Are you losing more opportunities than you are winning? When you lose do you often wonder why? Are your competitors beating you even though you offer more value and a lower price? Competing and winning in the marketplace is a top necessity in growing your small business. Often times, however, small business owners don’t know why they win or lose. Understanding and selecting the right competitive strategy will ensure you are optimizing your efforts, and will also make a big difference in the numbers in your win column.
With new accounts that you are trying to penetrate, there are three commonly used competitive strategies that can be used. The first is a “frontal” strategy that focuses in on your ability to differentiate what you are offering based on your reputation, the uniqueness of your product or service, and price.
If the decision-makers view your reputation or the uniqueness of your product and service much higher than other providers, you most likely will win regardless of price. The sad truth, however, is that most decision makers don’t have enough information to judge you or your competitor’s reputation, and also find it difficult to differentiate the uniqueness of your product and service. As such, they make the decision solely based on price. If you are the low-cost vendor, then you have a better chance of winning. If not, the odds are very little that you’ll win.
If you can’t compete with a frontal strategy, a “flanking strategy” is the next best option. Using a flanking strategy requires that you change the “buying criteria” to include things that favor your product or service. To do this, you need to have a relationship with key decision makers, and also be able to make the new buying criteria relevant in their buying process. Adding additional capabilities or features, changing terms, providing incentives, or committing top resources are some of the ways to do this. Often times a flanking strategy produces a win even though you offer a more expensive price. Decision makers see your solution as a better deal and are willing to pay for it.
The “fragment” strategy is the third competitive approach to winning. You use this strategy when the other two methods simply aren’t viable. This strategy requires that you break the opportunity up into smaller pieces, allowing you to win one part of the deal and your competitor to win the other. Getting a “piece” of the business is better than losing the whole deal, and it also allows you continued access to a new customer to sell them additional products or services.
Making the correct selection of the right strategy requires that you understand your customer, competition, short-term results, and long-term opportunities. Selecting the right strategy will help you improve your win rates.