The Moat That Protects Your Customers

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 its 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 tools 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 Doc Martens who defend their market share in the fashion market, despite many, many stores trying to compete. If you don’t know if your customers are delighted with your products or service, ask them.

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 when his sales staff deliver his weekly sales funnel on a existing system and watch the reaction on their face.

So what can you offer to your customers to make your company integral to their DNA?

Become a Verb

Think back to the last time you cleaned the floor or looked for some information. Do you “Hoover” or “Vax” your carpet? Do you “Google” the internet?  For heavens sake, who could have predicted that we would “Netflix and Chill“? Part of these companies’ competitive advantage is that their names have become verbs. Every time we refer to them we reinforce the competitive position of those brands.

The challenge is to think of the way you can control the vocabulary people use to refer to your category or specialty?


Digging a wider protective moat triggers a virtuous cycle:

  • differentiation reduces price competition,
  • more control over pricing provides better margins,
  • which in turn lead to greater profitability and the cash to further differentiate your offering.

Nurture your niche!