Creating a barrier to entry into your market
In my most recent SDB magazine column, I ruminate on the low barrier to entry in the secure destruction industry. I encourage you to read it if you haven’t.
First, as I stated in the aforementioned SDB column, established service providers should see barriers to entry as a good thing. Low cost of entry kills margins. In general, there are three types of market entry barriers. One is dependent on qualifications, where you need some combination of education, certifications, degrees, licenses, etc. Doctors and lawyers, among many others, fall into this category. The second is capital investment, where the amount of money needed to get into the business limits competition. The third is branding or name recognition, which is more about working harder and smarter than about investing money.
In our industry, branding is the most available barrier to competition followed by a heavy dose of qualifications. In fact, branding and qualifications go hand in hand and, together, can be formidable. Things like NAID certification, proper indemnification, being an ASIS board member, and speaking at a local ARMA seminar fall under the category of “qualifications.” Knowing how to effectively position them and knowing how to relate the value of each qualification is branding.
Don’t shoot the messenger but I am here to tell you this is it. The cost of entry to our industry is low and that is not going to change. Branding and qualifications are all you have to differentiate your firm from the others. And, it is not just one or the other; it is both. Having qualifications without the ability to position their value is better than nothing but falls far short of the alternative.
The good news is that it seems many of your competitors are more than willing to let you pursue this strategy. They seem willing to leave your market wide open for you to become “that service provider.” The question is only whether you will fill that vacancy or leave it for another to fill.
August 7, 2014