Strategy is how a business fulfills its longer term goals, given what’s actually happening on the ground level today.
If you are a cabinet marker you have a ton of things you do on a day to day basis to operate your business. You have to order supplies, make sales calls, and respond to customers. These aren’t strategy; they’re tactics.
Tactics are the tasks you do to implement a strategy on a day-to-day basis.
Strategies are the guiding principles behind your chosen tactics. If you’re in a town where there’s 25 cabinet makers, you’re going to employ a different strategy than if you’re the only one.
When you have lots of competition, you may decide to become a specialist. You’re the cabinet maker who does high-end 18th century reproductions. If someone wants a functional linoleum kitchen, they’ll go elsewhere.
But for the customers who want 18th century style, you’re the first – and only – choice.
If you are the only cabinet maker in town, you may decide to become skilled at a wider range of services. Anyone who walks in the door is a potential customer.
A lot of solopreneurs forget (or don’t know) that it’s not enough to showcase yourself. You also have to present yourself as different than the next competitor who pitches to that customer.
Locking Up The Distribution
One incredibly successful strategy in today’s business environment is locking up the distribution of your product or service.
In your local pharmacy you might only see 2-3 brands of toothpaste. But you’ll see 15 different varieties of each of those brands: anti-cavity, tartar control, whitening, kids, enamel care, etc. But when it comes to active ingredients, what appears to be a huge variety is pretty much the same. So why the variety?
Companies know that there’s limited shelf space a retailer will commit to toothpaste. The more of that shelf space they can occupy, the less is left for their competitors.
If a new company wanted to break into the toothpaste market with a superior product they would have to muscle out the market leaders just to get onto the shelves. So companies like Crest and Colgate don’t have to improve their product or lower their prices.
They win by locking up the main distribution channel and keeping all competitors out.
This is the crux of strategy: finding ways to win, given the realities of limited shelf space, multiple competitors, and a market that believes “tartar control with whitening joy beads” is a real thing.
Making Exclusivity Deals
You can also lock up distribution channels through exclusivity agreements. If you have an online course teaching UX and want to sell it through an online learning platform like Udemy you’re going to be entering a crowded marketplace.
But what if you partnered with someone who has a large list of people interested in learning about web development and design, and they agreed not to feature any other UX experts but you for 6 months?
This would give you a monopoly on that audience!
If someone comes along with a better course, it doesn’t matter. They’re going to have to find another way to reach that market.
The internet has made this easier than ever—only not for you. Amazon, Wayfair, and Overstock stay at the top of the charts because they have warehouses full of people constantly working to keep them in the top 10-20 search results.
Since no one looks past the top 10-20 search results, that one effort lets them lock out competition globally.
Overall, any way you can create a limit on what options people have and for how long, you’re locking up your distribution.
- List your distribution channels.
- Research what channels can you create exclusivity with by making agreements for preferred treatment.
- Pitch the channel’s owner by making a deal on revenue or resource sharing if necessary.
Result You Will Achieve
Exclusivity deals to lock up your distribution channels and crowd out your competition.
This article is based on an EHQ interview with the mentor.