Incumbents… everyone who isn’t one hates them and if they don’t already tease you enough from their ivory towers you just know that their lazy overpaid salesman is playing golf somewhere waiting for orders to drop into his inbox before he goes to the nineteenth hole. Secretly though many of us wish that that was us.
It’s a given that you’ve already invested a lot of time, money and passion during the innovation process to understand your target markets needs and develop a suitably differentiated solution and I’d hope that you’ve already picked up some willing beta testers. Invariably some of these will turn into customers but now that your solution is market ready the hard work begins – driving net new sales into strange new prospects. So how do your sales teams topple the King?
Your reference point is their Status Quo
Irrespective whether you think it’s right or wrong once a customer has chosen and implemented a new solution that becomes the yard stick that they use to measure everything else with so don’t try to pit your solution against everyone else – focus your time and resources on understanding and empathizing with your customers status quo because it’s only when you understand their viewpoint that you’ll know what your being base lined against.
Help your customer create new value
Sales teams within many organisations typically start their campaigns by trying to broker tactical sales engagements. While this approach helps you build your short and medium term pipelines it’s the strategic engagements which will earn you a seat at the customers board room table and catapult you to long term corporate success. Becoming truly strategic to an organisation though means you have to take an entirely different type of message to an entirely different audience – the fabled C Suite.
The C Suite are responsible for creating, communicating and executing company strategy and they care about three things – reducing costs, reducing risks and increasing revenues. Almost all of your competition will play to only two of these because the third – increasing revenues, requires a very different style and approach.
Helping customers identify, qualify and then build new differentiated revenue streams requires deep industry and cross industry insights, an intimate understanding of your customers goals and objectives, lateral thinking, business acumen, forward vision, an eye for future trends, empathetic knowledge of competitive landscapes and a robust execution strategy. If your solution allows it you should use it to design a new revenue stream, couple it with the insights you’ve gathered to create a well rounded business plan and set up a meeting. If you are going to take the CEO or CFO a proposition it has got to be bullet proof.
During your pitch you’ll be asking the Executives to commit time and resource so treat them as a board of investors. As many entrepreneurs have found to their peril if your insights, numbers or strategies are flawed you’ll be spun out of the door faster than a climber bounces down a cliff face.
Pursue Perfect Knowledge
All of us at some point, whether you’re a Presidential nominee, a salesman or an Explorer has had to start from scratch and as most of us can attest to failure to prepare is preparing to fail.
Preparation doesn’t guarantee success but it increases your odds and helps you adapt when presented with uncertain or unfamiliar situations. Imagine the benefits to your sales organisation if your teams had Perfect Knowledge of their customer – the right product, at the right time, at the right price sold in the right way. Perfect knowledge is attainable but rarely achieved because it’s locked inside your customers heads so until the time comes when they call you in to tell you exactly what they want to buy and how they want you to sell it to them you’re going to have to become a charismatic sleuth.
There are only two ways to get knowledge – directly and indirectly. The incumbent has access to both but it’s more than likely that your access is more heavily weighted towards the latter so you need to reach out and talk to as many individuals as you can who have any connections or insights into the customer you’re hoping to deal with. The community of people you can talk to is endless but can include suppliers, channel partners, media representatives, customers, mutual friends, social network colleagues and many more.
To attain perfect knowledge you have to identify your target audience and get an empathetic understanding of their view of the world, their relationships and their needs. Your first step is to clearly and deeply understand your products Value Proposition and features and benefits. Your value proposition is your products ‘What (… does it help your customers business achieve that they couldn’t before)’ and the features and benefits are the ‘How (… does it achieve it)’ – understanding both of these will help you zero in on the right decision makers and stakeholders. Invariably you will find that the people who care about the ‘What’ will be more senior and more central in helping develop business strategy than those who care about the ‘How’ who will more commonly reside in the operational areas of the business.
Your solution and its benefits will be more applicable to some stakeholders than others so now you have a list of names and titles you need to prioritise them according to which of them ‘owns’ or ‘cares’ most about the individual propositions contained in your proposal. Prioritising your prospects in this way has two advantages – not only do you know who you have to talk to and convince and what style of language to use but you also know who their secondary, and perhaps even tertiary influencers are going to be. It’s also highly unlikely that there will be a single decision maker so work with the prospects you’ve identified to understand what the decision making chain looks like and again, who needs to be involved and why.
As you step through this process it’s important that you sanity check your information with the community you identified at the start to make sure that the information the customer is giving you is accurate – after all you don’t want to invest a lot of time and energy only to find out that the customer is giving you misinformation. Collating this information together will not only help you create a focused sales campaign and build relationships but it will also help you uncover failings or gaps in the incumbent solution – all of which will help bolster the strength of your own proposition.
Win the game before it starts
Once the preserve of the Federal and Public Sector today tenders are more common than ever and despite denials to the contrary organisations almost always weight them in favour of the incumbent. Why? Because the incumbent is their status quo – they know what they like and they know what they don’t like about their current solution and these experiences allow them to design their tender accordingly. Unfortunately for you the bad news doesn’t stop there.
Many of today’s Supplier Training organisations provide immature training packages that encourage procurement teams to default to “Supplier Market Assessments and Surveys”. Translated this means that rather than encouraging face to face meetings with new potential suppliers they encourage procurement teams to open their web browsers and trawl a mix of websites for information about you. These sites will invariably include your own web site, analyst material and a plethora of information and opinions from the wider web. While you can influence some of these areas solutions are typically capacious and complex so how many times have you or your own company gone ahead and placed an order solely on the strength of a web based evaluation? I’ll wager that the answer is never and unfortunately again for you this type of evaluation is typically all you’re going to get before the tender comes out. Studies rate your chance of success as less than 1 in 10.
So what can you do to hedge your odds? Firstly you need to behave like the incumbent and get face time with the stakeholders you’ve prioritised on your list to understand their status quo and educate them about your company and your solutions. Secondly you need to engage with procurement as early as possible and do all you can to get them and the wider business to buy your solution without ever going to tender.
Individuals are loss averse
People are loss averse – economists and marketers alike call it the ‘Endowment Effect’. Put simply people have a tendency to strongly prefer avoiding losses than acquiring gains. Studies have shown time and time again that loosing something has two or three times the psychological impact of gaining something – even when there is no cause for the attachment. However, studies also show that people are also more likely to take bigger risks to avoid bigger losses and with the right information and right tailwind this is something that you can use to your advantage. If you want to get your solution on the table then the gains it offers have to be orders of magnitude better than their status quo to even be considered.
Make gains instantaneous
We’ve already established that people have a tendency to view losses two to three times more intensely than they view gains so you already face a challenge. There is, however, another inalienable truth about gains – they’re rarely instantaneous. Not only does this mean that your customer has get over the psychological trauma of having to let go of the past but it also means that they’ll have to wait to get the full benefit of your solution. Additionally those delays will also erode your solutions ROI so you are in a race against time.
Prospects will sometimes forgive the lengthy deployment time for highly differentiated solutions but in this fast paced world if your solution offers benefits that are only a couple of releases ahead of the incumbents then by the time you plan to have finished implementing it you could find that they’ve not only caught your wave but they’re releasing their own variation and you’ve lost your first mover advantage. Invariably though the more complicated your solution the longer it’s going to take to deploy and while it isn’t always possible to deploy a solution instantaneously you can still work with the customer to prioritise the deployment of particular benefits and close the gap.
Over the years I’ve interviewed hundreds of customers on their choice of vendor and the competitions inability to mitigate or quantify the risk of change is always cited as a prime reason for sticking with the incumbent provider. As a competitor you need to show your customer that you have done everything in your power to understand their risk of change and that you have an intelligent, well thought out transformation journey that clearly shows them how and where you’ve successfully dealt with these types of risks in the past. Help your customer eliminate and mitigate these risks and as always try to view, or better yet, experience it from your customer’s perspective.
The more integrated and capacious your solution the harder it gets to capture all the risks and the fact that you don’t have the same breadth or depth of relationship as the incumbent just serves to amplify the difficulty because your field of vision and range of influence are both going to be significantly smaller than you’d like them to be. Ultimately this will dramatically diminish your ability to ask for and build a comprehensive risk register.
Your goal here is to create a 360 degree view of the risks that are lying there just waiting to ambush you so work with as many of the customer stakeholders as you can to understand and quantify the risks and their impact to their organisation then work systematically to categorise, prioritise, address and eliminate each one. Your style of questioning throughout this process is crucial. Your objective here is to discover the root cause of each risk, determine whether those risks are genuine or perceived and elicit the customers help and insight to resolve them. The more time and effort that you put into this phase of your engagement the easier and quicker it’s going to be for you to develop a proposal that puts the customers mind at ease.
Get the Feeling
How many times have you lost to a competitor and been told by the customer that they just “felt” that the other vendors solution was right? Feelings – they can be your best friend or your worst enemy. Everyone has them and at some point your target customer began developing feelings for the incumbent and when individuals with similar feelings start coming together you rapidly get a culture.
Trying to change the opinion of a single person is like trying to turn a stream back on itself but trying to change the culture of a whole division, or an organisation is like trying to turn back the tide.
When you’re designing your sales strategy there are three paths open to you. The first will get you net new incremental sales at a slow rate and it’s lower cost and lower risk. The second will get you net new incremental sales at an accelerated rate over time but is more expensive to resource and if it doesn’t work you can be left with nothing. The third is a hybrid of the two and very few organisations use it effectively. So what are they?
The first is also the simplest but you need at least one great customer. Marketing organisations have long realised that the most effective way to grow net new sales is to use interpersonal referrals but it means having at least one customer champion who’s willing to recommend you to a friend in another business. Studies have continually shown that this approach increases your chance of a sale by at least twenty fold but this approach is a little like Dominos – it helps you knock down one customer at a time but it still means that you’re having to beat a path to your customers door rather than the other way round. This approach is most effective when you have multiple streams running in parallel.
The second approach gets larger results over time but is more resource intensive – the best way to turn back a tide is by using another, bigger tide but creating one is hard right? Wrong and many exceptional small, low revenue startup companies have managed to use this particular approach to their advantage but it takes planning and a coordinated marketing and sales approach. Studies have shown that a group as small as five percent can influence the direction of an entire group. As we’ve seen friend referrals are one way to exert influence but if you want to create a tide you need to identify organisations that have their own gravity – these are the organisations that others, consciously or subconsciously look towards for leadership – the market leaders and the rising stars. These are the organisations whose names give your products instant credibility when you can reference them as customers and every industry has them whether it’s Coca Cola in the beverage market, Apple in the consumer market, Salesforce.com in the Cloud market or General Motors in the automotive industry. Getting a Gravity customer on board though is challenging and involving and you need to create a focused 360 plan of attack, triple your efforts and bring your A Game.
You don’t always have to aim at the Gorilla
There are a plethora of competitors out there and in many cases some of them will have solutions that are better than yours in every way – I hasten to add though that if this is the case then you could have probably run more effective Innovation sessions… However, for every competitor that has a better solution there is also likely to be a competitor that has a much poorer solution and they too will have incumbent customers.
Over the past decade I’ve worked with hundreds of different manufacturers from around the world and they all have two things in common – firstly, irrespective of how small they are their marketing teams are always able to position the company as a leader and secondly when they pitch to their sales teams they always compare themselves against the industry’s Gorilla. While it’s admirable to try to take on your industry’s four hundred pound Gorilla sometimes the fact is you’re unleashing your arsenal at the wrong target which will only serve to waste time and resource so make sure that you set your sights on the right competitors and then focus your attention on those ones instead.
Training companies would have you believe that being able to systematically topple a competitors Empire customer by customer comes down to your ability to follow their well defined sales methodologies but the fact is that every customer situation is different. Just as the incumbent will never be able to defend their entire install base you will never succeed all of the time but if you follow the guide I’ve laid out above then you’ll dramatically increase your odds of success.