How To Build A Challenger Brand
June 11, 2020
The rise of the “challenger brand” has been a story for the history books. World over, this new category of smartly run businesses is doing things differently, exploring unchartered territories, and winning big where it counts most.
While the established brands unleash their bottomless budgets and unmatched access to talent to maintain their monopoly, the challengers are using creative tactics, and guerilla strategies to win hearts and penetrate new markets.
The Lyft Example
One of the most prominent challenger success stories to date is Lyft. Just before Lyft, there was Uber, a new line of business in itself that disrupted the transport industry. Uber created a whole new industry and had millions of customers within months.
But, not long after, a new brand offering the same services – just smarter and better – came along. That brand was Lyft!
How did Lyft become successful? Easy – by challenging Uber. Lyft marketed its services on the basis that Uber wasn’t transparent enough; that the ride-hailing company was hiding payment records and therefore could potentially overcharge clients without the people realizing it.
Once the argument stuck, Lyft took off, reaching a market value of $130 million within the first two years and beating Uber to an Initial Public Offering (IPO)! Today the company is worth over $23 billion.
Tips to Create your Own Challenger Brand
Many other challenger brands have been just as successful, including Elara, Zappos, Eatbigfish, and the new Lottoland betting model. These brands dared to challenge the status quo and are now basking in the glory of their successes.
The good news is – you can build your challenger brand too! Here’s what to do;
- Exploit white space in your market
Every market has unmet needs where consumers feel that the situation (products or services) could be better. Can you spot those gaps? If so, then that’s an excellent opportunity to create and grow a new challenger brand. If you can grab the opportunity and fulfil the unmet need, you’ve just earned a sea of customers.
An excellent example of a brand that did this to great success is Accenture. Accenture saw gaps in the management consulting world, challenged traditional vendors such as McKinsey, and carved a niche for itself.
- Borrow ideas from other industries
Copying (or stealing) solutions from other industries and applying them to your own is another excellent way to create a disruptor brand. Or, you could pick ideas from multiple sectors and fuse them to create a new business.
Look at what e-Bay does, for example. The company doen’t operate like traditional retail or e-retail businesses. Instead, the owners borrowed ideas from two industries, retail and auction, and created a multi-million company out of it. This strategy is also known as cross-pollination.
- Compete on customer service
One of the areas of business a large enterprise can’t easily beat a smaller, smarter challenger is customer service. Why? Because the large enterprise typically has millions of customers to satisfy. Meeting the expectations of each of these customers isn’t easy.
An upcoming brand, starting with a much smaller pool of customers, can deliver more satisfying experiences and center their growth on the customer service. Paycor has done this so well and now generates 60% of its business from customer feedback.
- Focus on repeat business, not new customers
Every business needs new customers, the challenger brand included. However, it’s even more critical for the challenger to retain the existing customers and try to generate repeat sales.
There are two reasons why. First, it’s a lot cheaper to retain customers. It costs 5x more to acquire than keep clients. Secondly, challengers rarely have to budget to finance an all-out customer acquisition campaign. And, even if you tried, the big fish would blow you out of the water.
- Think and act out of the norm
It’s what sets challenger entrepreneurs apart – they don’t subscribe to traditions – they’re there to create new norms. If the market has always behaved in a particular way, challenger entrepreneurs seek to find out what lies in the opposite path. Where the industry has never gone before, they make it their mission to explore.
AirBnB did it. They dared to challenge the traditional hotel industry and succeeded in moving it to a path never imagined before.
Now, Your Turn!
You can create the next Uber, Lyft, or AirBnB with a challenger mindset – all it takes is a leap of faith. Are you prepared to take that leap?