The biggest challenge I had as a rental company owner was commoditisation and the inevitable race to the bottom that follows.
Commoditisation is the process by which goods or services that have economic value and are distinguishable end up becoming simple commodities in the eyes of the customer. That is, our clients believe it doesn’t matter who they buy from - they will get the same result.
When I started in the audio visual rental business, I thought we could compete on quality. I thought other companies were overcharging. And I thought I could hire better people and buy better equipment whilst charging less.
I was wrong. Client demands were often last minute. Remember the popular saying: you can have two out of cheap, fast, and good but not all three. So with last minute client demands, we couldn’t be cheap and good. We’d have to choose between them and I had no interest in not being good. One of the biggest problems is that you can’t “try before you buy” when it comes to AV rental and production. Our clients often saw our business as being pretty much the same as every other, and they would go with the cheapest - only to be disappointed.
We even participated in a “reverse auction” to win the business of a major global brand. We were down to the last six suppliers and they then put us into an online auction room. The supplier that bid the lowest, got the work - a crazy system if you want a long-term relationship and the best work a supplier can deliver. Even the company’s own events team agreed the system was crazy, but they were being forced to follow the company’s global procurement policy.
That said, all is not lost. We did a pretty good job of winning clients and here are some of the strategies that we succeeded at using to stand out from the crowd, often winning work that nobody thought they wanted to win:
1. Love Small Clients
Small clients become big clients. Yes, small clients can be a massive time suck. Yes, they can be frustrating to deal with. Not only is the revenue relatively small, but they often need just as much hand-holding as a six-figure project.
As frustrating as it can be, looking after smaller clients was vital to the long-term success of our company.
- Three rental companies that each started off dry hiring a couple of moving heads from us, each brought us 5-figure projects.
- An event agency that started by hiring a 2 speaker PA system from us every 6 months or so, brought us some of our largest ever corporate events.
- An event producer that worked for a small event agency, moved to a larger agency and got us the introduction that we needed.
Loving your small clients is (almost) always worth it in the long-run.
2. Always Take a Site Visit
Even for the smallest jobs, we would try and do a site visit. People buy people, and our close rate was around 85% once we had done a site visit, and 40% if we didn’t. It made commercial sense even in the short term, and even for relatively small projects.
Site visits are also a great opportunity to build relationships with venue managers and other event industry suppliers who could be much more valuable that this single job.
It doesn’t always seem to make commercial sense but when you consider the potential long term impact, it can make a massive difference to your business.
One of our best clients started as a £500 dry hire of some lights. We won that first job because we were willing to take a look at their venue with them and help them spec what they needed. Let’s be honest, that’s not often a service you receive for a dry hire! Was it worth spending 3 hours doing a site visit for a £500 job? No - we probably lost money on that first hire as a result. Was it worth spending 3 hours doing a site visit for a £500 job that turned into hundreds of thousands of pounds worth of business? Absolutely.
3. Sell The Result Not The Kit
I still can’t believe how many proposals I see AV companies sending to clients that are nothing more than a list of kit with a price on the end. We won major events simply because we provided a full written proposal and some basic visualisations whereas every competitor had sent a list of kit generated by their rental software and a price.
The majority of clients have no idea what any of the equipment does, or what kind of effect it will produce. How do you expect them to visualise the result let alone differentiate between suppliers? It’s like buying a house based on a list of the materials used to build it without seeing the property.
I never understood why other companies were not willing to invest a few hours’ work to pull together a proper proposal and add a new client to their business.
Differentiating in the competitive events industry isn't always easy, and the tactics I've outlined in this post might seem obvious to you. But I know from experience that when they are executed on consistently by everyone in your business, they can have a transformative impact.