Tell me if this story sounds familiar...
An excited sales rep busts through the door with the deal of a lifetime. It’s a premier logo with a meaningful deal size and it could make your quota for the year. The prospect just issued the RFP and they are looking to make a decision soon.
But, it gets even better. The rep’s contact says they are not happy with their current vendor (which happens to be your top competitor) and they want to switch. If you get this deal, not only would you blow through quota and land a solid logo, but you’d be ripping out one of your competitor’s key clients.
You feel like a hungry lion staring at a wounded Zebra, licking your chops. You put this deal at the top of the priority list. You divert your best resources to meet the short timeline. You are aggressive with your pricing and packaging.
Then, BAM. You lose. You miss your number, maybe by even more than expected because of this deal’s distraction.
The prospect decided to stay with their current vendor because:
- It would be too disruptive to make a change at this time.
- The current vendor dropped their price.
- The current vendor committed to making some tweaks and updates.
- There wasn’t enough time to change before the current contract expired.
At that point, you realize that you never really had a shot at the deal and that you’ve wasted time, money, and resources that could have been directed towards more fruitful efforts. You realize that you were caught flat-footed and were completely reactive.
Manage your competitors' churn.
At Clozd, we uncover variations of this story all the time from the buyer point-of-view.
The buyers often are not happy with their current vendor. They would like to switch. They do not feel like they are getting the right price, service, value, or product for their money. They are intrigued by other vendors’ offerings and want to try something new. They would have switched if they had more time.
Other times, they are fine with their vendor. They do not really want to switch but they need a better price or some more concessions to make the deal work for their budget. So they bring other vendors in as stalking horses to gain leverage over their current vendor.
Win rates in these reactive pursuits with entrenched competitors are well below average. Think single digits. That’s because reactively trying to drive churn (like when you suddenly receive an unexpected RFP) in your competitor’s key accounts rarely works. That does not mean you shouldn’t try to compete in those instances, just don’t throw the kitchen sink at the pursuit until you qualify the deal.
That also does not mean you should give up on key accounts that have entrenched competitors. In fact, it means the opposite. Instead of getting caught flat-footed, you can proactively manage your competitors’ churn. At Clozd, we see account rip outs all the time across various industries.
Strategies for managing your competitors' churn.
The players that are able to consistently drive their competitors’ churn employ some of the following strategies:
- Know and track when an account is up for contract or renewal. Put a system in place or add fields to your CRM that allow you to track which competitor the account is currently using and when the contract renewal is due. This should include accounts that you lose to competitors.
- Create alerts or reminders that allow you to begin reach out early so that, if there is opportunity, you don’t run out of time to run the sales cycle and, even potentially, on-board the client before their current contract expires. This is particularly important when you are selling complex solutions that are deeply embedded in the buyer’s operations.
- Follow changes in the account’s leadership. One of the ripest times for a rip out is when new leadership comes into an organization, especially if the new leader has experience with your platform. This can be done at the rep level. It is as simple as creating basic google news alerts or paying attention to changes in your LinkedIn network.
- Ease concerns about the offering by letting your customers sell. That requires more than a few product demos. Buyers want to see how others approach the same problems they face. Expose these buyers to your network of customers. Invite the buyers to user groups so that they can hear and see how others use and derive value from your offering. Invite them to lunch with another customer. Help them expand their professional network within your customer base.
- Add value through personalized outreach. The robotic “just checking in” emails don’t work. Provide content relevant to their industry and use case. Show them advances in your offering that apply to their potential use case. Make value added deposits to the relationship without immediately asking for a meeting in return.
- Adapt your pricing, packaging, and terms to get the deal across the finish line. Plenty of deals die because the buyer simply is unable to turn off one solution and turn on the other. But they are also unable to pay for having two overlapping systems. One simple solution is to structure the contract so that overlapping payment is delayed or waived or the initial contract is extended “free of charge” to make up the difference.
Following these guidelines will enable you to proactively manage your competitors’ churn. It’s inevitable that you’ll be caught flat footed from time to time, but the difference between winning and losing at scale is how often you get caught.