Being a challenger brand involves an interesting mix of obeying existing market rules and breaking them. There’s no point being a challenger brand and mimicking existing players, but equally there will invariably be similar criteria, customer expectations, and regulations that have to be met.
While some things vary from market to market, others are consistent for all start-ups. For a challenger brand to be a success it must have absolute clarity on both the most recent and future needs of the customers rather than the conventional way the industry meets these needs. Over time most competitors in an industry gravitate to the same way of meeting a customer’s requirements, which is quite often driven by constraints within the industry that may no longer exist.
A challenger brand needs to see through these conventional norms in order to bring about disruption.
Simplicity and customer focus
The first rule is that if you’re going to be a challenger brand, you must be able to focus wholly on the customer. Then you must ensure your strategy – end to end – delivers what that customer is looking for. In the broadband market, customers are first and foremost looking for great connectivity that simply works, and they want this connectivity at a good price. The tiers of pricing that most broadband providers offer are not driven by customer need, they are driven by a set of dynamics in the industry and technical constraints that do not exist for a new player – so why stick to these rules?
Going against the grain has its challenges. There will be a lot of naysayers, but if you are going to disrupt, you must maintain a single-minded focus on the customer and take confidence as your customers start to respond positively to what you are offering.
Once you have this clarity, you can build your strategy around it. By their very nature, incumbents in any industry have scale advantages, but they are also dealing with their legacy business and this provides the opportunity for the challenger brand. Focusing on the vital elements that will deliver the customer’s needs and working hard, right from the beginning, will ensure your business has a clear vision for where it’s heading.
Know your target audience
Challenger brands have to build gradually, gaining momentum from an invariably small starting point. In some sectors, that will be about going after certain demographics, geographic regions, or customer groups with a specific mindset.
As a business based on infrastructure, we are defined by location. So rather than targeting certain demographics, we have to gain traction in the communities in which we are operating.
Clear marketing messages
This means – as we’re here for everyone – we have to be seen and heard in the communities in which we operate. The benefit of being laser-focused on the customer has meant we have a much simpler proposition than the incumbents. As a result, our messaging can be simpler, and that enables us to cut through.
The more traditional telecom approach is to have, say four different internet speeds and four different price points. Add in different landline, and TV packages and the landscape gets complicated for a customer very quickly. In turn, this provides a real challenge in communicating what you are offering and why a customer should consider choosing you.
If, as a business, your proposition is simple, your processes can be simple, and this provides an opportunity for automation. This means that you can invest more money in the thing people really care about, at toob, this means we can invest in the network to deliver fast and reliable broadband service.
The toob model of a single broadband product that meets the needs of a household (900Mbps) for £25 a month, and business broadband for £50 a month, allows for a much simpler set of marketing messages. As a result, our marketing costs are significantly lower as well.
Customer insight
Identifying the customer’s needs may sound easy. However, in many instances, it takes a great deal of thought and insight in order to strip it back to its essence. It can be supported by market research, but most of this can be based on the bias of the norms of the industry – and this is what a challenger is attempting to disrupt. In the broadband space, market research always states that what people decide on are speed and price. Clearly, price, especially now, is important.
The best of the best
Central to any strategy and targeting of different groups is that the fundamentals of your product must exceed expectations. If your product or service falls on quality, it doesn’t matter how good you are at marketing. The new kids on the block must deliver against the customer needs better than the incumbents.
It’s also crucial for the business to be built on sound economics. The behind-the-scenes activity that customer doesn’t see but will help deliver excellent service.
Experience helps face the unexpected
No amount of strategy can prepare you for every eventuality. When we wrote our business plan, we were expecting challenges – but nowhere near as much disruption as we’ve had. We certainly weren’t anticipating a global pandemic and the war in Ukraine. It all makes the environment we’re operating in far less certain. In one 12-month period, we could only get our sales teams out to knock on people’s doors for three of those 12 months.
So, while you can predict some of the external challenges of launching a new business, you’ll never be able to predict them all.
Any story of a successful business has a number of highs and lows in its journey. The challenge is to keep going in face of these adversities. Experience helps, but persistence is the biggest asset a founding management team can have.
Incumbents’ reactions
If you are successful, the established players will respond. Your competitor landscape won’t necessarily stay the same. New start-ups are emerging all the time – challenger brands must make sure they aren’t being disrupted themselves. But take market share from the big incumbents and they will work harder to hold onto their customers. In telecoms, that takes the form of retention offers – in other markets, it might be discounts or new deals.
Inevitably some of these responses will work on some customers, which is why ensuring your product is as good as it can possibly be will continue to be core to your proposition. If it outshines your rivals, you’ll ultimately build momentum with customers that will engender loyalty and word-of-mouth endorsement. Building credibility takes time – there may be occasional hiccups or problems but if you address those transparently and with honesty, it won’t derail you.
Make Continuous improvement a value
As challenger brands grow, they scale and evolve. The fundamentals are still the fundamentals, but you will have to build your capabilities to deliver this scaling. Adopt British cycling coach David Brailsford’s philosophy of incremental gains: “The whole principle came from the idea that if you broke down everything you could think of that goes into riding a bike, and then improve it by 1 per cent, you will get a significant increase when you put them all together.”
Concentrate on the small improvements you can make every single day, tweak what’s not working, and it will bear fruit. One per cent improvement doesn’t sound like a lot, but one per cent compounding week on week builds a winning team and a successful business.
toob is a full-fibre broadband provider, building a brand-new Fibre-To-The-Premise (FTTP) network across the South. Its aim is to transform the internet experience for homes and business while narrowing the digital divide by supplying hyperspeed broadband fit for the modern era, at an affordable price.
Founded by an experienced team, toob offers simple, affordable access to its full-fibre network so everyone in the community can benefit from hyperspeed broadband, regardless of income, technical knowledge or age. toob seeks to play an active role in the communities it operates in.
