A few years ago a friend of mine launched a bathroom renovation company. He was good at what he did, and chose to specialise exclusively in the bathroom renovations market. No matter how good your service is, getting your name in front of your target market when you’re still in the early years of establishing the business can be one of the biggest challenges.
During his second year of business, as part of learning to grow a successful company, he phoned the owner of the largest renovation company in town and offered to shout him coffee. This company had a huge stand at the local home expo and had spent tens of thousands of dollars sponsoring it. They had a large crew of builders working across many sites at once and specialised in large-scale renovations.
The owner was happy to meet with him, and within just a few weeks he referred a $12,000 bathroom renovation project to my friend. Why? Because that size job was too small for the large company to bother with! But for my friend, it was a normal sized job.
Networking with your competitors may seem like an unusual marketing strategy to suggest, but in most industries, there is a surprising amount of business that can come from these relationships.
Most successful businesses have a sweet-spot they like to work in. There will be certain jobs that they enjoy and find profitable. Other jobs will be too small so they’re not ideal, or too big and beyond their current capacity to handle.
For this reason, networking with companies that are bigger or smaller than yours in your industry can be beneficial for both parties.
If you’re starting out, or if your company does well focusing on the cheap end of services, reach out to the owners of companies that do larger jobs in your same industry. Just like my friend with bathroom renovations, companies that focus on larger jobs or the more expensive end of the market will often be turning away clients that are too small for them. They’ll normally happily refer these inquiries to someone else who likes doing the smaller jobs, because it’s much nicer when they can recommend another company, rather than just saying “No”.
It goes both ways. When I was starting out, I networked with some web development companies that were doing large-scale projects. My company was doing SEO and Google Ads for a nationwide client, who then wanted to upgrade their website. It was a large and complex job, beyond what my company had capability to deliver at that time. I referred the job to one of the web development companies I had met with, and they got the work.
It’s not just larger or smaller competitors that you should network with. I also recommend networking with direct competitors, who target the exact same customers as you do. Why?
Firstly, all serviced-based businesses have capacity constraints. It’s likely that you will at times be at complete capacity and not able to take on new work that pops up with a tight deadline. Rather than just saying, “Sorry, we can’t”, knowing a direct competitor, that you trust will do a good job, means you can make a helpful referral. And the direct competitor can to refer people back your way when they’re over capacity.
Secondly, most people have jobs they don’t like. One heat pump company we work with doesn’t enjoy doing ducted heat pumps because they have fine-turned their systems for installing high-wall heat pumps and have become highly efficient at it. When someone wants a ducted system, they just refer the enquiry to a direct competitor who is happy to do that. By having a recommended company to refer them to, they retain a positive brand perception in the mind of the client by being helpful, instead of just saying “Sorry, we don’t do that work”.
Finally, in some industries it’s common to have exclusive agreements where you agree not to service a client’s direct competitors. This might be in legal matters, marketing services, business coaching, or a host of other industries. If this is common in your industry, find direct competitors you can refer people to. You might negotiate a referral fee, or just roll with a “I’ll scratch your back, you scratch mine” arrangement.
It’s surprising the amount of business that can come from networking with competitors in your industry. Network with companies who do bigger jobs than you, smaller jobs than you, similar jobs to you, and the exact same jobs as you, and watch your business continue to grow.