Sometime last year in one of the sales campaign with my team I met with a young dynamic executive from a major institution. The meeting started with a bright note as this executive had a previous delightful experience with our product at his past employer. As we get along in the meeting and trying to understand his business objectives it became clearer that he had a project that we can work together.
He was looking at exploring technological choices for the platform and we were one of the players. The question that he put across in the first meeting was putting us direct against one of our competitions. This was a very valid question, “Tell me how you differentiate yourself against vendor XYZ that we are using for several years”. While this is a very broad question and often doesn’t get asked in the first meeting, it’s a very important one and an attempt of addressing it then and there is usually futile.
Why ? One would ask. Answering a question such as that requires a detail understanding of what your customer is trying to achieve. On surface every solution in every technological field looks and feels the same, every vendor has plethora of shiny marketing materials which could blindside anybody who is just making decisions on speeds and feeds.
The other aspect of answering a question such as that requires a very current knowledge of your competitive landscape. Due to high churn and agile development practices adopted by most of the product companies the lead on features and functionality remain only for a short period of time often as less as 6 months.
Then How ? One would ask. This is where a mature engagement model with your customers comes in. While it is important to have the customer interested in what you are offering it’s also of great importance that you use this question to your advantage and do a “Current state analysis“. Your discussion flow could be something like below.
Thank you for asking our differentiations, in order to make an attempt to answer that may I ask you on how are you using this solution today ?
- What are some of the technical and business benefits you are getting from the solution ?
- Considering your current and future project requirements what are the new or existing features you are planning to use ?
- Do you plan to use this product to provide new technical capabilities outlined in your project scope ?
- Do you expect any SLA improvements around availability/supportability/cost and maintenance debt ?
- Do you plan to keep your existing operational framework ?
There are plenty more which can be asked to get more understanding of the scope. By asking these questions you have not only gained significant knowledge of what the customers requirements are but also shown a more mature approach to a head to head compete scenario.
The Follow up ? The most important part is that you don’t try to answer the differentiation question then and there itself however you should have a broad stroke discussion on the areas where you can bring efficiency based on the information you have gathered and request for additional time when you can go through it in more detail.
The next meeting is a very important one and that should cover the highlights of your solution with an absolute focus on bringing business value through your technology. This meeting should however definitely cover/address the original question but not through a speeds and feeds rebuttal.
Now not every prospect or customer will be interested in going through a detailed process like that, however in that case you know that they are probably not the right prospect/customer or not the right opportunity for you to focus on at that time.
What about market dynamics ? Market dynamics are largely those forces which impact prices and the behaviors of producers and consumers. In a saturated market such as the “commodity hardware” business the competitive differentiations are almost zero. Hence we see phenomenons such as “reverse auctions” where the role of the buyer and seller is reversed or the ask for a “third quote” to satisfy regulatory bidding requirements of the company.
These kind of competitive scenarios and behaviors should be used as a great tool for understanding the market dynamics by vendors. The ones who are constantly evaluating these market changing forces will continue to thrive and survive and the ones who can’t do it well, will be acquired or become bankrupt.
While market dynamics is a big area of research and focussed on many aspects, the one concerning the competitive analysis provides a very unique perspective as they are directly coming from the frontline and one of the best reflections of what customers are looking for.
- Are you the right fit for their operating model ? Sometimes customer’s have very rigid operating models which may not be the right fit for your offering.
- Do you have a product which provides business value for their biggest strategic initiatives ?
- Are you in the right price bucket for them ? (You could be a leading vendor in Gartner or through technical POCs than the second in the line but if expensive by long margin then you will loose).
- Do you have right channel/SI ecosystem with whom you can work with ?
- Do you have seamless support model ?
You will uncover answer to the above and many other important aspects when you have a better engagement model to address the question of differentiation with vendor xyz.
The common gap that I see is a tight feedback loop between a given company’s frontline sellers and their internal broader product strategy group (PM, Engineering, Support, Pricing) to act on these inputs. The sellers have a quarterly life and they will continuously move from one customer to another and one project to another. The product group is struggling with delivering shiny new features and often behind on their commitments.
Some of these are addressed through CABs (Customer advisory boards) but often limited to customers and not prospects and loose most of the feedbacks on improving the dynamics of demand side of economics.
In an ideal (the ones we strive for) world a great engagement model results in establishing value of your products/services over competition which results in your products being consumed by the customer. While it also captures tangible / actionable insights within the company which greatly improves understanding of the market dynamics.