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General Business Tips |
You Killed Your Competition! Now What?Although not from our industry, this author points out a way to potentially take advantage of the situation when your competitors go out of business.by Robert Short (with Ranger Kidwell-Ross) When your competition goes out of business they will obviously lose the relationship that they have with their existing customers. When this happens it will create what I like to call a "customer vacuum." All of their customers will be set free and they will start searching for another company that can service their particular needs.
The most effective way that I have discovered to assume control of a dead business' customers is to take over their phone number when their company dies. At the same time you and your existing competition will start grabbing for control of these customers. What you need to do is fill that vacuum and there is one very good way to maximize the chance of these unaccounted-for customers coming right to your door. The most effective way that I have discovered to assume control of a dead business' customers is to take over their phone number when their company dies. This can be very difficult and confusing at first but it gets very simple. You see, most phone companies use what is called a "cooling off" period for recently disconnected phone lines. This period usually lasts for one year. This means that you can't just call your phone company and take over a phone line the day it is disconnected. I assume this is done because the company may have just forgotten to pay its phone bill, or has encountered some difficult times financially and has to wait a week or so before getting it reconnected. It would be very unfair for a phone company to allow this type of outright squatting. Other reasons could be that the company may be restructuring and will resurface in six months or so. Whatever the reason, this "fail safe" was put in place to protect the existing phone number's owner. However, it is possible to acquire the phone lines without waiting on the "cooling off" period. First, though, let's discuss the value in waiting a year. "A year," you ask? "That's an eternity!" Well, although it may seem like it, I actually waited a year once for a phone line that then produced more business than I could handle. I had to put on three more trucks because my business literally exploded. The company that had gone under was an established arm of a major franchise in my industry and they had already signed contracts for massive amounts of yellow page advertising, both online and print. Even so, they simply packed up and vanished into thin air one day. They left a foundation that could make your average business owner rich beyond their wildest dreams. What I did was to call the phone company in advance and explain to them what my intentions were. In return, they told me the exact day the "cooling off" period would end. I waited the required amount of time, then got the defunct company's phone number and had it remotely forwarded to my company's main phone line. I saw an instantaneous increase in business and bled that phone number white for years. To top all that off, the main company's web site kept that location's address and the phone number on its home page for two years after I took over the phone line! My existing competitors were baffled and probably still haven't figured out how my company grew so big so fast during those years. The fact is, I got massive amounts of their existing customers, and took advantage of their in-place yellow page advertising and web site exposure for the cost of a remote phone line that cost a mere $16.95 per month. Man, I am still amazed! Now, let's face it, in most cases there is a real good reason why a company goes belly up. I've found that some business owners will be of the opinion that if the company had had any customers in the first place they wouldn't have gone down. So, they may reason, why would a competitor gain value by getting the out-of-business company's phone line. The fact is, a company can have more than enough customers and still die for a number of reasons. My theory is this: When I spend less than $20 a month for a dead business' phone number, I figure that company had to have had at least five good customers. Acquiring one customer with a lifetime value of, let's say, $10,000, is worth far more than the measly 17 bucks you spent acquiring them. And, based on my experience, you will get at least ten new customers even if the company was mismanaged beyond belief and has been gone for over a year. Your new phone bill actually tells you how many calls were remotely forwarded to your main number from your new phone line each month. With this information you can easily decide if the transfer is worth continuing or not within the first couple of months. There are also several techniques I use that can work to get the phone line right away. For example, the phone company will allow you to take over the dead company's phone line if you can get a letter from the previous owner on that expired company's letterhead. In that case, you must also satisfy any debt that the company still owes on that number. For this to work, you need to approach your former adversary and let them know that you want the number. During this process, find out how much they owe and if they are willing to give their old number to you. If they are not interested you need to spark some interest by pulling a couple of crisp hundred dollar bills out of your pocket. Remember: This person just lost it all along with several years of his or her life. It might just be that a couple hundred bucks really matters now. Never act arrogant or give them any indication that you will get the phone line anyway if you just wait a year because they can easily derail your intentions simply by reinstating the phone line for a while. I approached one "old timer" that was no longer in business and explained to him what I had in mind. He said he had just got sick of running his business, that it was a young man's game and that he had simply decided to retire. When in due course he asked how much I was willing to pay for the phone line, I jokingly said $100. He said that was fine by him, but that I also had to pay $272 to the phone company in order for them to release the phone line. I (excitedly!) agreed and as a result literally took over the business that he had established over the previous thirty years. To top that off, he dug out his customer list (all handwritten) and gave that to me too. Because of how established the business had been, I had planned on giving him as much as $5000, if I had to, for the phone line. I was further willing to pay an additional $500 a month for two years. Instead, I walked away with several hundred thousand dollars in yearly business for $372. It really doesn't get any better than that. Another true story: I had one of my competitors approach me and offer to sell me his existing customers for $100,000. I wanted to acquire his customers immediately, but the fact was I was not willing to spend $100,000 on customers that were going to be mine in a year anyway. I counter offered at $35,000 and he balked and acted all insulted. Needless to say my competitors couldn't afford or wouldn't pay the $100,000 and his company laid down, put its legs in the air and died. A year later I took over his phone line and many of his long-time customers at the same time. Sometimes it's much better and less expensive to wait a year and take over the phone line than it is to purchase the business and its old equipment and/or liabilities on the front end. Each customer that you acquire using this method is highly targeted and if cultivated properly will have a substantial lifetime value. Plus, they will continually refer new customers to you. The best part of all of this is that over the years, as my competition has died, none of my existing competitors got any of the customers once I took over the phone line. As each of my competitors dies I take over their phone line, further starving the competition that remains. I will continue to do so until I fulfill my ultimate goal, which is to be the last man standing! 
The author, Robert Short, heads up New Hampshire Concrete Cutting and Core Drilling. His company provides concrete cutting and core drilling services to the contractor and homeowner marketplace in New Hampshire. You can visit the company's website at www.affordableconcretecutting.net for more information on concrete cutting and core drilling. If you have any questions or comments about any of the above ideas, feel free to contact the WorldSweeper.com Team. |
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