How long can you give up your market
23
share?
P
ERSP
Expect the unexpected is the advice from The Revival Group. ECTIVES DR
By Simon Walker, Technical Manager, The Revival Group.
Summer 2007’s flooding was significant it might be we run into millions of pounds.
devasting for many businesses should take a look at the It’s not just big brands
across the UK resulting in online world – where the link however who are spending
thousands of claims, no more between service outage and serious sums to build share.
so than within the I.T. and market performance is strong. Figures from thebestof, a
data sector. These floodings network of local marketing
underlined the importance of While nothing to do with websites for SMEs, who
having a strong business floods, ebay, the online conducted a survey amongst
continuity plan in place and auction house suffered a 22- 3,000 small to medium sized
the damage it could do on hour outage a few years back. enterprises across the UK
market share if there was no This inability to serve its showed that over 42% spent
such plan. customers cost it $5 million in more On promoting their
lost revenue and a 26% drop brands in 2007 than in 2006.
These claims theoretically in share value. Other similar This activity being focused on
covered property damage and examples were when Charles building sales and thus
loss of business – but did Schwab suffered a 26 hour defending or more likely
they? outage resulting in losses growing market share.
believed to be $20m leading
For every firm that suffered a to $70m having to be invested What’s more, market share is
flooding, there was business in infrastructure whilst in the increasingly under threat from
interruption. If that same year E*Trade were hit by business disruption. For
interruption was prolonged a 5 hour outage which led to a instance, a recent survey by
there was no doubt a market share drop of 22%. the Chartered Management
competitor waiting to step in Now while few businesses are Institute found that about 1 in
and mop up the available an ebay, Charles Schwab or 3 businesses had business
customers. The business lost E*Trade these examples show disruptions, and that UK
by such disruption wasn’t that a business’ market value businesses affected by
simply those immediate sales is inextricably linked to its extreme weather rose from 9%
– it was far more than this, it ability to serve its customers. in 2006 to 28% in 2007.
was long-term market share.
You need only flip the coin Following the summer floods
Damage to Market and consider the spend and of 2007, a report from the
Share time taken to build market Association of British Insurers
While figures abound for the share in the first place, to see (ABI) released in November
claims covered by the flood, how costly it is when business 2007 estimated that over
few have attempted to interruption opens the door to 8,500 households and
quantify the ‘cost of loss of your competition. In many businesses would still not be
market share’ which flood-hit markets the advertising costs repaired in time for Christmas.
I.T. businesses no doubt associated with increasing Amounting to over 6 months
suffered. To get a feel of how market share by even 1% can business disruption for many
WWW.SNS-UK.CO.UK MAR/APR 09
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