Warren Buffett has a philosophy, he invests in businesses that have a ‘moat’ around them – a moat that is hard for their customers to swim across and requires a large siege for a competitor to breach. Why? Because this protection allows the business to control it’s pricing.
Big companies can lock out their competitors by out-spending them in infrastructure or marketing, but, as smaller businesses, can we be smarter about ring-fencing our customer base? Here are four ‘spades’ you can use to dig a deeper moat around your business.
Expertise – Get qualified
Is there a certification or qualification that could differentiate your business? E.G. a Canadian company that disposes of radioactive waste decided to get licensed by the Canadian Nuclear Safety Commission. It was a lot of paperwork and training, but the certification is now a barrier against competitors joining the market.
Is there a certification or qualification you could obtain that would reduce competition?
Create an army of raving fans
Delighted customers will defend your business against the competitors entering your market. Apple know this and companies like Trader Joe’s in the US also defend their market share in the bourgeois bohemian (bobo) market, despite many, many stores trying to compete. Conduct a Net Promoter Score to find out if you have delighted customers.
Get your customers to integrate
Is there a way you can get your customers to integrate your product or service into their DNA and become key to their operations?
To change a Customer Relationship Management (CRM) system costs very little. Free trial software is everywhere!
So the real cost of changing CRM software is when a business starts to integrate it into the way they work, customising procedures and reports and training staff. Ask a sales manager to change his CRM