Increasing Market Share

In today’s struggling economy, we often hear that while the weak companies may not survive, the strong companies will come out even stronger. If you believe that theory—and I certainly consider it to be sound—you must realize if you are to survive this difficult time and become even stronger, it may very well be at the expense of your competitors.

So how much attention should you pay to your competition in the throes of this difficult economy? If you’re smart, you will pay a lot of attention. Let’s look at some ideas that may help your company take more market share from your competition, even when new business may be challenging to find.

Self exam
Before we look directly at your competition, it’s wise to first examine the health of your shop. Let’s face it, if you aren’t operating from a position of strength, you’re going to struggle to knock out your competition. Simply put, in our current economy, if you want to be become stronger as a business, you must find a way to execute better in everything you do. From the easiest processes in your shop to the highest level decisions of management, you have to dig deep into the details, be sharp in your analysis, and make the best decisions possible.

Essentially, you can strengthen your business two ways: by increasing revenues, or by cutting expenses. The best plan of action is to concentrate on both areas.

Late last fall, when our company began to feel the effects of the recession, we huddled together with our management team and began really drilling down into the areas where we could cut expenses. We made some difficult decisions with some personnel reductions and we cut into some other areas that we knew would save us some money. Some of these were one-time expenses, while others, like employee lay-offs, saved us money each month.

After a month or so of focusing on cutting our monthly expenses, however, we realized that we had spent no time on the sales side of our business. It was almost like we were just taking whatever the economy was giving.

So at that point, we began to emphasize with our sales and marketing team the urgent need, now more than ever, for sales. We realized that while most customers in our industry certainly cut back, they were still, in fact, buying graphics—there were available sales to be had. Since then, we have made it a point to spend a significant amount of time focusing on where we can generate more sales. The point of this example: You need to zero in on both the expense and the revenue side of your business to be able to attack your competition from a position of strength.

Taking on the competition
So now that you’re ready to take on the world, let’s discuss how we attack our competition. One of the benefits you gain from making difficult decisions and cutting your expenses is that you become a leaner, meaner organization. As you reduce expenses, your break-even point for sales becomes lower, which enables you to become more competitive with your prices.

But be careful. While getting aggressive on price is perhaps the quickest and easiest way to secure more business, this can also quickly become a slippery slope. Once you begin cutting prices to your current or prospective customers, pricing may become the focal point of your customer relationship. Lower pricing expectations can become set and, as a result, moving prices back up to where they need to be becomes very challenging.

You can utilize some pricing strategies, though, that can be very effective without sacrificing long-term margins. For example, you can use a coupon-type approach—offering a current customer or a new customer a one-time discount on a particular job or for a specified period of time. This might be a good tactic if your sales tend to be slower during a particular time; or perhaps you make it valid for a particular product line where you have idle capacity. This approach works best if the customer understands that it’s a short-term or one-time discount. Ultimately, it’s the responsibility of the sales rep and/or the marketing team to make sure that the customer has a clear understanding of the limits of the offer. And keep in mind that, while discounted prices may be an effective way to get a competitor’s business, no one wants to structure their business around that type of a model for the long term.

When things get the most complicated, you need to return to the basics. I’m referring to the age-old practice of sales prospecting. During the past six months or so, we have really challenged our sales team to dedicate time each day to the prospecting of new customers. The results have been very encouraging. Many on our sales team have really discovered that when you set aside time and focus on prospecting, the outcome can be amazing. For example, after recently securing a new piece of business, one of our top sales reps said, “Wow, I forgot that I am actually pretty good at this whole cold-calling thing!”

Foot in the door
This more-aggressive approach to your marketplace will be much more successful if your entire organization lends its full support. Taking business away from your competitors will always be a daunting task, but in this economy there are some unique opportunities available. Buyers are more cost conscious than ever, although most also remain unwilling to sacrifice quality for price. So once you get your foot in the door, be sure that you’re offering an excellent price for your goods and services. But the potential long-term relationship with your new customers will be based on your ability to offer them quality products combined with excellent service. Your best game should include both.

One last word of warning: Be sure that you don’t get so involved in going after your competitors that you forget to take care of your own customers. Remember, your competition is also dealing with the recession and will be trying to take away your business, too.
 

MARTY MCGHIE is VP finance/operations of Ferrari Color, a digital-imaging center with
Salt Lake City, San Francisco, and Sacramento locations. The company offers high-quality large- and grand-format photo, inkjet, fabric, and UV printing. [email protected].