Recently, Jeff the managing director of a large company came to me and said:
“Hey Nick, I’m having some issues at the moment, there are a lot of competitors that are entering into our market resulting in extra competition for us.The margins have become really tight and we are starting to lose the work that we’d been winning in the past.That is having a real impact on our revenue. I need some help,”
Quite often I find that there are a lot of competitors that come to the market and they use exactly the same thing that you used to be doing for the last five, six, seven, eight years.This is because they have finally figured out that you’re making lots of money and your margins are pretty good.That’s why they’re entering into a space that you’ve disrupted or innovated in the past.
Disrupt the Market
Don’t fret this only means that it’s time for you then to start looking at disrupting the market again. I can tell you one thing: if you remain in your current market, as it is today with so many competitors out there, the chances are that your margins will increase is almost none.
What you need to do is find out how you can disrupt the market again so that you offer:
- Added value at a low cost
- Offer more and win more
- Offer additional services
There are just a few of the ways you can disrupt the market again. By doing this, you will have a whole new range of innovation products that you and only you can have.
Segment your Market
Try drawing 3 circles in those circles replace them with segments for example ‘customer experience’. That circle is a segment in your market that maybe someone else is doing really well, but it may not have a very well-defined market segment. Or they may not have the ability to innovate.
Don’t lower your prices
If you are in the same situation as Jeff, chances are that you’re feeling pressure of your competitors and you’re feeling a little bit worried about them.Quite often, whenever you’re creating quotes,it’s quite likely you’re making your price lower so that it increases the chance of you winning the contract. Or, if you’re selling in retail, potentially you’re giving away more discounts than you want to just so you can make the sale.All this does is put pressure on your margins which could mean that you’re giving away more value, but for the same price.This not only increases your price of creating additional products that you give away as part of the added value.
As you draw those three circles, you can then start analysing your market. As yourself:
- Who, in the market can offer a better customer experience than you at the moment?
- Who in your market is targeting the exact same segment?
- Or, if everybody is targeting certain segments; maybe there is opportunities and gaps in this market.
The third thing is to work out what to innovate. What is a new problem that somebody in your market, that your existing customers, have that no one else is solving? You know your customers better than anybody else, you’ll be able to solve this problem on their behalf. By doing this, you’ll be able to disrupt the market. Or at times you may find that somebody else has invented a product, and you need to work out- you don’t want to be creating the exact same product as what’s already been done. Maybe they were not really good at solving your client’s’ problem, maybe there is a better way that you can do that. Any product that comes onto the shelf, work backwards and identify what is it- what is it that your competitor is trying to solve. But you know what the problem is and then you can work on finding a better solution…. a better product, a better service with regards to solving your clients problems.If this the case, the likelihood of winning their work is far greater than your competitors winning the work.
How to Innovate?
In the past, there was a walkman. Everybody thought it was a cool thing to have, everybody was walking with a walkman.After that, you were able to carry music everywhere with you,but as you were able to carry music everywhere with you, it was with some inconveniences.It was bulky, and you have to bring along a lot of tapes if you wanted to change the music. This is where people moved to a smaller music device, which is the MP3 devices that were small, a bit clunky to use and that’s where Steve Jobs actually identified an opportunity into a segment.While all the MP3 players at a time were targeting the cool tech-heads, people that understand technology, that like to play with electronics and would find it cool to be carrying one of these, Steve Jobs actually aimed at creating very simple designs that everybody else could use. By creating those simple designs, he was able to target a wider audience, a larger public that were not tech-heads and did not only want to look cool, but wanted the simplicity of use, and that’s where the new market segment was formed for the iPhone. It was dissimilar to the other MP3 players, but it was just targeting a different segment altogether.
Customer Experience and Sustainability
The third thing I put right at the top is: customer experience.There are so many companies that are doing the transactional thing, where they sell you their product for $500, $5,000, $500,000 once to a customer.After the sale is made, they don’t look after the client anymore, they go “ca-ching, I won the contract, now let’s move onto the next one”.They’re constantly chasing new sales, new clients, and not doing great work at providing a great customer experience. They’re not good at providing a great service, they’re not good at delivering a good piece of work based on the contract that is signed. As a result, their revenue keeps going up and down and it’s very stressful for everybody involved. Instead, what I always advise my clients is to develop a long-term, long-lasting relationship based on providing a customer experience that is second to none. You want to be at the top of your market in terms of providing a great customer experience, because that will bring longevity to the sales and allow you to up-sell and cross-sell and ensure there’s a constant flow of revenue that keeps coming. When you have that constant flow of revenue coming, you can grow with confidence, it brings sustainability to your company and also ensures that you’re always profitable.
So where is your edge?
Once you’ve found those three areas that will help you find your competitive advantage, the next key thing is to actually work out what is sitting in the middle. What is it that no one else is offering in regards to customer experience, segment or innovation? That will present the area that will allow you to get the edge. By knowing what is it that will allow you to get the edge, you can go with confidence and disrupt the market again.