How to Knock an Incumbent Out of the Ring
Put the gloves on, and get comfortable.
Companies typically compete on Price, Product or Service. If they are smart, they develop ways to compete on talent, information, research and development, value add, ease of doing business, return on investment to the client, plus many other key metrics.
Too many corporate sales teams fall into the compete-on-price trap. When it comes to price, the incumbent will win every time. All he has to do is match what you your proposal and price. This type of stick-to-incumbent thinking comes out of fear of change and cost. No company wants to rip up the sidewalk and replace a vendor solely on price.
When it comes to products, there isn’t enough differentiation usually to sway the prospect’s attitude against change. If your firm does offer a product with a measurable and meaningful difference, naturally you need to leverage that advantage.
Most likely, you recognize that product differentiation is not sustainable over a long period of time. You will book sales with a new product, however, you can’t base your marketing and sales strategy solely on the product, especially if you need to knock the incumbent off his perch.
Truly unique products do play a convincing role when going head to head with the incumbent. Early adopters often ignore all other factors in a purchase if they can acquire the latest in technology, process, or performance before others in their field.
If you are offering a new product without a solid track record, the incumbent can wield the classic FUD weapon against you — fear, uncertainty and doubt — a time-tested tactic used in marketing and sales to help discredit a competitor.
The FUD weapon is your incumbent’s attempt to influence perception by disseminating negative, questionable or outright false information.
An individual firm, for example, might use FUD to elicit unfavorable opinions on a competing product, or to alter how current customers view the cost of switching products. What’s more, incumbents use FUD to keep a current business partner from competing against them, which often fails.
When it comes to service, you have access to one of the best ways to unseat the incumbent. But be forewarned, it is one of the most difficult to prove in new opportunity. Unless, the prospect faces major servicing problems with the incumbent, it is tough to convince him he should change just because your service is better.
In fact, your firm may offer far superior service capabilities. In some ways, good service is a given and an intangible, so people don’t easily see its value upfront.
Consider your automobile service. Every so many miles, you return to the dealership for scheduled maintenance. In, out and you’re on your way. You go to this dealership because you bought your car from it. And it is only two miles from your office.
As far as you know, the service is fine, although you really don’t have a comparison. If a new dealer opens across town, what could the service department offer you that you aren’t already receiving from the original dealer? If you were the competing dealership, what is your compelling explanation why your service is better? Faster turnaround. Higher quality parts. Friendlier technicians. Prove it.
All of us know that clients with incumbent vendors are underserved in some way, whether the evidence is anecdotal or factual, we know. Breaking up is hard to do with business relationships, too. Many before you tried to unseat the “champion,” and many fail.
We also know that as a matter of corporate policy, new business is put out to bid every few years through an RFP (request for proposal) process. This way the company establishes a veil of fairness. Ironically, the incumbent wins the RFP because he helps the company prepare it. Nothing changes.
The incumbent has become quite skilled at competitive akido, deflecting any attempt to knock him out of the ring with persuasive arguments against change. So how do you overcome the incumbent?
The Set Up
Using your differentiation, I urge you to do ample pre-call research to help you clearly communicate, from your prospect viewpoint, how your differentiation translates into a competitive advantage for your prospect.
If your goal is to take over an existing relationship, then approach the initial meeting with the thorough knowledge of why your prospect needs you, and how your prospect is being under served by your competitor/incumbent. Sounds obvious, I know, but do not cast aspersions on this relationship.
Don’t Go Head to Head
One of the biggest mistakes sales people and advisors make is going head to head with your product or service. Most of the time, this strategy will lose the opportunity.
Three Smart Knock Out Punches
1. Help prospects solve an issue or problem you identify, and help him create the buying vision.
■ Find out what’s not working in his current situation
■ Develop a compelling value proposition around your solution.
■ As learned from Strategic Selling (Miller Heiman), embrace the buying influences early
■ Locate a coach to help you with the sale
■ Combine coach strategy with a solid value proposition, and you’ll increase your odds.
2. Approach the company with an issue it faces, but the incumbent isn’t working on.
Example: If your goal is to sell your client a retirement plan, instead to tackling that directly, discuss compensation issues, turnover problems, or employee communications.
If a company struggles with turnover, discuss the range of solutions, and help develop alternatives during your process. Once engaged in a collaborative process, help your prospect to self-discover your expertise in redesigning retirement plans.
3. Focus on service.
■ Uncover service issues with the incumbent
■ Explore with researched questions in your initial meeting
■ Map out the buying influences on the current situation
Using the retirement plan as an example, and if it comes up, ask questions around their objectives, and how the plan is working. I like to ask something like: “Now that your plan has been in place five years, knowing what you know today, what three things would you have done differently in setting it up?”
Listen closely. Then, explore even further each bit of information that falls gently onto the table.
Never let a prospect notice your Sherlock Holmes hat.
We’re not interrogators. We’re facilitators.
Selling against the incumbent takes patience and stamina, far more difficult than selling into a new opportunity.
Do your homework, not only on company issues, but the buying process, too. Build a strong relationship with a coach, your Dr. Watson, who can help you through the maze of decision making.
Nothing worth having is ever easy. If you stand out from the crowd, new opportunities may even find you.
See you on the upside,