers, this could be an important marketing activity for your business going forward. Not only will you be able to discover new ideas for improving your brand’s customer journey, you will also be able to articulate what differentiates your business from competitors more precisely.
6. Competitors Are More Visible in the Community and Local Networking Groups
Community activism, events and local networking groups can be highly effective ways to become more visible in your neighborhood, city, county or region. If you perceive that competitors are more active within local civic groups such as the Chamber of Commerce, Rotary or business networking groups, it may be because their marketing budgets allocate more spend on membership dues and activities in order to become more influential and increase brand awareness with members of the local community.
7. Competitors Are Winning More Head-to-Head Contracts or Sales Battles
When pricing, features and benefits are roughly equivalent (or unchanged) but competitors begin to win more head-to-head contract battles against your business, it could be because they are outspending your business when it comes to signing bonuses, gifts-with-purchase and other new customer perks.
Improved performance in winning contracts could also come from a competitor’s willingness to outspend your business when it comes to employee development and skills training for sales professionals, or in spending more money on payroll in order to attract higher-performing candidates.
As a post-sale strategy, the more information you can find out about why someone elected to go with one of your competitors instead of your business, the more you can work to level the playing field – or tilt it in your favor.
8. Your Competitors Have Lower Churn Rates than You
Churn rate refers to the rate at which a business loses existing clients that must be replaced with new customers just to break even, or even faster if they want to grow. In the Hubspot.com infographic referenced above, a growing number of business owners (58 percent compared to 49 percent five years before) said that customer retention was their top concern.
If your competitors have lower customer defection rates than your business, they could be outspending your business on loyalty marketing or providing a customer experience that more effectively promotes retention. In our article Do-over: What These 7 Small Business Owners Would Have Done Differently, Matt Behnke, Founder and CEO of Orthotic Shop pointed out that establishing a Customer Happiness Center was key in increasing customer satisfaction rates at his business.
9. Competitors Have Multiple Forms of Marketing Media
Consumers have different preferences when it comes to how they want to learn about a brand, product or services. If your competitors have custom mobile apps, videos and other forms of marketing media your brand has not yet developed, they could be winning market share with customers who prefer video and more interactive forms of media.
While content and social media marketing can be conducted effectively on even a small budget, development of videos and apps for marketing may require a more substantial monetary investment. Your organization could be able to win more new customers and grow revenue by taking advantage of our short-term business loan programs. Don’t hesitate to reach out to us for more information if you would like to find out more about the financing programs we have that can be used to power these and other business marketing initiatives.
10. Competitors Are Adding Square Footage or New Locations
Expansion is a sure sign that competitors are outspending your business on marketing. Even if you do not open a new location, you can expand your marketing efforts to reach potential buyers in areas where your competitors are expanding by using Google AdWords and social media ad platforms, which allow for highly targeted ad placement. You can also watch competitors’ moves into new locations to see whether sufficient opportunity exists for your own business expansion there or elsewhere, without all the risk and costs inherent with opening a new location in order to test-market local demand.
The more you learn to watch competitors’ marketing moves and analyze their marketing budgets, the more you will be able to anticipate and offset their campaigns in areas where they attempt to compete against your business directly. In these cases, outsmarting the competition could well outweigh the tactic of outspending them, or help you determine how best to gain market share by countering their moves.
What about you? Where would you most like to increase your organization’s marketing spend? Tweet your answer to us @KabbageInc or leave your comment below.