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Why
"Copying Success"
May Bankrupt Your Company
From
Timothy A. Gross, Executive Director - Educated Media, LLC
Friends, virtually
every marketing expert seems to give the same advice on how
to become successful on the internet if you're just starting
out. They say,
-You've
heard it a thousand times before. There's only one problem
with that advice: IT COULD BANKRUPT YOUR COMPANY!
Here's
the problem: Under normal circumstances, you can never know
EVERYTHING about your competitors' business models. You can
look at their websites, their products offered, and their
price points... You can purchase their products to look them
over, get on their mailing lists, and you'll certainly learn
a lot.
-But
if you've been led to believe that ALL you have to do is imitate
your competitors to be successful, you may be in for a rude
awakening. Here are some potential pitfalls:
FIRST
SCENARIO - Modeling Someone Who TELLS You To Model Them
First,
who is most likely to share the "inside secrets"
of their business with you? -People who are SELLING their
expertise to you. They're telling you to "model someone
who is already successful" because they're pointing to
themselves as success stories, and want you to buy their marketing
information so they can profit from it.
That's
fine, except:
1)
Their information may be biased in that it may stress "how
easy" it all is, and could give you lowered expectations
of what you're up against. (That doesn't help you - But it's
to the "experts'" advantage to downplay the hard
parts of what they're teaching, for fear of turning you off
and having you ask for a refund of their information product.)
2)
Their information may be outdated. For example if their claim
to fame is how successful they were at selling a book on the
internet years ago, or how they found and exploited a little-known
promotional technique that has since become overused and saturated,
those tips may no longer be as effective as they once were.
SECOND
SCENARIO - Modeling A Competitor Based On Your Observation
The
information you gain by studying your competitors can be invaluable
- but it only tells half the story. I can't tell you how many
times people have come to me after they'd "cloned"
what they believed to be a successful site and were unable
to succeed as much as they'd hoped by imitating them.
Here
are the reasons:
1)
The business that got there first was able to capture a large
segment of the market. By "paving the way", they
have already established themselves in the marketplace.
If you're just imitating their business model in an
uncreative way, you'll most likely only get a small piece
of the market share from them.
Most
"imitators'" solution to this problem is to undercut
their competitors on price, only to find that it may not have
increased their sales but that it DID lower their profit margin...
and that there's always somebody else out there willing to
undercut THEIR price even more.
2)
The existing business you're copying may have hidden advantages
over you that you're not aware of. For example:
a)
If both you and your established competitor are re-selling
someone else's products, your existing competitor may have
a special price arrangement with the wholesaler which gives
them a higher profit margin than you're able to get.
b)
Your competitor may have special advertising rates, or even
barter services for their advertising to save costs. Some
of these types of advantages may be due to their larger purchasing
power if they are a larger, more well-established company.
c)
The competitor you are attempting to model may actually be
LOSING money with each initial sale that they make, and making
their profit with back-end "upsells". If you don't
have a back-end product to offer your customers, imitating
their initial sales strategy could bankrupt your company!
I've
worked with companies who sold lower-priced "lead"
products and didn't mind losing $50 or more for every new
customer they could gain through an initial sale because they
knew each new customer was worth an average of $100+ dollars
to them in back-end sales over the next 3 to 6 months. Imagine
going head-to-head with this company after modeling your business
after theirs... but not having a back-end product!
(If
you're not familiar with the term "back-end", it
simply means a product or service that you are selling to
existing customers. A "front-end" product is what
you offer to potential customers to encourage them to initially
do business with you. The front-end product is what you spend
your advertising dollars to promote.)
So
What SHOULD You Do?
Am
I telling you NOT to "model success"? -Absolutely
not. But the "copying" should be used as a springboard
to get STARTED, after which you add your own unique, creative,
ground-breaking twists and ideas that will help you to catapult
your business over your competitors' by approaching your market
in new ways.
"Modeling
success" is an effective way to short-cut your learning/growth
curve to come up with a viable business plan, product, and
advertising campaign - But it's ONLY THE BEGINNING. It just
gets you into the batter's box. From there, it's up to you
to "hit a home run" by coming up with new twists,
ideas, and innovations to give you the Home Team advantage.
(Pardon the baseball analogy
;-)
Why
Am I Telling You This? -I want to make sure you're looking
further down the road as you build your business...
If
you're in the beginning stages of developing your internet
business, you should *absolutely* use your successful competitors'
business models as signposts to where you're going... But
if you latch on to the idea that your work is done once you've
mimicked a competitor's business, you may be in for a big
disappointment.
BOTTOM
LINE:
If
all it took to have a successful online business was to model
what your competitors are doing (or at least what you PERCEIVE
they are doing), life - and business - would be a piece of
cake. Don't be fooled into thinking that success is a "paint
by numbers" process.
Draw
from every source you can to focus on developing your OWN
successful model, then test, test, test. Don't be discouraged
if the first thing you try doesn't work. It can take many
changes and improvements to get your sales process running
on all cylinders.
Don't
be so fascinated and impressed by what you think your competitors
are doing that you just fall in line behind them and mirror
their efforts. To get to the head of the line, you've got
to try things that the others haven't thought of - That's
where the real breakthroughs (and bigger profits) are.
This
isn't as much of a "nuts-and-bolts" newsletter issue
as my others have been, but your overall mind-set is crucial
to the success of your business, and you need to have your
radar up constantly scanning for new ideas and twists that
you can apply to your business. Don't be lulled into complacency
by thinking all you have to do is "copy success".
You need to make your OWN success story.
To
your success, Tim Gross - Executive Director, Educated Media, LLC
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