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Competition is one of the best things for business. It affirms an actual need and market for the industry or niche you’re in, and it encourages innovation and creativity.
There is a tendency to hold competition in a specific light, and it becomes easy to look at what the competition is doing rather than to focus on innovation or actually solving a problem. Rather than striving to be creative, you just try and catch up with what other people are doing, hoping to gain some of the same traction.
Copying is easy and following trends is simple, and there’s a better way to build your business than to only look at what others in your industry are doing.
On today’s show, we’ll be talking about the alternative to focusing on “what everyone else is doing” and improving your offerings in ways that make your competition’s methods irrelevant.
Highlights, Takeaways, Quick Wins
- What your competition is doing doesn’t matter—what matters is what your target market needs.
- If you try to match what your competition is doing, you have less incentive to make an incredible product.
- Keep your customer’s best interest in mind.
- Instead of matching what your competition is doing, increase the value.
- Focus on doing things better while keeping your finger on the industry’s pulse because competition fuels innovation.
- If you don’t like something in your industry, change it and do something new.
- If you only follow, you’re never going to lead.
- 04:43 Cory: Today, we’re talking about increasing revenue. The title of the show is Increase Revenue by 200% by Forgetting the Competition, and the reason I gave it this title isn’t because I can guarantee anything, but because of a story I would like to tell. In 2009, I listened to an album by this band called Falling Up, this new concept album called Fangs. A concept album is where you have some concept, theme, or story, and you write music all based in this theme.
- 05:40 I thought that was amazing. It was really cool. I’m a musician, and I’ve been playing for almost 20 years now. In 2009, I started working on my own album. I was really excited about it. I started writing music. The process is a really long story, it’s a long story because that album took me seven years to complete. I met a girl, married the girl, had a kid, moved, went through life transitions and different jobs.
- 06:24 In 2016, last year, I finally completed my album. I finished writing it and recording it. I had it all ready to go. The music industry is really interesting. Looking at how music has evolved in the last 50 years, so many changes have been made in the modern music industry. It’s interesting to look at what the MP3 player did and what the iPod did. In our day and age, there’s an acceptance that a song is $0.99 and an album is about $9.99.
- 07:17 That was what I was encouraged to do. Everybody else who was releasing albums and doing their thing, they were making their albums and selling them on iTunes, Google Play, or whatever, for $9.99. That was just the thing. That’s not even counting in the percentage that Apple or Google takes off the top. I think with Apple it’s like 30% that they take from your sale. You’re not even getting $9.99 from that sale, you’re getting $6.99 or whatever.
- 07:53 I looked at that, and I thought, “I could put it on iTunes and Google Play. I could do this thing everyone else is doing. Or, I could forget about that. Maybe I’ll put it on there as a side thing.” I wanted to do something different. I wanted my project to stand out as something really different. I made my own website, I built a platform, I used WordPress and WooCommerce and did this whole thing, and I added value to the album.
- 08:33 If you buy through iTunes, you can only get the songs. I sold my album on my website for $12.97, and I recorded a bunch of videos, one video for each song. When you buy through my site, you get the downloads. There was an MP3 version, a few high res versions, so if you wanted to listen in different formats, you could do that, and then there was a PDF of artwork for all the lyrics I had written. I also recorded a video for each song, explaining the background of the song, adding value, talking about the different themes and how it all went down.
- 09:13 You could get more for just a couple of extra dollars. You would get all of this extra value. That’s not all I did. I also created a “deluxe version” of the album, and I priced it at $24.97. With that version, you got everything you got with the base version, but you also got an instrumental version of the album. That wasn’t hard to do. I just had to remove the vocals and remix and remaster those a little bit. I created this whole other album and added a few more things, and I sold that at $24.97.
- 10:15 If, for example, I had sold ten albums on iTunes, that would be $99.90. Taking 30% off the top, I would have only made $69 or so. Imagine that those same ten people came in and bought the deluxe version, which included all of this extra value, at $24.97. That’s literally $249.70, which is coming straight to me. No one is taking a cut off the top, because it’s coming through my own platform. That’s where I directed everybody. I directed them to the website and showed them the value, and 97% of my sales were of the deluxe version.
- 11:15 I looked at that, and I thought, “A really interesting thing just happened.” I could have just done what the competition was doing. I could have gone with the industry standard, but because I decided to do my own thing, I saw an increase in sales and revenue of about 250%. In this episode, I want to talk about the purpose of competition, why it exists, and some practical ideas of where your focus should be as you’re building your business and producing this brand based on your business. I want to talk about how, in the long term, it can be better for your consumers if you don’t worry about what your competition is doing.
- 12:25 That’s where the focus needs to be. The focus needs to be on the people you’re trying to help, not on everyone else, who may be trying to sell to those same people or do similar things.
- 12:35 Kyle: That’s a really awesome story. 97% of your sales? That’s crazy.
- 12:45 Cory: Imagine if I hadn’t even considered that, if I had said, “Ah, I’ll just put it on this other thing.” Instead, I stopped and said, “I want to be a little bit creative. What can I do to increase the value of this product and create a higher tier?” I honestly didn’t even expect people to buy that version. I really didn’t. It blew me away how many people wanted that. Partially, it was story. Partially, it was value. And, partially, people liked, believed in, and trusted me, so it all naturally funneled into a place where it made sense to them.
At the launch of my album, the total revenue I made was about 230% more than I would have made just selling it through iTunes.
At the end of the day, what your competition is doing doesn’t matter.
What matters is what your target market needs and what is going to help them.
Stop Looking at Your Competition
- 13:25 Kyle: I have a similar story with icons. We’ve talked about that before. I design icons. One of the digital packs of icons that I have on my site has over 40 icons, and it’s for $56. It’s fairly reasonable. If you take those out, per icon, and you think about the time and energy that goes into making those a good quality product, it’s a very reasonable price. There’s this weird industry standard where you can get a crazy amount of icons, sometimes thousands of icons, for something like $1.
- 14:13 Cory: You just go to GettheFreeThousandIcons.net.co.uk.
- 14:18 Kyle: To be honest, a lot of those are terrible. They aren’t well made. They’re made to be a mass-produced item. Some of them are decent, but you also have to know and discern which ones are right. I made this set, and it came to a point, similar to where Cory was at, where I hadn’t sold them yet. I was like, “Do I go the route most people are going and sell on these sites where most people sell icon packs?” Even if I sold on my site, do I sell them for the “industry standard”?
- 14:57 If you divide that out, it’s less than a penny per icon. It’s definitely not worth my time. I started selling this thing on my site for $56. Yeah, the numbers aren’t as high. The amount of sales probably aren’t what I would be getting if I sold for less than a penny, but with what I’m selling for, I don’t need as many sales. Obviously, I want to have more sales and increase income, but if I was selling for $1 per icon pack, it would take me 56 of those orders to equal one of these.
- 15:49 I’m selling these, and I’ve made a decent return on them because, for the small amount of people that have purchased them and see the quality in it, it equals out to what someone else would make somewhere else, waiting on 50 people or 120 people to order from them. Those are high numbers if you don’t have the audience to back that.
- 16:24 Cory: Kyle, you talked about getting 1,000 icons for $2 or whatever, but once you open it up, it’s probably 32 pixels by 32 pixels. It’s like a PNG, so you can’t scale it. It’s just really small. Or they just send you a font, and you have to figure out what font goes to what, what character goes to what. It’s terrible. Maybe that works for some people. The point is, if you’re only basing what you do on what other people are doing, it won’t work in the end. You’re looking sideways instead of looking forward.
- 17:01 That’s ultimately what we need to be doing. You need to be looking forward and looking at the people who actually have the problems, the people you’re trying to help.
If you try and match what your competition is doing, you have less incentive to make an incredible product.
Consider Your Customer’s Best Interest
- 17:13 Cory: We were talking about some of the businesses we know that are in similar industries. One that came to my mind was this restaurant we used to go to back in California called Garcia’s. It was deeply authentic Mexican food, and it was great. You would get a massive burrito, probably the size of my face, and it would be priced higher than if you went to Taco Bell. If you go to Taco Bell, you can get a burrito or a taco for $0.99. You eat it, you hate your life, and you regret everything.
- 18:04 For whatever reason, you’re like, “I’ll have another,” and you get the $0.79 one. Garcia’s wasn’t worrying about Taco Bell. They were producing a business and creating a product that had people coming back in droves. I can’t even count out how many times I would say, “I really just want Garcia’s,” and we would go there. We loved the people there. They were really friendly and personable.
- 18:27 It felt less like a corporate race to the bottom, trying to sell all the bits and pieces at the cheapest possible price. Garcia’s wasn’t worried about Taco Bell. They were just worried about serving their customers in the right way and delivering the kind of product their customers wanted, and that was authentic Mexican food.
- 18:50 Kyle: That’s awesome. I think that’s the biggest down side to getting so focused on your competition.
- 19:03 Here’s a great example. There’s a local company here called Local Coffee. They have great coffee. They serve people who care about their coffee and who care about having an environment to work in—a lot of college students will go there—or people like me who work from home will go there to relax a little bit. Also, people will just meet up there for social time. They don’t have drive throughs. At none of the locations can you drive through a Local Coffee and get your coffee.
- 19:44 They could do that, probably easily in some of their locations, but there’s a reason. They don’t want to be a commodity, where people are in a rush and they go through this drive through to get coffee real fast and then leave. It’s more of an experience to go in there, order something, have it handed to you, and talk to the staff. They’re really great at hiring great staff members, and they want you to experience the interior of their coffee shop. There’s something to be said for that.
- 20:24 They could probably raise their profits if they had a drive through. There are people going to work, and some of the streets they’re on, I know, are places where people are in a hurry. People are going to work. One of them is close to a college campus. People are in a hurry, but that’s not what they’re going for. That’s not what the people they serve really want or what’s in their best interest. Maybe they think they want it, but if they had it, it wouldn’t be the same.
- 21:05 Don’t say, “Well, Starbucks has a drive through, so we need one.”
- 21:10 Cory: Maybe that’s not what your customers value. Maybe the people who want to go to Starbucks value that quick in, quick out, and they want the drive through. Maybe your customers value a space where they can sit down and enjoy a cup of coffee or an espresso, and it’s about the atmosphere.
If you focus too much on your competition, you start adding things that don’t make sense for you.
Keep your customer’s best interest in mind, the people you’re serving, and stop being so focused on the competition.
Competition & Innovation
- 21:34 Cory: That’s when it comes down to knowing your target audience. You have to know your target audience. You have to know them so well. If you feel like you spend too much time looking at your competition, if you spent half of that time focusing on your target audience, asking them questions, and taking them to coffee and getting to know their world, you would be crafting the kind of brand that these people are looking for, what they want and need.
- 22:21 You’re solving problems here. At the end of the day, competition just means that you need to step up your innovation. If there’s another business out there that’s doing the same thing that you’re doing or they’re in a similar industry, that just means that you need to know the people you’re serving so well that you can innovate and be the best. That doesn’t come from just saying, “Elon Musk is over there making an electric car, so I’ll make an electric car that looks just like a Tesla.”
- 23:02 I think there was a company like that. It was giant electric truck company called Nikola. It was ridiculous. That’s so obvious. At the end of the day, this may sound ironic, but you can’t ignore what your competition is doing.
- 23:43 Innovation is doing new things based on the problems your customers have, based on the needs that the people who follow you have—and what they want, enjoy, and value! The people who are buying my album, who are engaging in that part of the story, they wanted something more than just buying tracks off of iTunes. They wanted to be part of something, part of this journey and this story that I had crafted over seven years.
- 24:17 I wanted to give more value. We talked about this last week. Instead of discounting your price, why not increase the value? Instead of trying to match what your competition is doing, why not increase the value? Why not add? Do something new. When Apple Music was released, there was that whole Taylor Swift thing that happened. The payout for artists was terrible, or so she said. She decided not to stream her music.
- 25:00 She was like, “This is a high value of mine, because I want to make sure artists are compensated. This is something I really value.” There was this pretty quick turn around from Apple. They were like, “Alright, we’ll adjust some things.” They apologized, and Taylor Swift then became part of it. She’s even been on commercials for Apple Music. I only found out the other day that Taylor Swift is not on Spotify.
- 25:27 I wasn’t searching for it. Actually, I was. She’s great. She could have stuck with what everybody else was doing, but she said, “No, I’m not going to do that.” Allison is a musician and a friend of ours in the Community, and she says, “I agree whole-heartedly. Innovation is so important. I hate how people in the music industry are always complaining about Spotify ruining music-making. I think it’s just an opportunity for creativity.” I 100% agree.
- 26:02 Or make what is there better. Look at the people. What do people value? They value music on the road. They like it on the go. How can you tap into that? How can you connect with people who would rather pay for a subscription than outright for music? As my sales go to show, that’s not the case. A lot of people bought the physical copy. I had physical CDs, and people bought them.
- 26:31 Kyle: That’s pretty amazing, actually.
- 26:33 Cory: That blows my mind. You can’t just make decisions based on something that seems like it’s the way. I could have said back then, “No one is going to buy a physical CD. Nobody.” Between 50% and 60% of the people who bought that deluxe version also bought a physical copy. I had to mail it to them. How crazy is that?
- 27:02 Kyle: You mailed one to me.
- 27:04 Cory: I did! Thank you for your purchase.
If you only focus on what your competition is doing, it’s going to stifle innovation.
If you don’t like it, change the industry and do something new.
Don’t Let “Because They’re Doing It” Be Your Reason
- 27:12 Kyle: Do you know what the worst thing you can do is? Ever since we came up with this topic, I’ve been thinking about this. I’ve had these conversations, so I know this exists. Maybe you’re thinking, “I would never do this,” but if there’s anything where someone says, “Why are you doing that?” and you say, “I don’t know, that’s just what you do. That’s what other people do,” stop. No. That’s the worst possible answer to that question.
- 27:51 I’ve been talking with people at conferences or meetups or wherever, and I’ll ask them, “Why are you doing this?” They’ll say, “That’s just what a lot of people are doing right now. It’s the thing.” I’m like, “Why? Who are you targeting? Okay, maybe people don’t buy CDs anymore, but maybe they do. Maybe the people you want to appeal to actually buy CDs. Maybe they buy records. Maybe they don’t care about records. Maybe they only want streaming music.
- 28:27 Maybe they want to buy 1,000 icons for $1 because they’re using them for mock-ups. Maybe they want high quality icons. Whatever it is, if you don’t know who’s in your audience or what they need, from a content marketing standpoint, should you be making videos? Should you not be making videos? Should you be making more written content?
- 29:10 Cory: When did Netflix start? I think it was 2002 or 2003. I don’t know if you had a subscription back then, but they would send you DVDs. You would go on Netflix, you’d order whatever DVD you wanted, and they’d mail it to you. When you were done watching it, you’d put it back in the package and you’d send it back. That was their whole business model—mailing DVDs to people.
- 29:47 I forget the year, but then they decided to try and do streaming. I don’t think they were doing TV shows at the time. They were going to create a whole different brand called Qwikster. It was going to be this whole separate company. There was backlash. They listened. They put it all together. Ultimately, they dropped DVDs because the world was going in the direction of streaming, and they wanted to be on the forefront of that.
- 30:27 Of course, there were people saying, “I can’t believe you’re doing that! Look what everyone else is doing. Look what Blockbuster is doing! Look what Hollywood Video is doing!” In 2016, Netflix brought in almost $9 billion in revenue. They weren’t worried about what the rest of the industry was doing. They wanted to innovate, to do new things. Then you have all these other streaming services, like Hulu or Amazon Prime, and they’re trying to catch up.
- 31:00 Netflix was like, “We’re going with this. We believe in this. We want to innovate. We want to move something forward.” It’s huge. It’s massive. $8.8 billion last year!
- 31:18 Kyle: I don’t remember what year this was, but this was early on in the company, once they went public. It was fairly soon after that, and my dad bought 2,000 shares of their stock for something like $8 or $18 a share. Time went on, and they got to that rocky point of trying to figure out whether they should do DVDs or stream. A lot of people were apprehensive of that, so he sold all of his shares. If he had kept them, today, they would be worth something like $200,000. If he’s listening, he’s probably crying right now.
- 32:21 Cory: He was, and now he’s got his fingers in his ears.
Stop doing things because that’s what other people are doing or what they say to do, especially if it’s not in the best interest of the people you’re trying to reach.
Don’t Ignore Your Competition, Either
- 32:27 Cory: We can only say the same thing so many times, so I don’t want to keep harping on it, but there’s a massive opportunity. As you’re building your company, your freelance business, or whatever, stop just looking sideways! How many times have you gone on a designer website looking for inspiration, and you can’t tell who’s who because it all looks the same? Maybe there are different ways to solve the same problem, or maybe there are new problems, but you didn’t now because you were just looking at the competition. It’s all about knowing who you’re trying to help.
- 33:10 Kyle: Earlier, Cory, you mentioned that it’s not good to completely ignore the competition, which I completely agree with. Do you know who ignored the competition? Blockbuster. If you’re not familiar with Blockbuster, they were a really big chain in the US. You could rent DVDs or VHS tapes back in the day. I rented many VHS tapes there in my younger years. That was the thing. Then Netflix came along. They did streaming and started that trend, but I really think it was understanding the market.
- 34:05 “Oh, people are interested in this. People have internet connections now, and they can do this kind of thing. They want to, it’s convenient.” Close to the end of Blockbuster’s life, they tried to do a streaming type of thing, but it was too late. They had already lost so many people that were demanding a Netflix-style experience. They completely went under. They’re gone. They’re not a company anymore. That’s how you go from being a giant corporation to nothing—you completely ignore what’s happening. It’s either, “We do things the best way,” or you’re being completely blind and you’re not even looking at the competition.
- 34:52 Cory: Look at Blackberry. They had the cell phone market cornered. They had it. Everybody had a Blackberry. Anyone who was anyone, all the business people, all had a Blackberry. Then little old Apple decides to show up ten years ago, 2007, with the iPhone, and they didn’t go out of business, but they’re done. They had to scramble to match what Apple was doing. Everyone wants touch screens. Nobody wants keyboards. Blackberry tanked.
- 35:44 When you have multiple people doing the same things and working on the same problems, you can build community with that. It also gives you an opportunity to innovate, think outside of the box, and be creative, so you can actually be top of your class. Maybe that isn’t the right expression. Why would anyone choose you over someone else? Keep working on that. You can’t just make something and hope it sticks for the rest of your life.
- 36:12 You have to keep working on it, building it, and cultivating it. It’s like a garden. You can’t just plant a seed and hope it becomes a great thing. You have to water that sucker. You have to put some fertilizer down. You have to make sure the birds don’t come eat all of your pumpkins.
You can’t completely ignore what your competition is doing, because competition fuels innovation.
- 36:42 Kyle: That’s the separating factor. You can see what your competition is doing and say, “We need to do that same thing,” exactly the same thing, because obviously, they have success, so if you do this, it will be great. Most of the time, it’s not. It’s not you. The foundation of your brand doesn’t fit with that. Sometimes it does, but sometimes it doesn’t. It’s up to your discretion. The best way to approach that, though, is like this.
- 37:13 Say, “Everybody is starting to do this thing. How can we do this in a way that fits with what our brand is all about? Obviously, there’s demand for it. People in our audience are interested in this thing, because we’re in the same industry. How can we do this in a way that fits with our brand? Can we?” Think through it a little bit. A great example here is CommunityTalk.
- 37:50 This is the platform that Sean McCabe started working on, that we have working here at seanwes, that’s part of the chat we’re looking at right now. It’s built around this idea that forums aren’t good. Sean could have easily looked around and said, “Everyone’s using forums. Let me put a forum on the site, and that will be good enough.” There is chat, there are forums, and this is all of that coming together. This is something new and different. It’s hard to explain.
- 38:43 Cory: Ultimately, you can look at something like Slack, forums, or other messenger things, and think, “I could just do that.” Instead, using Kyle’s example of CommunityTalk, you go to community organizers and say, “What does your community need? What do you need to foster and cultivate community?” You can actually build something around community. It’s not just about making a cool app where you can talk with people. There are tons of things that do that. This is about something specific.
- 39:23 That’s what we’re building. It’s something for communities, made out of the needs of actual communities. That’s going to be good. Check out CommunityTalk.com.
CommunityTalk is innovative because it looks at what everyone else is doing and tries to give its target audience a better experience.
Keeping Perspective on Your Competition
- 39:42 Kyle: Those kinds of things are what drive any industry forward. Look at Apple and the iPod. Some people could argue that they like whatever brand better.
- 39:58 Cory: Zune!
- 40:01 Kyle: “I like the Zune better!” I actually had a friend that liked the Zune better, for some reason.
- 40:05 Cory: It was cool. It had a cool interface.
- 40:07 Kyle: The point is, they looked at something differently. They looked at the industry, and maybe it wasn’t streaming at the time, but they realized that people wanted to take this stuff with them. “The Walkman has been really popular. People have been switching out tapes and listening to music on the go. Why not give them a huge library of music to listen to while they go somewhere?” For that audience, for the audience they were going for, it wasn’t about the music quality, necessarily.
- 40:36 It was about being able to take music with you. That was what they focused on. It seems like a simple concept now that we’re used to it. We have iPhones. iPods are almost obsolete already. Back then, you could combine storage, music, and have an interface to interact with it and listen to music. There are always solutions to things. They match your audience. They almost match your competition. Don’t focus on doing what your competition does.
- 41:26 Know what’s going on in this industry. Is that a good thing? Is that a bad thing? Do you want to follow that? Or do you want to make a change? You can make a change in your entire industry by not just following competition.
- 41:43 Cory: If you really want to look at some of the great long term benefits, what if you make something that allows a “competitor” to make something even better to help the people you’re trying to help? If you’re really focused on helping people, it doesn’t matter who does it. Of course you want to be part of that. If you want to help people and there’s someone out there who does it really well, that’s a good thing for the world.
- 42:18 You have to be mindful that you’re part of something bigger. That’s really important. Josh has a great way to close us out. He says, “While you can’t ignore your competition, it seems like paying attention to thoe market is truly most effective. Blockbuster was so big, and just watching their market in the now. Netflix seemed to be watching the world as a whole and saw what was coming on the horizon.” I totally agree with that.
- 42:47 Again, Netflix was looking at the people. Of course, there was business interest and the desire to make something great and build a successful company, for sure, but they weren’t so focused on just maintaining. They were focused on bringing what their customers wanted to them in a way that was new, in a way that actually brought about something that helped them or made their life better. We can argue all day as to whether Netflix makes your life better, but that’s why they’re so successful. I’m interested to see how well they do in 2017.
Focus on doing things better, in the best interest of your audience, while keeping your finger on the industry’s pulse.
If you only follow, you’re never going to lead.