Business owners know that mistakes happen. We’ve all felt them and fear them within our own businesses, but often experience the opposite feelings when the tables are turned and hear of a public failure about a competitor. Perhaps you read the headlines in the morning and discover a big scandal or failure has befallen your rival or you hear about a negative experience with their products or recent their financial struggles, the first feeling is utter shock. The second is “this is my shot”. Before arriving to work that morning- heck, before the mistake even happens- it is essential that you be prepared to handle the situation. How you conduct yourself in this moment not only says a lot about the character of you as a business owner, but the impression you’ll give your consumers. While the mistake likely presents an opportunity for your business to capitalize on, it can also be tempting to shift your focus away from your own business strategy. This could not only be a rare opportunity for your business to bring in new clients and earn more market share, but an opportunity to prove your integrity to potential customers. Your employees will follow your lead with handling the sudden shift in the market. This rare opportunity is one that could easily be squandered. Here are three things you that will help you prepare for when the inevitable happens.
1. You Didn’t Succeed Because They Failed
Because we’ve all experienced our own failure, it sometimes feels good when you’re not the one who failed. When it is your competitor that failed, your first instinct may be to sing along to the tune of “Another One Bites the Dust”. However, your company still didn’t necessarily win- an opportunity has just presented itself. In the story of the Tortoise and the Hare, the Hare’s laziness didn’t automatically mean that the Tortoise won. The Tortoise still had to put in the work, continue its slow and steady strategy, and finish the race to win. Just because your competitor has failed, their customers don’t automatically become your customers. Their failure does not automatically equal your success.
In the midst of Uber’s recent scandals, Lyft- their main competitor- has taken Uber’s failures at face value and recognized this principle. The two founders made a concerted effort to communicate this to their team members. They wrote a pointed email to all their employees noting, “the faults of our competition don’t do anything to deliver a better experience for our customers”. Uber’s failures have no impact on Lyft’s business operations or what consumers will think of Lyft. Lyft understands that the failures Uber is experiencing may provide them with more opportunity to improve in the market; but it doesn’t directly impact the performance of their company.
Keep your focus on the value you provide to your consumers. Lyft didn’t pour out marketing dollars into ads that highlight Uber’s failures, they remained diligent in communicating why they are the best ride-sharing option available. Simply being “better than the worst” opens up your company to new competition and consumers will seek new alternatives in place of you and your competitor.
2. Be a Reporter, Not a Scavenger
It’s important to understand why your competitor failed so you don’t make the same mistakes. For example, if they got involved with the wrong business partner, you better be sure that you don’t make the same mistake. If their employee made a mistake, for goodness sakes, don’t hire that person! By understanding what went wrong, you can take measures to make sure you do the right thing for your business and your consumers.
This is a rare opportunity for your company to learn from mistakes without suffering the consequences. Think back to when you would conduct experiments in chemistry class. If someone made a mistake and used the wrong ingredients that caused a negative reaction, you’re going to be sure you don’t use the same ingredients. Just like you did in class, your business can see the mistakes from your competitor and take proactive, rather than reactive, steps to avoid these pitfalls. This doesn’t happen often, so use your competitor’s mistakes or scandal as a chance to learn rather than simply a scavenging opportunity.
3. Learn From the Market
With Uber’s recent scandals, people have been outraged with the company. Uber’s app downloads have been decreasing, and they’ve dropped significantly in market share from 90% to 75%. Lyft was able to be in the perfect position to pick up the slack by understanding just why consumers were so upset with Uber. They were able to gain insights from the market about the value of a positive internal company culture, how to handle delicate political and social events, and how the market reacted to industry developments, such as self-driving cars.
Similarly, when you hear how consumers are reacting to your competitor’s failure, consider if you need to make adjustments to your current strategy. Were you about to launch a similar marketing campaign that now needs to be avoided? Do you need to shore up your compliance or human resources issues to avoid a regulatory punishment? Perhaps it’s as simple as telling your salespeople to avoid a certain topic of conversation with a group because of the way it was perceived.
By understanding the market’s reaction to your competitors’ failures, your company can build a strategy to capitalize on the opportunity. However, no matter the strategy you choose, insulting your competitor is a race to the bottom and rarely does anything to impress your consumers. While every business should certainly be ready to capitalize when the market presents such opportunities, your business will only grow if you communicate why you are the best option, not simply why people shouldn’t do business with your competitor.