Tag Archives: Competitor

How Do You Target CIOs of Large Companies? Six Suggestions

Situation: A company’s target customers are Fortune 1000 companies, some of whom are simultaneously clients and competitors. The key target is the VP/CIO. A prime concern of that individual is assuring that their IT systems never go down. What could the company do better to approach these target customers and reach the right decision-maker? How do you target CIOs of large companies?

Advice from the CEOs:

  • The approach must be tailored to reach corporate level decision-makers:
    • Conduct a direct marketing campaign strategically as opposed to using a high-volume mailing with a low cost-per-piece.
    • Mail relatively expensive dimensional mailers to a small number of highly qualified prospects. Look for high impact to the best targets.
  • Research and identify the key targets within prospect companies.
    • The best success will come from prospects who have tried other options from the large competitors but are unsatisfied with the results.
  • Consider and research prospects within the large consulting firms. They may have tried IBM or similar options, but weren’t happy with what was provided, either because of cost, time or quality.
  • Also look at next-tier players. Success with these customers can become valuable references to the larger firms.
  • Position the offering as the “safe choice.”
  • Closely monitor customers and their experience with the offering – both pre-installation, during installation and post-installation. The key variables will be quality and ease of installation and adoption of the company’s offering.

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Do You Sell the Company or Grow Bigger? Four Options

Situation: The CEO of a successful company is considering two options: sell the company or grow to the next level. She believes that the company could be sold for an amount that would satisfy her financial needs. Also, the prospect of a long vacation and more time for family is appealing. Do you sell the company or grow bigger?

Advice from the CEOs:

  • First Option: Pursue funding to take the company to the next level – through either private equity or venture capital. Present an optimistic, but credible, upside return for the investment; back this up with a realistic lower estimate to cover exposure.
    • Both funding sources only buy the home-run model. Two reasons:
      • They need potential and credible home runs to sell to their investors; nobody invests in solid base hits because the return is insufficient for the risk.
      • They assume that the funds recipient is overestimating what they can do.
      • Given the existence of new technology to expand the company’s presence, it has a legitimate home-run model.
    • Hire a pro to help obtain funding.
  • Second Option: Take a shot at buying the company’s principal competitor – this provides the opportunity for rapid growth at low risk in the existing market and will make the company more appealing at a higher price.
  • Third Option: Based on personal goals, if the company can be sold now at a good price – do it. This will enable you to fulfill your life goals.
  • Give the first two options 12 months. If there is no or limited progress in 12 months start taking two successive months off on vacation – allowing minimal time to monitor the company. If vacations are satisfying, sell the company.
  • Ask yourself a serious question – do you really want to be on extended vacation now or is this an objective for 3-5 years out? If the company already has strong momentum, why not see what can be built and then sell. There may be more adventure in this.
  • Fourth Option: Take some money off the table – enough to build your dream – but continue to own controlling interest in the company. This offers both choices.

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How Do You Evaluate a Potential Partnership? Five Factors

Situation: A software company is developing a new solution for their B2B market. The CEO has been in discussion with a potential partner to assist developing this solution. The question is whether this partner is the right partner. Is it smarter to complete development as a partnership, or on their own with the aid of subcontractors? How do you evaluate a potential partnership?

Advice from the CEOs:

  • Is the potential partner also a competitor? If so, is the partnership arrangement on or off the core focus of the company’s business. Is there potential for future development in the partnership, or is this just a one-shot opportunity?
  • What would a new partnership look like? Ask the following questions:
    • What is the long-term vision for the company?
    • Does the partnership fit this vision, and under what terms?
    • Is the potential partnership “sticky”? Will it bring in business that can be nurtured and developed under the company’s shingle?
  • Until answers to these questions become clear, soft pedal the partnership opportunity and plan for the company’s future.
    • Take advantage of situations that the partner presents as they benefit you, but do not let these become a distraction to the company’s focus unless the partner is open to working with you as a partner rather than as a source of bodies and skills.
    • Put a deadline and milestones on the partnership relationship. If they don’t pan out, walk.
    • Don’t burn bridges, if the partner takes off, then jump back in more strongly, but on terms that benefit the company’s strategy.
  • For the immediate future and until the situation becomes clear don’t let people become idle. Unless something develops quickly be ready to redeploy them.
  • An alternative is to stick with the company’s current customers and expertise. This involves investing resources and focusing R&D on solutions for these customers. If the market remains substantial and current customers are the largest players, this has the greatest potential for growing the company’s business.

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How Do You Compete Against Free Software? Six Tactics

Situation: A boutique software company with superior expertise in their market competes against a large corporation that provides similar software for “free.” The competitor sells systems with their software pre-installed; however, these systems are known to work better with the boutique company’s software. How do you compete against free software?

Advice from the CEOs:

  • Create an alternate message that rings consistently through your advertising, speaking, and media. The core of this message is that if you want a successful experience with the competitor’s installation, the only clear choice is your software. Feature data from your case studies showing improvements in performance, savings of time and resources, etc.
  • Your best target is customers who are in the proof of concept stage. Here they are learning about the system and dealing with the early challenges with the software installed by the competitor. They not only have to pay for the system, but they must pay for installation services. If you can demonstrate both cost savings and smoother operation they will be open to your pitch.
  • Keep a list of the competitor’s trial sites and approach them three months after they try the pre-installed software. Have case studies in hand that demonstrate the clear superiority of your software. At this point they will have experienced enough during the trial that they will be open to your sales message.
  • Focus on the regional rales organizations of your competitor – the people who sell the competitor’s equipment. The RSOs are driven purely by sales performance. Show them that it is easier to sell their systems, and that trials go more smoothly when they recommend your software as part of the sale.
    • Your message: with our software your trial installations go more smoothly; without our software, the entire system sale is at risk.
  • Continue to refine your search engine optimization so that you appear in the first five hits when anybody asks about the competitor’s systems or software.
  • Find an independent Blogger who cares and wants to spread the message that your software is the only way to go with the competitor’s system. Continually feed this blogger with fresh material from your field sales experience.

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How Do You Evaluate Marketing Partners? Six Observations

Situation: A company is interested in partnering with a larger company to market a suite of services. They have identified two good candidates. They haven’t worked with partners in the past and are curious about how other companies work with marketing partners. How do you evaluate marketing partners?

Advice from the CEOs:

  • The danger of working with a single marketing partner is that all of your eggs are in one basket. Your success in this relationship will depend upon the success of the marketing partner. This, in turn, will depend on the amount of attention that they pay to marketing your services, and on how actively their sales department sells your services. The danger to you is loss of control over the marketing and sales process.
  • Another company had a similar situation several years ago. At that time, the advice of the CEOs was to not select an exclusive partner, but instead to work with two different marketing partners, even though they are competitors. The company followed this advice, and it has worked like a charm.
  • Start with a position that you want a non-exclusive relationship. If a potential partner insists on exclusivity then ask for fixed guarantees of business and fixed minimums.
  • Other companies around the table work in partnership with competing companies all of the time. All of the partners value the services that these companies provide, and the relationships are harmonious.
  • If a possible partner insists on an exclusive relationship, another alternative is to split territories and supplement your agreements with most favored nation clauses.
  • Going back to the original question, provided that the terms offered by the marketing partner/partners are favorable, you won’t really know how they will perform until you establish a relationship and monitor it over time. Exit clauses and conditions will be an important part of any marketing agreement.

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How Important Is It to Protect Your IP? Five Points

Situation: A company sells specialized components to a large manufacturer. The manufacturer is building a new product and, for this product, is requiring that all suppliers be approved suppliers. The company sells other products to this manufacturer and is in process of becoming an approved supplier, but the manufacturer wants to start using the company’s components for their new product now. As a work-around, they have asked the company to teach someone else their IP until they are approved. Would you share your IP with another company? How important is it to protect your IP?

Advice from the CEOs:

  • This is a creative request from a large company to a smaller supplier. Absent a legal requirement that suppliers must be approved – not the case here – they are simply trying a bureaucratic ploy to get you to release your IP. Your component is necessary to them and they can’t get an equivalent component from anyone else. If they want your component for their new product, and want to release the new product on their internal timeline, insist on a waiver for the new policy until you have become an approved supplier.
  • Stand on principal. This is your IP and it is proprietary. If another supplier, a potential competitor, has the IP to do what you do, you don’t need to train them. If they need your IP to make the components you need to protect it.
  • Ask the manufacturer to put you on the fast track to approval supplier status. This is faster than teaching someone else your process.
  • Escalate this within the customer company until you find an audience.
  • Bottom Line – don’t give away your secret sauce. This request is unreasonable. Unless, of course, the other company is willing to give you satisfactory compensation for your IP.

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How Do You Respond to a Breach in Policy? Five Suggestions

Situation: A company recently terminated their lowest performing sales representative. Prior to surrendering the company computer, the employee sent a goodbye email blast to the company and customer email lists. This action was a breach of company confidentiality policy. How do you respond to a breach in company policy?

Advice from the CEOs:

  • Have the human resources manager send out a company-wide message specifying how this misconduct violated company policy and the potential impact on the company. In the same message, re-emphasize company confidentiality policy and the importance of complying with policy. Follow-up with conversations between managers and employees about the importance of company confidentiality.
  • Consider having all employees sign a new company confidentiality agreement every 6 months. This should be accompanied by explanations of company policy and conversations to reinforce the importance of complying with policy.
  • As a follow-up to this situation, be proactive by informing affected clients that this individual has left the company and let clients know who their new sales representative is.
  • Be aware in your internal communications that this action may have been an honest mistake, not intended to harm the company. If this is the case and your internal response is too strong, this may have a negative impact on other employees.
  • If the individual goes to work for a competitor, send the new employer a copy of the termination agreement signed by the employee and put them on notice that you will prosecute any violations of prior confidentiality agreements.

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How Do You Respond to a New Competitor? Six Options

Situation: A company performs service that is primarily locally-based.  A competitor is establishing a new site less than two miles from the company’s location, offers a broader array of services and is larger than the company. How can the company protect its business by responding to this new competition?

Advice from the CEOs:

  • Your most important asset is understanding what you are doing right, and what is most important to your customers.  Remember that business is more than just a product or service. It’s a relationship. Your customers depend upon your for more than just what you offer for sale. Reach out to your customers for these answers. Make sure that you respond to their needs. As a benefit you may also find new growth opportunities.
  • Ask current customers whether you need to expand your service offering, or whether your current offering and lead time is acceptable to them. Ask how their needs are changing and how you can better serve them.
  • Reestablish the connection to your customer and listen. Preempt new competition by contacting your customer base before the competitor gains a stronghold.
  • Study your options and avoid knee-jerk reactions.  You may be in better shape that you think.
  • Major retailers and service companies have moved into many locations. Local businesses who survive their presence do so because they are focused on their customers’ needs and are better at serving the customers that the big companies are.
  • Invest in key components of your business relationships:  services, payment terms, responsiveness, your facilities, and so forth.

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How Do You Cope with a Changing Market? Five Options

Situation: A company’s major competitor is closing shop. When this happens the company will be the sole large local service provider. Municipal and many large projects require multiple bids. The CEO is concerned that out-of-area companies will underbid the company’s union scale operation. How do you maintain your position in a changing local market?

Advice from the CEOs:

  • If your municipality has union scale wage rules, find a way to monitor wage compliance of out-of-area operations. These companies may say that they pay union scale, but the municipalities and others won’t have the staff to monitor them. This will be up to you.
  • Talk to local elected authorities and impress upon them the importance of supporting local businesses. Remind them of wage compliance problems that localities have seen in the past. Suggest that they look at local content requirements to help keep business and business revenue funding in the local economy.
  • Emphasize the maintenance aspect of your jobs. If a local company both builds and later maintains the project, they will know the subtleties of the design and will be able to provide better and more cost-effecting ongoing maintenance.
  • Educate clients with monitoring, measurement and compliance checklists that highlight the benefits of using local contractors and maintenance service.
  • If the other company approaches you about buying his business focus on the ROI produced by the other company’s costs and profits, but under your pay-scale. If this looks promising, have a conversation with the owner and see what he wants. Prompt the owner to talk and listen carefully to what he has to say. If you don’t want to buy the full business, there are other options:
    • Hire his key employees on a $/hour plus commission basis on retained sales.
    • Purchase his customer list, or giving him something for any maintenance contracts that come over to you within a set time period.

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How Do You Respond to a New Big Competitor? Four Strategies

Situation: A company has just learned that a new, much larger competitor is moving into their market. They are concerned that this may severely impact their growth and even their existence. How do you respond to new competition in your market niche from a much larger new entrant, particularly if the new player comes in with a low pricing strategy to buy market share?

Advice from the CEOs:

  • Take a lesson from those who survive a move by Walmart into their territory:
    • Boutiques and high service specialty stores survive Walmart – especially those that focus on personal service. Walmart does not provide the level of service that you find in one of these stores and doesn’t know their customers as individuals. Boutiques may lose some price conscious customers, but these are not the customers that provide good margin to them.
    • Use your personal knowledge of the marketplace and your long term relationships to your advantage – including your reputation with existing customers when going after new customers.
    • You may remain more profitable than the larger company, especially on a per transaction basis, based on your knowledge of the territory or business niche. Walmart can’t tell you the best product to perform a home repair.
  • Focus on your strengths in the market, and don’t assume that all large companies are Walmarts. Walmart has a unique set of talents and a tightly controlled process. This may not translate to other markets – especially services which are very personal.
  • Research the reputation and business practices of the new entrant in their other territories. What are they known for, and what are their weaknesses? You may be able to learn this by networking with their current competitors and customers.
  • If you are a multi-generation family business, consider promoting your “old world skill” and established reputation and expertise.

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