I was helping one of our newest clients set up his sports facility scheduling software and noticed his batting cage rental prices seemed low.
I asked how he came up with his pricing, and his answer baffled me. He was undercutting what he considered to be his nearest competitor, a batting cage facility a 20-minute drive away.
Even the smartest owners (my client is also a very successful corporate consultant) tend to start with simple, intuitive pricing instead of analyzing the profitability of each service they offer. At his prices, he was actually going to lose money on every cage rental purchased.
However, I saw an even bigger problem with his strategy: He was worried about a threat – a batting cage facility 20 minutes away – that I saw as nonexistent to his business.
You can’t ignore your competitors. In fact, you should be very familiar with all of them. But to truly understand how those competitors can threaten you, you’ll need a deeper understanding of customer behavior.
Customer Behavior: What Would You Do?
You’ve probably been a past customer for the very service you’re selling now.
For example, if you’re a baseball academy owner, you’ve certainly rented many batting cages throughout your life. Think back: When you last wanted to rent a cage, did you start by comparing prices at all the batting cage facilities in the area, or did you spring for the most convenient location as long as the prices seemed reasonable?
I’m guessing it was the latter.
(This, by the way, is another reason why market research is so important. It can give you insights into what people in any given geographic area are more likely to spend money on. Related post: How to Choose Your Sports Facility’s Location)
My client saw his competitor as being the nearest batting cage facility, but in my opinion, the only market he could possibly lose to that “competitor” would be to the people who live a relatively equal driving distance between the two businesses.
That group is too small to worry about, unless you’re focused on the wrong things – which brings me to my next point.
Compete on Value, not Price.
My client was actually on the right track when he considered competitor prices before he set his own prices for cage rentals, because a standard cage rental is pretty similar anywhere. And people are more likely to compare by price when looking for a commodities that are equally accessible. (If there were another batting cage within five minutes, for example, the price would be a big factor.)
However, the key to real success is not to offer lower prices for commodities, but to create a niche for yourself and focus on specialty services, which customers are happy to pay more for based on their value.
Your clients won’t be coming to you expecting discounts if you’re the only one offering exactly what they want – for example, a top quality agility program just for soccer players, or an exclusive chance to train with a popular former-pro instructor.
You can even turn a batting cage rental from a commodity to a specialty service by adding equipment and technology that no one else in town has. People might make the longer drive to your sports complex for a cooler experience – and also pay MORE for it than they would pay your competitor.
Think Outside the Box.
Finally, Tim Ziakas from Parkview Sports makes a great point on his blog about expanding your idea of who you’re actually competing with. He says:
“Parents only have so much disposable income. They will choose to spend it on the place that they feel benefits themselves and their child the most. They could care less if that means trying karate, swim lessons, travel baseball, or sleep away summer camp. Those are all your competitors! Too many sports facilities focus on the most tangible competitor, the one that does the exact same thing.”
So, what’s a bigger threat to your sports complex: the batting cage facility 20 minutes away, or the karate studio right down the street? What about the nearby paintball range or community rec center?
Again, if you’ve differentiated yourself enough with specialty services, you protect your business by attracting the best kind of clients from all over your market area AND hedging against competition for the more standard services you offer.
Take some time today to consider how you’re positioning your business to stand out from all your competitors. And if you want to read a real-life example of a sports facility doing just that, check out this post about Momentum Volleyball Club.