Written by Kevin Jones, Principal – Ignite Selling
“We aren’t looking at any alternatives to your solution. We want to work with you and no one else.”
Wouldn’t it be nice to hear those magical words? While it is possible that some of you reading this have been in the enviable position of facing virtually no competition for a deal, it unfortunately doesn’t happen very often. In fact, some would argue that if you have a proper understanding of “competition,” then the situation of “no competition” never happens.
What is Competition?
We were working with Rich, a successful sales representative for a large financial services company. Rich’s company specialized in expense management data gathering and analytics via software tools. These tools were created to help companies better analyze employee-spending habits and identify areas where savings could be obtained. Rich was working on an opportunity in which he faced serious competition from a large national software company. This company created software tools that were similar to Rich’s company. They were also the competitor Rich most frequently faced.
Rich’s strategy for this opportunity was built around the competitive strengths and weaknesses of this one competitor, with little-to-no attention given to any other potential competitive threats. When we asked Rich to describe the competitive landscape for this opportunity, this was the first and only competitor he named. When we asked Rich if there were other alternatives the customer might choose, he responded, “Nothing serious. It’s pretty much us or them.”
Is competitive analysis and strategy really this simple? A binary choice between two alternatives?
What Does Webster Say?
Webster’s Dictionary offers one definition of competition: “The effort of two or more parties acting independently to secure the business of a third party by offering the most favorable terms.”
When we introduce the idea of competitive analysis to our clients, most begin the discussion with Webster’s definition in mind. Moreover, they think only of their traditional, familiar competitors, ones who play in the same sandbox and sell similar solutions. This is exactly the framework Rich was using when we asked him to do a competitive analysis. What we find is that most sales people tend to ignore non-traditional forms of competition. For instance, how often does real competition come from inside of our customers’ own organization? In a “make or buy” scenario, this is often where the strongest competitors lie. Moreover, given how budgets are allotted, internal competition for the same pool of money or resources is completely normal and customary. Choosing your solution is only one alternative among many for the customer.
Consequently, when we discuss competitive analysis with our clients, the first task before us is to remove their traditional blinders, and to get them to look beyond the competitors they are used to. Every alternative before the customer should be considered a legitimate competitor, and a well-thought-out competitive analysis needs to reflect the breadth of choices your customer has before them.
Think About Competition
We decided to press Rich in an attempt to stretch his thinking about his competition. The first assumption to test was how limited the competition really was. Was it simply a binary choice? At first, Rich was uncertain, but he did acknowledge that there were some small companies that might go after the business. Rich identified them as boutique consultants and did not feel they were serious competitors. In his opinion, they lacked a track record. Rich also acknowledged that his customer’s internal IT department could build a homegrown solution, but he didn’t believe that was likely. The company was continually strapped for resources in general and lacked the expertise needed for a project like this in particular. Rich admitted that there were competing priorities inside the company which could feasibly interfere with his project; however, he was confident that his project had priority because it had already been delayed for two years. Rich was sure the company would move forward and felt confident that it was a two-horse race.
Broaden Your Thinking – How Does One Choose?
Competitive analysis isn’t complicated, even when there are a large number of competitors in the mix. People typically make buying decisions following a reasonably predictable pattern. First, people determine which criteria are important to them in a solution. Second, they look at alternative options and evaluate them against the criteria they determined in step one. And lastly, they select the option that best aligns with their priorities. This is a reasonable approach to decision-making.
Regardless of how we might perceive our prospects, in this regard, prospects are generally both reasonable and predictable.