Last week I mentioned that the average time a New Year’s resolution lasts is approximately 19 days. Well I am pleased to say, while I may have failed my ‘don’t mention Sky’ resolution, that I’m still tracking nicely on removing my soft underbelly and should hit my goal in the next two weeks.
But this week’s blog is not about ketosis or intermittent fasting or HFLC diets – it’s about your business’s soft underbelly-where disruption of your business is likely to come from or where you can attack your competitor’s soft spot.
In the past month, I have been asked to participate in a number of workshops looking at how businesses can attack their competition, enter an adjacent market or generate new revenue streams. While I was a participant rather than the facilitator, I couldn’t resist intervening and focusing the teams by asking these two questions:
- Where are the profit pools? and
- Where is the customer pain*?
To really understand where the soft underbelly is, let’s take a look from your competitors’ perspective. Where are they looking to disrupt your business?
Adapted from Rachel Botsman here are six areas where you could be exposed:
Complexity: Incumbent businesses suffer from this all the time, their processes are complex, based off legacy systems and the ways of working that has always happened. When you push them on why things are complex they can easily explain why it is that way and why it has to be that way. But they never explain it from a customer outcome point of view – your customer doesn’t care about your system, they care about their outcomes. Keep pushing because simplicity is on the other side of complexity
Waste: Similar to complexity, someone is paying for the waste, either you or your customer and in time or money. Streamlining processes and removing waste saves money, it saves time and it gives your customer a better outcome.
Broken Trust: In today’s always-on always-connected world, your brand is only as good as the trust you have with a customer and as the saying goes ‘a brand is what a brand does’. Break this trust and you are dead. Your customers have a platform and they aren’t afraid to use it with 58% of respondents said they are more likely to tell others about customer service experiences now than they were 5 years ago. If you aren’t authentic in your response, everything is escalated and negative reviews reach twice as many customers than a positive review. Learn to connect in a way that really matters to your customers.
Redundant intermediaries: The irony is not lost on me with this one, but I have held the view that if you have the word Agent in your title, you are doomed. Typically agents have existed as they have asynchronous information, control of information, knowledge or a process. Now with more information being exposed and the creation of digital marketplaces, and consumers have global access the power and importance of these intermediaries has significantly diminished.
Limited access: Limited access equaled scarcity, and scarcity used to be a way to drive value. Now any customer has access to unlimited information, your products, your competitor’s products or a global competitor from anywhere in the world. Media used to control what you had access to, now everyone has access to unlimited media and some of it is free.
Monopoly rents: This is a drug that is hard to get off. You have built a market dominant position, you, have a large customer base that are ‘locked in’, now you milk them for what they are worth. Guess what – someone is already looking at this profit pool, and they know they can deliver the same service for much less. Your challenge is deciding when do you give up the juicy easy profits and instead invest to significantly improve the customer experience.
Commercial Model: Can your business model be disrupted? Can people make money by giving away your service? Will they introduce a freemium business model? What happens if they are using your service as a retention tool of their core product and therefore trash the value? Alternatively, how do you attack your competitors or adjacent market players profit pools by changing the commercial model?
Disruption won’t come from any one of these, in reality, it will come from multiple fronts.
*There is a number of great tools out there to help define what the customer pain or problem you are trying to solve is.
PS – this isn’t my doing (honestly). This was sent in by a reader after the unpicking of certain company’s pricing in my last blog.
Some small amount of math:
~680K satellite subscribers
- Say 80% have Sky Sport ((680K x 80%) x $75) = $40.8M per month.
- Say ~50% take the $25 trade down ((544K x 50%) x $25) = $6.4M per month.
- Versus 10% churn of Sport Subs ((544K x 10%) x $75) = $4.1M per month.
Other alternatives could have been to remove advertising from pay channels – $60M per annum revenue (less 1/3 for Prime) = $3.35M per month. Or removing the $10 per month for the HD ticket – assuming 50% of sport viewers have this = $2.72M per month.
Foxtel did something similar to disaggregate bundles but it made no difference. The above also assumes no impact to non-sport users in terms of trading down and it’s quite conservative re: Sport subscribers trading down. I do think they could have saved $ and addressed key bugbears by removing adverts AND giving everyone HD. There may also have been some cost savings in a reduced sales team.
I appreciate there are no easy answers for SKY though.