The biggest fear of a large rival setting up camp on your turf is, of course, that your customers will desert you in droves.
This can be combated in several ways. Play on your strengths as a small, personable enterprise that cares about your customers’ experience – engage with them via email and social media and reward your best buyers with freebies and special events.
It’s also worth going further than this and make it hard for your customers to go elsewhere. If you are providing a good product and service and it’s a hassle to switch to a rival, your attrition rates should remain fairly low, depending, of course, on your industry.
McKaskill says: “Where you can, you should create a situation where your customers willingly give up their rights to engage with your competitors.”
“You might find this a bit confronting but, in fact, we as individuals willingly enter into agreements all the time where we commit for extended periods of time to one supplier.
“Think of your mobile phone, mortgage, life insurance, car lease, internet service and office rental agreements.
“There are penalties for early termination but also, usually, concessions or benefits for signing up long term. We can often create some form of ‘lock in’ in our customer agreements.
“These can be preferred supplier agreements, maintenance and service agreements, cumulative rebates or discounts, joint ventures or strategic partnerships.
“The objective is to engage with the customer on a longer term basis and to entangle the customer with your business so that there are disincentives for them to terminate the agreement or change suppliers.
“Customers are usually reluctant to switch suppliers if there is a ‘switching cost’ associated with moving suppliers.
“This might be the risk of making the wrong decision or simply the delays, costs, hassles and stress of moving. Our task must always be to make it easier to deal with us than to switch.”
Sure, you may take the time to build up a small, talented workforce, but they will jump ship as soon as a big business waves a fat paycheque in front of their noses, right?
Well, not quite. By working on creating a positive, engaged working environment, you can reduce the chances of your best talent being poached.
“Basically, people need to be paid fairly for their efforts but money is often well down the list in motivating them to stay,” says HR guru Vicki Crowe.
“What is your EVP (employee value proposition) in regards to rewards and benefits that would entice an employee to stay?
“Your first step is finding out what intrinsically motivates each person and then linking his or her motivation to the benefits you could afford.
“Once you know their key motivators, you can creatively explore some inexpensive benefits like monthly supermarket vouchers, a gym membership, contributing to household cleaning, bringing a mobile remedial masseuse weekly/monthly into the office, providing a weekly fresh fruit platter or a coffee machine.”
Martin Nally, founder of HRAnywhere, adds that start-ups can offer the kind of employee flexibility that large corporates struggle to achieve.
He says: “It’s a powerful lure in today’s economy. So, where a large corporate might be compliant you can go further.”
“Flexibility is sought after by many, so if you can offer employees a different arrangement it may well be the advantage you are looking for.”
If you find a rival is eating into your customer base, it’s important that you stick to your strengths and win them back.
What you should avoid doing is getting into a price war because larger, well-resourced businesses are the only winner in this scenario. Hold your nerve, improve your offering and you’ll stand a chance.
“Price is a very small part of the buying proposition, but a critical one in terms of developing a sustainable business model,” explains Startup Tasmania founder Polly McGee.
“Price is part of a complex emotional reaction by a buyer. Sure, in a commodity market like supermarket goods, price is a major factor, but in niche and service based offerings, the experience and brand values play a major part.
“When you have spent a significant period of time building a value to your brand, why would you take a knife to it?
“Discounting and price dropping to attract market instantly tells your customers that either you were charging too much to start with, or your product is inherently less valuable than you were putting it to the market as. Both of these cause confusion and distrust in the consumer.
“If your sales are slow or slowing, go to your customers and your potential customers and ask them about your price-point. Better than discount, consider offering something extra, rather than taking away some of your profit by discounting.
“With this approach, your customers get more, not less, and they still have the great product or service they originally came for.”
