Silence is golden, sometimes

In the last couple of weeks, I've seen a couple of examples of why we should never break the rule: "Never speak ill about your competitors."

In one case, a web designer and Internet marketing expert of undeniable credentials and capacity stepped over the line and had less-than-wonderful words to say about another website design/management service.

In the second, I offered candid, first-hand observations of a publishing competitor.

We were both communicating in the remodelcrazy.com forums; and we both (independently of each other) have earned our place of trust and respect within the forums.

In the context, we are experts within our respective fields and we "should" know what we are talking about.

But did our words of wisdom about our competitors carry any weight? Not unless you consider it a weight against us.

I observed this rather disillusioning result not from my own frame of reference, but when the web publisher spoke his mind. My immediate reaction: "This guy has lost points, who is he to say these things, and isn't that competitor really not so bad, in fact, maybe quite good."

So what are the forum readers thinking when I took a shot at MY competitor?

I'm pretty sure that both the web designer/marketer and I know the rule "Never speak ill about your competitors" by heart, but we felt comfortable (and trusted) enough in the closed forum environment to speak our minds with some candor.

It didn't work. It is too painful to draw attention to the specific responses, but you can read through the relevant forums and will see we didn't win any brownie points for ourselves, or really do any harm to our competition.

This leads to another question, then. You know you have a bad competitor, and you know someone is considering using their services. How do you get them to see the light you know from hard first-hand experience?

Maybe you have a better answer than silence or even sincere praise (rather hard to do, eh). Right now, I don't.

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Tarred by others feathers

One of the biggest challenges in business is when your business practices (and brand) are adversely affected by the ill-doings of others, such as your competitors. I noticed this challenge yesterday on the closed list serve from the Society of Marketing Professional Services (SMPS) group for Certified Professional Services Marketers (CPSM).

One member sent an email to the group with this question:

Would like your opinion regarding National Publications offering to publish a feature article on your firm. The caveat is to supply them with a listing of your firm's vendors/suppliers who they will then contact to obtain advertising space.

Although the contact at the publication assured me this is done in a professional manner (no hard sales involved), I'm not sure that I am comfortable with this tactic.

Several members responded, some telling of horror stories of suppliers being badgered, and publishers producing terrible and useless publications. A few took a more even-handed stance, pointing out that if the feature is well written and distributed to the right people, it can truly be effective for the business.

I felt like the lion in a china shop, however, as our business is producing just these types of features -- and I know that the complaints of the angry CPSM members have some validity.

Last summer, for example, one of our own clients reported he had been burned by one of the less-than-ethical players in this business. He had experienced working with us, and so thought the other publisher would conduct business in the same manner.

The challenge of course is we can't dictate the ethical behaviour of our competitors, but their mis-doings affect our brand. We certainly can't name or criticize them. (However, here our client is being helpful; when we hear from other clients about the competitor plying the trade, we refer the potential customers to him a first-hand and wonderfully negative reference.)

The unethical behaviour in our industry is possible because sales can, to some degree, be conducted in a hit-and-run manner, especially if you are publishing a "national" publication and are able trap your business victims in many different locations, at least once.

As I write this note, an industry association with whom we have very good working relationship sent me an email asking about a publisher who appears to be representing a project in co-operation with the association. The association's employee immediately emailed us and two of our competitors to find if the person works for us. I'm sure the dishonorable publisher will be warned off.

I don't have a magic solution to this problem, which might affect your business, especially if you have several less-than-ethical competitors in your market space. Probably our best defence is simply to maintain our own standards. We benefit, like most successful businesses, from long-term repeat and referral clients, and by participating and contributing to industry associations.

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The competitive impetus

Yesterday, I received a call from someone who noticed a long -established competitor is responding to his group's initiatives with changes and improvements to the competitive site.

We agreed that this can be seen in a flattering light; if your ideas are good enough that they are being copied, you are on the right track. Nevertheless, the question is, what should you do when you see the competitor sniffing around in your "space" and, seemingly, stealing your ideas.

One solution, not recommended except for those with very deep pockets, is to bring the lawyers out, as has happened recently with Reed and McGraw-Hill Construction. These mega-corporations can afford a few million dollars each on legal fights without worrying about the dollars and cents of litigation (these fights are lawyers dreams for billable hours!)

I decided to engage a competitor in the legal framework only once, about 14 years ago. The competitor was trying to stomp on me AFTER he broke a buy-out agreement, which resulted in the voiding of the non-competition agreements. I won't forget the day the process server arrived at my office, with a writ claiming $1 million in damages. I called friends to recommend a lawyer, and they all recommended the plaintiffs!

Fortunately, my affairs were structured so the other publisher had to sue the local Board of Trade (Chamber of Commerce) as well as my business, making it rather messy for the plaintiffs, also business-to-business publishers. As well, my lawyer confirmed to me that I had actually acted appropriately throughout.

In the end, at an injunction hearing, the judge issued a split ruling: Clearing my business of any liability (and awarding costs), while finding the Board of Trade and its then president had erred.

The story ended with the Board of Trade paying about half of my legal costs and its then-president resigning after he was picked up in a prostitution sting. I had nothing at all to do with that, but it certainly added up to an amazing business year.

So, while lawyers and legal actions can create competitive chaos, are there other, more effective, responses? Here are some other ways to handle competitive challenges:

• Be true to yourself, but don't be afraid to copy good ideas (that aren't patented or protected by trade secrets you've cracked, of course) and implement them in your own business.

• Remember you have a primary niche and market. You are generally wisest to focus on your market and maintain a leadership role. The challenge comes when an extremely well-funded competitor tries to invade your space. You can't generally invade their space in response, so your best approach is simply to be much better than they are at what you do.

• Connect and relate to your current clients better than ever, keep your marketing and product focus high, and constantly improve.

Healthy competition will improve your business and sustainability. In my years in business I've seen "brilliant" competitors come and go, and usually the failure occurs when their ego gets ahead of their business.

(Oops. Is this speaking about me? Yes, last year I felt smug as I watched a competitor crash and burn but beneath the surface I was making many of the same mistakes -- fortunately we caught them in time, but it has been a scary ride.)

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Winning Awards: Scale, quality and marketing

My wife and I have attended the Greater Ottawa Home Builders Association Housing Design Awards Gala for 17 years. We have reason to be there, even though we aren't home builders and have never designed one. With my ongoing responsibility to publish the association's internal newsletter, The GOHBA Impact!, I'm there in a journalistic capacity.

However, with a week before our firm publishing deadline, and the fact the awards are extensively covered by the local daily media, I don't need to "work" that hard as a journalist during the evening. We can soak up the atmosphere and, today, I can discuss some general concepts about the awards and award-winning process, without naming individual businesses. (I'll write the appropriate, totally positive story next week.)

In general, awards competitions (if properly and fairly judged as the GOHBA Awards are), are incredible marketing equalizers. You could put the entries into three core groups:

1. Smaller or high-end boutique builders and designers who submit selectively projects they truly believe are really the best in their categories;'
2. "Category stuffers" -- larger niche businesses who enter multiple entries within specific categories where they think they have some chance of winning or which suit their marketing framework/focus.
3. Larger builders who may try to emulate the ideals of (1) above, but simply don't have the oomph, in part because of their size and scope.

I'm not suggesting anyone is wrong here -- the reality is that really great work requires individual creative talent and ability and is hard to replicate and expand on larger scales. Boutique high-end builders and designers are likely to walk away with more awards in the first category simply because they really do amazing work which dazzles the judges (and they probably take as much care in their entries as their original work.)

Category stuffing makes plenty of marketing sense, especially if you have a significant marketing and advertising budget. Entry fees aren't that high, and if you are the only company in the category, with multiple entries, you are sure to win (and you can then compare your work objectively to see why one project succeeded above the others).

Of course, it may be somewhat embarrassing in the room when you are competing against (1), and if you have three entries within the category and the one boutique project wins against your force. But realistically, the people in the room aren't your potential clients, they won't see the competition, and you only need to announce and trumpet your success if you win.

Finally, the third category, large builders and renovators with multiple projects, often fare poorly in these competitions, simply because it is hard for them to convert volume into the dazzling quality that appeals to judges. Of course, the awards organizers (and judges) still found ways to recognize and respect the builders who have contributed significantly to the community and the association's budgets. These builders know they can't really expect to do well at the awards, but are good sports about it.

Can we learn some marketing lessons here?

• I've seen astounding and truly exciting business growth stories from smaller builders who won key awards. One modest builder, who won the "People's Choice" Award a few years ago, saw his business virtually double. There can't be much better return on your marketing investment: An entry fee, and you win the recognition (with the support of the awards major sponsor, the Ottawa Citizen), of greatness with plenty of free publicity.

• Of course if you only enter in one or two categories where you truly think you are great, but win nothing, you end up with nothing (except perhaps a slightly bruised ego.) You have the choice of following the third point.

• Category stuffing, when allowed by the rules, is a wise marketing move. You can broadcast any win you achieve, and ignore the results if they aren't so great. If you are spending thousands of dollars on advertising and marketing, the entry fees are not going to break your budget.

(My views have changed on some of these points in the past year. See last year's posting on the same topic.)

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Competitive intelligence, marketing, and confidentiality: The Reed - McGraw-Hill Lawsuit

A story of competitive intelligence with marketing intent has come to earth with the filing of a lawsuit by Reed Construction Data against McGraw-Hill Construction Dodge.

The suit charges that Dodge has unlawfully accessed confidential and trade secret information from RCD since 2002 by using a series of fake companies to pose as RCD customers.

The lawsuit, filed in the U.S. District Court for the Southern District of New York, seeks an unspecified amount in lost profits and punitive damages, trial by jury, and injunctive relief as a result of Dodge’s misuse of RCD’s proprietary construction project information, Reed announced in a news release.

The complaint charges that Dodge hired consultants to subscribe to RCD’s confidential data under the cover of fake names and companies. Dodge then allegedly manipulated the information to create misleading comparisons between Dodge’s and RCD’s products and services in an effort to mislead the marketplace.

The complaint cites eleven counts of misconduct by Dodge, including fraud, misappropriation of trade secrets, misappropriation of confidential information, unfair competition, tortious interference with prospective economic advantage, violation of New York’s general business law, violation of the RICO Act, RICO conspiracy, monopolization, attempted monopolization and unjust enrichment.

“McGraw-Hill Dodge has used our information to deceive and confuse the market about RCD and the data we offer,” said Iain Melville, CEO, Reed Construction Data. “This was an attempt by Dodge to force RCD out of business and obtain a monopoly over the construction data industry.”

The story is described in greater detail in the actual court filing, which can be downloaded from Reed's site here.

Business to Business Magazine reported this response from a McGraw-Hill spokesperson:

“We intend to vigorously defend ourselves against Reed Construction's legal claims. We take these allegations very seriously and are committed to ensuring that all employees comply with our Code of Business Ethics.”

The two competitors have been battling within the construction information marketplace for years. The Reed lawsuit alleges that McGraw-Hill used data obtained from unauthorized users hired by McGraw-Hill to adjust its services and adapt its marketing programs to make it look like it was delivering a more useful service. Reed's contract language includes specific provisions regarding non-disclosure of confidential information.

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Life is not fair (and therefore, why you should be aware of construction marketing)

Tonight, I spent the day and evening at the Annual General Meeting of the Ontario General Contractors Association (OGCA).

Partly an expenses-paid break (for those fortunate to have the money for such indulgences), partly an informative event with insights and observations and lessons, I looked a little beneath the surface and remembered an life lesson: "Life isn't fair, and if things are fair, you will wish they aren't."

The issue that brings this concept to life arrived in my email yesterday. A general contractor, interviewed for an unrelated story, told me about his problems with the pubic bidding process at the Ontario Realty Corporation (the crown corporation which administers provincial buildings.)

He said the number of contenders for simple jobs had grown truly outrageous recently. More than 50 prequalified contractors are bidding for some jobs, jamming up site meetings, and making it virtually certain that any regular and well-established business would lose to a low-ball offer from someone barely eking out a living, with no overhead and little sense of what needs to be done to earn a fair profit for the work. (Certainly, the contractors winning this sort of public work would not be able to spend a few thousand dollars to bring their wife to a weekend in Ottawa for the OGCA conference -- in fact, most could not even afford the association's membership dues.)

Trouble is, as the contractor reported to me in a letter he had sent to OGCA President Clive Thurston, the excessive competition resulted from the OGCA's negotiations with the ORC for a transparent and fair bidding process. Previously, general contractors felt they had no chance at the public-sector work as service providers and third-party contracting organizations played games and favorites. How could businesses which played by the rules and really could do the jobs break into the closed circles of qualified bidding lists and restrictive tendering?

Clive Thruston confirmed today the ORC has listened to the association's concerns about transparency. Trouble is, the Crown Corporation is responsible for many smaller projects, which require limited bonding capacity, and which are within the range of many smaller contractors. And, like lemmings, these contractors are chasing after the dream in the open bidding process -- with dozens of bidders competing for each simple job.

Thurston acknowledged the contractor complaining about problems has a point; this excessive competition discourages reputable contractors from bidding, and could result in badly managed jobs with bidders under-pricing their work. He said the optimal number of bidders for a job is six to eight -- this allows for fair competition, but not the craziness when 50 or more are competing.

Solutions might include some system of rotational qualification. As well, Thurston noted, contractors are evaluated on their past performance, so if they mess up once, they won't be back again.

Many small construction businesses can perform the same services. Without marketing or relationships to differentiate themselves from the others, their only option is to compete on price for openly publicized projects.

There is only one escape from this trap: Marketing and sales. If you can differentiate yourself from the others, if you can stack the deck to your favor, if you can win the opportunities that are invisible to others, and discover clients who wish to do business with you because they want to, despite all the competition out there, you can earn a fair price, make a profit, and afford the conference fees which allow hours on the golf course and five course dinners.

Otherwise, prepare to struggle, hoping to "earn" less than you could if you took a job at a fast food restaurant.

Life isn't fair.

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