The Australian Small Business Blog

Tuesday, July 28, 2009

Competing with Your Business Owner Customers

Let’s say your business was to supply landscaping materials to landscapers and then you decided to get in the landscaping business yourself as a side business. What would your landscaper customers think?

For materials may be as much as a third of the cost of a job. So when they see their supplier competing with them, they will believe that they will have a significant cost advantage over them. They would also ask: “Why should I be giving money to a competitor to take business away from me?”

Which is why, most businesses in this situation go out of their way not to compete with their customers, even accidentally, as can happen sometimes. For example, distributors will in most cases refer retail sales to their retail resellers, but sometimes they may end up supplying a retail customer who has had a poor retail experience.

However recently, Google decided to compete with some of its customers, and they are not happy! Fairfax and News, owners of Domain and pay Google millions of dollars for keywords to send searchers to their websites. Now Google wants to provide listings of real estate directly on google maps for free. This will directly undercut the businesses of two of its largest advertisers. Another issue will be poor quality control from this free service on the accuracy of these free listings with out of date information appearing as well as allowing scammers.

A former CEO of REA a competitor of said:

"Google is moving from being a search engine to a portal," he said. "Instead of sending you to other websites - which have paid money to be there on its listings - it is now serving up the end data itself. That then raises the question: why would you need to go to the other sites and why would they then pay Google money [for search key words].

A Google spokesperson said they have received “great feedback”. I bet they have!

So if Google is giving this service away free, what’s in it for them? It is just one more free service Google offers to make it more difficult for competitor search engines to compete with it. Services such as free email, news, calendar, YouTube, and many others. As it expands, it will inevitably clash with those offering a paid similar service. If they are small, they can just ignore them, but it is more and more finding some hard boundaries and now Google seems to have taken the place of Microsoft in internet demonology and attracting the attention of the regulators.

If you are small like the landscape supplies business, there will be other suppliers who refuse to compete with their customers who will get their business.

There is a saying in business: “Stick to your knitting”. Business history is littered with examples of failures of businesses which tried to take over their customers knitting. While it may appear that the grass looks greener in your customers pastures, inevitably, there are just as many competitors grazing there as in your own paddock, and they will know much more about this paddock than you will.

Respect what your customers do, and help them be successful, and you too will be successful.

What do you think? Remember, the best commenters July 2009 will receive a $500 printer.

May Your Business Be - As You Plan It.

Over to You. What do You Think? Post Your Comments Below.

Dr Greg Chapman is the Director of Empower Business Solutions and The Australian Business Coaching Club and is Australia's Leading Advisor on Emerging Businesses and provides Coaching and Consulting advice to Australian Small Business Owners in Marketing & Business Strategies Planning & Systems. He is also the author of The Five Pillars of Guaranteed Business Success.

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