How to Protect Your Business from Losing Market Share: The Best Defence is a Good Offence
Major Points of the Article
Competing on price and speed is too generic to win against your competitors
Protect your business from closing down by playing to win the game of business
The Best Defence is a Good Offence strategy should be used when attempting to grow your market share
The skyscraper technique should be used to create a superior point of difference and can assist in building brand equity.
Every business is in a constant battle to stay ahead and grow its market share. This means that every day your competition is looking for ways to best you, and it's only a matter of time before they find one. The best way to protect yourself from losing market share is by being strategic and using the principle of "the best defence is a good offence".
A commonly known phrase, the best defence is a good offence is usually used in sport to describe how your team can win against your rivals. This is the same in business and while you may not be playing a sport, business is a game where every day you win points (new customers), increase your score (increase revenue), and take steps towards the goal (end of year targets).
In particular, no one wants to be the losing team or worse, the last team as they fall behind, are seen as losers, and are just not good overall. When you are watching the grand finals do you remember the team who won or the team who came last? You remember the winners and it is the same in business.
So what makes you the winner amongst all the other players?
You need to play the game of business and play it well. This is why the best defence is a good offence strategy can work for you.
When we look at say Basketball, the end goal is to shoot the ball into the basket and score more points than the other team. However, when the coach speaks to the players, he/she does not simply say "grab the ball and take it to the basket". No, they lay out a strategy of passing the ball from one to another, working as a team to eventually score the goal against their opponent.
Let's draw a parallel with Basketball to sales. In the situation of sales, you would be trying to win the client. You would probably discuss having a meeting, scope out the work, provide a quote, and then ask them to sign the dotted line creating your sale. However, we all know that not every quote leads to a sale as no business has a 100% sales conversion. So why is that?
The potential client would be looking at many different service providers or products that are equal or better. Creating a situation where the potential client has many quotes to choose from and will need to judge, which quote is the best. Why should they pick yours over the others? Like the Basketball coach, what strategy does your team/employees implement to make your business the most attractive amongst all the other quotes?
Do you compete on price?
Are you faster?
Are you better?
These are the generic points of difference and reasons as to why the potential client should take your services or products. While these would have worked a few decades ago, they no longer work as the world has changed. We are now a globally connected world with fast internet, teleconferencing, online platforms, world-wide shipping and so much more. What use to be "your competitors are within your own city", is now, "your competitors are in many different regions or countries" and being "better" is too broad of a reason they should go with you.
Your competitors could even cost more and be slower, and the potential client will still choose them. It happens a lot and not even by a little bit. Differences of more than double, four times, 10 times can occur... as the potential customer values more than just price and speed. Having the exact same product, or the exact same service, the potential client could consider your brand equity such as brand awareness, word-of-mouth, brand recognition, brand trust, and much more.
So what can you do to win the potential customer and grow your market share, even if your competitors have higher brand equity, are faster, cheaper, and better than you?
The Answer is The Best Defence is a Good Offence Strategy
The Skyscraper Technique
Let's start with the best defence is a good offence strategy.
At Paradelta Strategy, we have seen many businesses who have struggled to play the game of business and grow their market share. Essentially, losing more and more market share year-on-year because there are no new clients or limited clients coming through. Sometimes, we have even heard, "we are just going to focus on our existing customers, and not get new ones". This is especially dangerous as it is inevitable that customers will leave as your competitors could eventually win them over, or the customer's business (B2B) closes down. Creating a slow trickle of losing customers across many years, this strategy can lead to insolvency and is typically seen in businesses that are being defensive, but never win in the long run.
So, let's create a good offence to defend against losing market share, take even more market share and protect your business from closing down.
The Best Defence is a Good Offence Strategy
The first step in this process is to learn more about your competitors. Analyse everything and every one of your competitors. What are they doing? How are they doing it? Why has a customer gone to them? What products and services are they offering?
Compare it to what you do and how you do it. What is different? What can you do better than them?
Use the skyscraper technique.
Make the changes. Do it well and then tell everyone about it.
This 4 step process, sounds easy to do, but not always and if you find you need help. Ask us at Paradelta Strategy as this business strategy and brand equity building is exactly how we help businesses to grow.
But, what is the skyscraper technique?
The Skyscraper technique is a content writing strategy in SEO where you do something better than the competition, so much better you naturally will get more attention and press.
Just think of skyscrapers, when anyone says they are building the next biggest building, it naturally creates press. Or when Dubai released the first 7-star hotel, everyone knew about it, they didn’t even have to spend a dollar on marketing.
Essentially, this tactic will get you tons of eyeballs, social shares, people linking to your site and of course higher Google rankings...
This strategy is great for SEO and we can translate it to business growth too to help your business stand out amongst the others (much like the Empire State Building above). In the outlined 4 step process, once you have analysed what your competitors are doing you can build a bigger better skyscraper. Do what they are doing but do it bigger and better than them. This will make you more well-known as you are now better than your competitors with a superior point of difference, rather than one in the many. It will also increase organic marketing too. Organic marketing such as word-of-mouth, press, positive brand awareness and much more raising your own brand equity.
Let's review an example of this in action
Virgin Australia Skyscraper
In 2001 Ansett Australia collapsed leaving a massive market share opportunity for its competitors to take. Virgin Blue saw this opportunity and developed a competitive way to win this share against its biggest competitor QANTAS. But, how did they do it?
Established in 2000, Virgin Blue had only two aircraft on a single route, which is tiny in comparison to the QANTAS fleet. With comparatively small revenue to match, Virgin Blue airlines evaluated its competitors and developed its own skyscraper.
They discovered that by competing on price they could win the market share as QANTAS was a premium service, usually reserved for corporate travellers. However, they also noticed that there were the non-corporate travellers willing to buy a ticket at these lower prices who were an untapped market, increasing the potential total available market share they could gain.
Competing on price won them the market share, but that was not the only thing they did.
In reducing the plane ticket price, their profit margins were reduced and they needed to increase them. This was achieved by cutting costs; there was no in-flight meal, snack or drink, no entertainment on the screens, no airline magazine, and a whole lot more. This saved them millions, but the flyers would expect these so what else could virgin blue give them? They choose customer experience, giving the flyers exceptional service and smiles... Smiles are free, but research has shown it increases customer satisfaction. Adding to this the "carry-on" baggage option only, which made the ticket price even cheaper, but it also meant the airline spent less on fuel. And the option to buy food and drinks in the air, which had greater premiums on them than if you bought the items at a local supermarket.
Virgin Blue's (now Virgin Australia) Skyscraper was bigger and better. Its growth soared as word-of-mouth, press, and a whole bunch of other marketing avenues promoted the business for free. It had gained and still holds today a large market share.
QANTAS the best defence is a good offence
In 2001 QANTAS was already a big player with substantial brand equity and was typically reserved for corporate travellers. However, when Ansett collapsed the opportunity for QANTAS to grab the available market share was missed. QANTAS was heavily branded as a premium service and to simply reduce prices to compete against the growing Virgin Blue could have caused significant brand disruption.
Instead, they used "the best defence is a good offence" strategy to create their own budget airline Jetstar in 2003. Providing the same competitive prices, services, and fleet but better. Their Skyscraper allowed customers to use and gain their QANTAS frequent flyer miles on Jetstar that could then be used on either airline at a later date. This removed Virgin Blue's competitive difference and made them one of many. However, it was a little too late and Virgin Blue had already established itself.
Was it ever too late to implement "the best defence is a good offence" strategy and Skyscraper technique? No, if Jetstar was never introduced then Virgin could have gained a lot more market share than it did.
Reflecting on this article, what market share opportunities exist for your business? What are your competitors currently doing that you are not? What best defence is a good offence play could you do? What skyscraper can you build that will wow and impress your customer market? Do you actively protect your business with this strategy?
Within Paradelta Strategy business growth services, we create strategic roadmaps to help grow your business and assist in the implementation. Over the years, we have helped businesses across Australia to grow and expand, nationally or internationally. To get assistance with your business, simply email us at email@example.com or schedule a no-obligation discovery call here.