Market leadership is defined by the business with the largest market share or highest profitability margin in a specific market. Some business theorists suggest that service companies always run the risk of competing neck-in-neck on price. This may work for businesses that sell virtually identical products. In the services industry, however, market leadership requires that your service offers something a buyer cannot find elsewhere.
Understand Your Service
What benefit does your ideal customer expect from your service? Is it really the bricks and mortar that attract buyers to a hair salon, for example? In their book “Market Leadership Strategies for Service Companies,” authors Craig Terrill and Arthur Middlebrooks explain that the intangible experience is what truly sets a service business apart. Go into the field to understand your service. Ask customers directly about their experiences. This is where you will uncover what is responsible for your sales. If customers say they come to you because of your low prices, you may be following a commodities model where your service becomes a product that competes too closely with similar products. Competing on price means you are not offering a strong enough value proposition or unique benefit to your customer.
Choose Your Customers
Identify your ideal customer. Understand exactly what demographic and consumer philosophy you are targeting. You may have to turn down customers but that’s ok. You only want the customers that want what you’re selling. If you try to be everything to everyone you will lose your competitive edge. By going after a specific kind of customer you can own more of the market segment.
Offer Unique Value
Do not ever rest on a service menu that performed well last year. Engage your staff and your customers to develop new services and innovate stale offerings. If your service stays the same, competitors might be able to catch up or mimic your style. Innovation keeps your customers satisfied and avoids the chance of them getting bored over time. Instead of offering sales, for example, offer a value-add promotion. In a hair salon that may mean adding an aromatherapy scalp massage to the haircutting service or a hot towel service with all barber shop shaves.
Listen to the Experts
Follow those who have already achieved success. While Apple offers products more than it does service, its co-founder Steve Jobs is a great model for market leaders in the making. He suggests that you adopt better tools as soon as they are available–do not just follow industry standards, invent them.