Business Growth

The Ultimate Guide To Market Penetration For Field Service Businesses

Apr 26, 2022
8 min read
SEO Title | The Ultimate Guide To Market Penetration For Field Service Businesses
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Market penetration. It’s a buzzword people often throw around without truly understanding what it means or how it applies to businesses in their pursuit of success. While often considered a word reserved for large corporations, even small businesses can utilize a strong market penetration strategy to achieve high-level growth.

Your lawn care or pest control business may only serve a small community, but understanding what market penetration is and how it can serve you allows you to make necessary tweaks to your organization.

So what is a market penetration strategy and how can you start implementing it? Let’s delve into the market penetration definition and how to develop an effective strategy for field service businesses.

What Is Market Penetration?

Market penetration can be defined as both a measurement and an activity. New business owners can often fall victim to the two definitions by confusing them.

When defined as a measurement, market penetration assesses how much of a product is being sold relative to the total estimated market for that product. In other words, if 100 customers want to take advantage of regular lawn care services and you currently have 16 customers with a recurring subscription, your lawn care services have a penetration rate of 16%.

This measurement can also define how much growth space there is in an area. For example, if you live in a smaller town and there are 10,000 customers with lawns and only 4,000 subscriptions for regular lawn care with existing players, there’s a penetration percentage of just 40%.

Of course, you wouldn’t expect to capture the entire market. Some customers may prefer to manage their own lawns, but it does indicate room for growth. It means there’s still space to accommodate a new lawn care or business: yours.

When market penetration is defined as an activity, it represents the process of going into an existing market where current and similar products already exist. Your market penetration strategy is to take away market share from other companies.

Chances are you will use both definitions. Pool care, pest control, and lawn care companies are among the most common small community-based businesses in the country, meaning the market is there and competition can be high.

Why Is Market Penetration Important For Field Service Companies?

Understanding the value of product penetration is crucial for field service companies, as much as any other industry. Don’t be fooled by the word “product” in that term – your services are your product. It provides enormous insight into how your customers and the market as a whole view your services. It indicates the market health of your company and illustrates whether you need to make alterations.

Here’s a market penetration example:

Company X offers pest control services yet discovers it has a low rate of penetration in relation to the competition. What could it mean?

Reasons for this could include a lesser quality of service, poor marketing, or simply that they tried to compete against someone who had already been established for years. Based on this information, Company X can perform a further investigation into how they provide and market their services.

Penetration is all about comparison within a market. It can start with a neighborhood and be expanded to a town, city, county, or even nationally. There’s value in using penetration, regardless of who you are or your service type.

As part of a market penetration strategy, you may decide to make product penetration an established business goal. Some of the benefits of adopting it as a formal goal include:

  • Increase Sales – Focus on upping your sales and making further inroads into a new or existing market.

  • Encourage Adoption – Perhaps you have offered a new pest control package or a bespoke lawn care service. Penetration can boost adoption among customers.

  • Understand Your Market – Get additional knowledge regarding your market and its needs. If you cannot increase your penetration, it could show that you do not understand the local community's needs.

  • Discourage Competitors – Achieving a high market share doesn’t just mean you hold the bulk of pest control contracts in your area. It also discourages others from trying to compete.

  • Find Underserved Markets – When using market penetration as an activity, you can find weak points in your competitor’s offerings. Maybe they don’t offer specific services, or perhaps they lack the packages customers want. Penetration can provide clues as to where you can innovate and offer customers something no one else can.

Penetration is vital for everybody, whether you’ve got an established lawn care company or are thinking about starting a pest control business in your local neighborhood. Learning how to calculate penetration rate can inform your future business planning.

How To Calculate Penetration Rate

When you calculate penetration rate, you’re using it as a measurement. Figuring it out can help you discover how much your products or services are being used by customers in relation to the total estimated market.

Not only can you calculate it for lawn care or pest control as a whole, but you can also do it for individual services.

The formula is thus:

(Number of Customers / Target Market Size) x 100 = Penetration Rate

You should be using this formula frequently to monitor any increases or decreases in your penetration. But when should you plug your numbers into this formula?

As a rule of thumb, a good time to calculate it is after every sales campaign you run. It’s also good practice to do it after a financial quarter and at the end of the year.

Developing A Market Penetration Strategy

You should start building a market penetration strategy when your company is looking to achieve a more significant share in an existing market. You’ll be tapping into existing products within existing markets. This is how you grow as a business through increasing sales among people who already want to take advantage of the services offered by companies like you.

Let’s examine how your field services business can implement several tactics as part of an overarching market penetration strategy.

Revamp Your Digital Marketing

Change up your marketing plan. Utilize other channels to boost exposure. Think about your demographic and the way to reach them. For example, if you’re marketing lawn care services to a gated retirement community, you may want to think more about leaflets and local TV ads rather than social media like Instagram or Facebook.

Don’t waste resources on ads no one will see. Tailor your digital marketing campaigns to the audience most likely to receive them.

Change Your Pricing

Market penetration pricing means altering your pricing to attract more customers. Undercutting the competition is the most common option chosen by companies. Field services businesses can take advantage of this strategy by considering better introductory offers or discounted bundles to pull customers away from the competition.

Identify A New Service

Survey your customers and ask them what services they would like to see that aren’t already available. For example, perhaps you don’t offer seasonal services, such as snow shoveling or Christmas light installation. 

Find out what the market wants and launch a new service to accommodate that market.

Expand Into New Territories

Sometimes you might find that you’re a big fish in a small pond. Increase the total pool of customers open to you by expanding into new territories. Regarding a field services business, it could include the other side of town or the next town over. Look into the costs of expansion and whether it makes financial sense for you at this time.

Purchase A Competitor

As you grow, you’ll find that your team also grows to accommodate the increase in demand for your services. If you significantly dwarf a competitor, it could be worth buying them out.

Keep in mind that this doesn’t necessarily mean becoming a brand in a competitor’s area. You may know a friendly neighborhood pest control agent that everyone knows because they live there. Buying them out but using their brand and connections to increase your market share is a great market penetration example.

Boost Loyalty With A Promotional Program

Promotions are an excellent customer retention strategy to prevent others from executing their penetration plans effectively. They’re also a great way to get your customers talking about you with their friends and family.

Offering promotions is both an offensive and a defensive strategy for field services businesses looking to tighten their grip on a market.

Launch A New Marketing Campaign

You may want to consider launching a new marketing campaign from scratch. Think of creative ways to market your brand and have it stand head-and-shoulders above everyone else. For example, you may choose to invest in advertisements on local radio, beef up your social media strategy, or perhaps you want to add a billboard on the main road coming into town.

Freshen up your existing lawn care marketing or pest control marketing campaigns and brainstorm some new ideas. 

Boost Customer Interactions

Field service businesses often only come into contact with customers when they’re on the job or taking inquiries. You can change that.

Some strategies for increasing the number of interactions you have with new and existing customers include:

  • Sponsor a local event

  • Hold a charity auction

  • Partner with a local business (non-competitor)

  • Door-to-door selling

  • Cold calling

Some of these strategies are direct sales strategies, whereas others are more about passively increasing your exposure. The more interactions you have with your target audience, the bigger your profile and the greater the chance of securing more penetration.

Successful Examples Of Market Penetration

At this point, you may be asking yourself how your business can successfully implement these strategies. Market penetration can be difficult to fully understand without context.  

To demonstrate how a market penetration strategy works in real life, here are three examples of successful market penetration.

Barnes & Noble/Starbucks – Building Strategic Alliances

While this isn’t a field service business, it’s a valuable market penetration example. The strategic alliance is a valuable option for quickly expanding your range of services and immediately gaining access to a new customer base.

Barnes & Noble, the bookstore, and Starbucks, the coffee brand, decided to form a strategic alliance where small Starbucks outlets would appear inside Barnes & Noble stores. Rather than simply operating as a place to buy books, customers could enter the store, buy a book, and enjoy a coffee.

Field services businesses may also choose to form strategic alliances. A customer who wants to have their lawn regularly manicured may also have a seasonal pest control problem. They might also have a pool in their backyards that needs cleaning.

The lawn care business may not want to offer a new range of services or may lack the expertise to do so, and vice-versa. Instead of forcing customers to purchase multiple service contracts, a strategic alliance could allow them to get everything covered through a single company.

With one stroke of a pen, multiple smaller companies have formed an alliance that increases penetration on both sides.

Android – Market Penetration Pricing

The concept of market penetration pricing is adjusting the prices of products or services to lure customers away from competitors.

Android is well known for using this strategy to encourage customers to use them instead of their biggest competitor: Apple. With Apple’s consistently high pricing of its products, Android’s low entry price for their phones serves people on a budget. In some cases, Android’s pricing structure can even convince consumers to switch from Apple to Android for their future smartphone and tablet purchases.

How could a lawn care business do the same?

Simple. Undercutting competitors or bundling service packages at a discount could encourage first-time customers to give you a try if they feel like they’re paying too much already for their lawn care services. You can also combine this with an introductory offer promotion to increase your value proposition.

Naturally, you need to find the right balance between cutting your prices and profitability. Calculate your margins and figure out how low you can go. Remember, business price isn’t always the prime consideration in the field services field. Quality often trumps saving a few dollars, so don’t rely on this strategy exclusively.

Grow Your Business with FieldRoutes

Planning for market penetration is crucial for growing your business and becoming the number one lawn care or pest control business in your community. The key to any successful penetration drive is being able to plan and manage your business efficiently.

Whether you need pest control software or lawn care software, FieldRoutes is full of industry experts who know your business needs and can help you streamline your operations to expand your business. 

Give yourself the edge on the competition with the most effective way to manage your business. To find out why so many companies have turned to FieldRoutes and request your free demo today.

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