Keeping an eye on the horizon
The world is changing faster than ever before and every market and every business in the world is under threat from these changes. Yes, they bring opportunity for all as well, which is exciting.
But most business owners are poorly prepared for what is coming, because they don’t have an eye on the horizon. In fact, they are barely looking up from their feet and hands on a regular basis to see what might be coming towards them.
Anyone who is half awake has seen the rise of technology based businesses like AirBnb, and Uber. AirBnb now has a huge valuation yet it doesn’t own one hotel room. Uber is likewise highly valued, without owning a fleet of cars.
Anyone operating in the real estate market has seen the rise in businesses like Realestate.com and agent referral sites. But did you know that some agent referral sites are able to command up to half the commission for a house a being sold, despite not doing any of the work to actually sell the house – all they do is match potential sellers, with agents. And because individual estate agents have been poor in their ability to market themselves and generate leads, they are being caught in a pincer between customer and someone who owns the preferred communication channel.
This is uncharted waters – whilst in the past newspapers would have charged significant sums for advertising in their paper, likewise radio stations or TV stations – they never went so far as demanding a percentage of the sale made by the advertiser.
From the local restaurant paying up to 30% commission to home delivery portals, to the book keepers going out of business due to Xero – it’s happening everywhere.
If it hasn’t happened in your market yet, expect it to soon – in some way, shape or form.
So what can you do about this situation for your business. In this article, I’d like to share a few tips and thoughts on these trends and how you can survive this disruption to your market.
1. Stay close to your customer – at the end of the day, an understanding of your customer, their needs and wants and how they research and purchase your product and service is critical to your business
2. Workable marketing – you need to plan, implement and measure a strategic marketing plan so you know how to profitably attract and retain high value customers in your business, without relying on 3rd parties. Sure, you’ll need to advertise, you’ll need to have a website, or other communication channels – but I can’t see Facebook asking for a percentage of your sales in the near future, nor a radio station. But be wary if a portal generating leads of your customers is launched, and be careful you don’t lose power to them like real estate agents are right now
3. Flexible business model – no more than ever margin and profit is going to be important. So you need to be thinking about high value niche customers, you need to think about operating efficiencies, you need to be thinking about how to make sure you and your staff are highly productive. Because margin allows flexibility, gives you money to invest in new ways to promote and deliver to your customers. If you’re tight for funds or pursuing a discount or price focused strategy, you won’t have the resources to continue to compete if you aren’t doing this at the lowest cost and most efficient business model
There are many ways to cope with disruption. Keeping an eye on the horizon is a great start to give yourself as much warning as possible. Then be sure you don’t stick your head in sand, know your business, know your marketing model, know your customer.