Part 4 of 7
So let’s get to part 4 — learning more about our competitor’s prices.
The idea behind this email course is to figure out how to set your prices for your race.
In order to do that, you need to know what the market is currently charging for something of similar value.
Remember all the work you did in Part 3 when you talked to potential customers and mined your competitor’s results?
You did that, right?
Of course you did!
Hopefully you paid a lot of attention to the other things that came with that.
If not, no worries!
The tactic in Part 3 are very similar to the tactics in Part 4.
The only difference is the objective you are trying to achieve.
What objective are we trying to achieve this time?
A complete understanding of what your competitor thinks is a good value for the price they have selected.
And whether or not they are right.
Ready to work?
Okay — let’s go on a value-finding mission!
#1 – Value! Value! Get your value here!
There are a certain number of race promoters, in your selected territory, that produce races.
You know who they are!
You’ve seen them give the pre-race briefing.
You or your friends have been to one or more of their races.
You’ve see their advertisements, and know which parks they like to use.
Remember these folks?
These folks are your potential competitors.
Okay, I know what you’re saying.
I race mountain bikes and they to trail runs! Are they still a competitor?
Yes. But don’t over think it too much.
Here is an easy rule of thumb to use when trying to make heads or tails of this:
If you both hosted a race on the same day, would they take away a percentage of your customers?
If the answer is, YES? Then they are your competitor.
Now make a quick list of each one of these potential competitors.
We’re going to use it in Steps #2 and #3 to start building our competitor value list.
#2 – Collecting intelligence… um… I mean experiences!
Each one of your competitors creates a product in the form of a race.
There is no rule that states you cannot go to that race and, well, hang out.
Go to my competitor’s race?
Absolutely! It’s a free country, right?
In fact, I encourage you to go an hang out at your competitor’s races more than once.
A good way to race in it yourself, or even volunteer.
The racing community is interesting in the way competition is treated.
They all visit each other’s events to see what the other is doing. But they do it by racing in their events.
In a way, it is the same as if you bought your competitor’s product and took it back to your lab to see how they built it.
When you race of volunteer in your competitor’s event, you see their value first hand.
No, you don’t see it first hand — you EXPERIENCE it first hand! The same way a customer would.
You know if their timing is well managed, or a total mess.
You know if their course is well marked, or dangerous.
You know if their registration process is easy, or if you wandered around a bit before finding the right place.
And you know all of this through experience, not second-hand accounts or hearsay.
As a participant in your competition’s operation, you don’t only get to see the parts that have value, but you also get to see the parts that suck.
It is a very honest way to judge your competitor’s value, and know exactly what they think is worth the price of admission.
Consider the following scenarios:
- If you paid $50.00 for a race that had a confusing course, only Top 3 results, and a stuck up race director, you know that other people experienced that too.
- If you paid $50.00 for a race that was well organized, posted good results on race day, posted better results online a day later, and had very nice people running it, you might know what to strive for.
- If you paid $50.00 to pre-register for a race, but on race day, discovered that registration was a volunteer sitting cross-legged on the ground under a pop-up tent, you might seriously wonder what you just paid for.
The point is to know exactly what value you received by experiencing it.
Only through the experience can you provide a objective critique on your competitors services.
#3 – Crunching observations into numbers you can use
Once you have been to competitor’s race and seen all there is to see, it’s time to transform your observations into something you can base a decision on.
On a spreadsheet, list each competitor across the top. Visiting about 5 to 10 competitors within driving distance of your first venue, should give you a good perspective on each one’s value.
Down the left column of your spreadsheet, start listing things you think each race should have.
A good starting list would contain:
- Attendance
- Registration
- Starting Line
- Course Marking
- Safety
- Finish Line
- Timing
- Results Postings
- Podium
- Awards
- Direction
- Volunteers
- Parking
- Extras
- Communications
Keeping this simple, use a 1-10 scale (1 being very poor, 10 being superior), and rate your competitor as honestly as you can.
Remember that your rating is for your own personal use, so no need to embellish or play favorites.
Be brutally honest in your evaluation.
Your honest impressions of what they do well, and what they do badly, will help you when it comes to building your own races.
Next, add up all your ranking columns for each competitor, and divide it by the number of categories you used. Then round up.
Using the list I gave you (15 categories), you might have something like this:
{5, 6, 7, 4, 8, 5, 7, 9, 5, 7, 2, 8, 3, 4, 3} = 83
83/15 = 5.3333 = 5.4
This gives you a total score of 83, and an average rating of 5.4 over 15 categories of value.
You can get fancy with this list and provide weights to each category that you think are more or less important.
I prefer to save the fancy for when you are providing your own value to customers.
For now, you only need to worry about how one competitor’s value compares to another.
#4 – Connect Value with Price
You might have notices that I left price off that list.
Hey! Wait a minute! Yes!
That’s because you need to find the overall average value of each competitor first.
Got it!
Awesome! Now that you have those scores and averages, take the price you paid (or would have paid) to race in your competitor’s event, and see how it matches up with each rating.
This is often called head-to-head comparisons.
I expect you will see something you didn’t see before.
Actually, I know you will see something you didn’t expect to see before!
Some of the ratings will seem like there is a decent amount of value for the price you pay.
However, other will seem way off.
It is important to understand that your rankings of each competitor, and your feeling about the price you paid for that value, are your’s and your’s alone.
You might think that a registration price of $100.00 for a competitor ranking of 5 is way too high.
Others might think that a registration price of $100.00 for a competitor ranking 5 is just fine.
Do you want to know who is right?
YOU ARE!
Why? Because you are the one ranking these competitors, you are the one that has an opinion on how low or high that registration price was, and you are the one that had the experience.
No one else, just you.
But if you’re looking for some validation, your fellow racers and friends are good ways to make you feel better about your work.
Do they agree with your ratings? Ask them.
If you get enough feedback that agrees with your assessment, then you’re probably on the right track.
Ultimately, you find that competitors fall into three (3) categories:
- Very little value for the price
- Too much value for the price
- Just about the right value for the price
This is the Goldilocks scenario.
Since very few will be too much value for the price, which of your competitors on your list is providing very little value, or has their value just right?
Here’s another way to interpret your head-to-head comparison chart that now includes prices:
Competitors that show little value (1-4) for a high price include:
- Competitors that have elusive access to land or a trail system that is not normally available to everyday racers. This gives them exclusivity that prevents any other promoter from doing the same course.
- Competitors that are struggling to stay in business by jacking up their price to increase revenue with minimal turnout. This is usually the sign of a business that is about to go under.
- Competitors that are delusional and think they provide the best bang for your buck, regardless of customer feedback or dwindling numbers. Often it is the personality of the promoter or the promoter’s staff that is the turn-off.
Competitors that show a lot of value (6-10) for a low price include:
- Competitors that have already invested in all the gear needed to put on a race, have a large volunteer based (like a club or team), hold few races a year, and use racing as a fund raiser.
- Competitors that are new to the business, had a lot of seed money to spend, and over-produced a race that is great, but probably did not make any of their money back in the end.
- Competitors that are trying to build their racing portfolio by providing more than a customer expects for the price, hoping to win return customers that will not mind when their prices eventually go up.
Competitors that provide an average value (4-6) for an medium price include:
- Competitors that are playing it safe, not innovating, not trying new things, but rather doing the same races the same way year after year so long as enough customers keep showing up.
- Competitors that do racing as a part-time gig, have a second job, and don’t really need the money. But they also never have time to improve their races and do it more as a way to hang out with their friends, give back to the community, and earn a couple extra bucks.
- Competitors that are one-off’s and only produce one or two races a year, never investing too much time into extras, but do manage to create a race that breaks-even. Many businesses that use racing as a promotional event fall into this category.
Do the work, build your list
Your goal is to use your assessment of their value, your impression of the price, and your perception of your own experience, to create a list that gives you a clear understanding of your competitor’s value.
This is your initial gauge for determining which of your perceived competitors are really YOUR competitors.
Some may be fly-by-night operations that pose no threat to your business.
Others will directly compete to your business.
That’s why it is very important that you know who is who.
Once you know, you can figure out which of your real competitors is weak in certain categories, or charging too much for the same value.
These insights give you options and advantages when it comes to determining your final pricing strategy.
More importantly, they are insights that 99-percent your competitors will likely never do.
Okay! That’s a ton of work for you to chew on for the next few days.
Meanwhile, you’re already half way through collecting enough data to make an informed decision on how to set you own price!
Congratulations!
Your next email will take on the third most important pricing strategy question:
Part 5 – What are YOU offering for the price?
See you in a few days!
Cheers,
Kyle
Kyle M. Bondo
Reckoneer | reckoneer.com