If you sell for a smaller software company that competes against the big guys, I’ll bet you think about the age-old story of David and Goliath. However, more often than not in today’s hypercompetitive enterprise application software world, it’s Goliath that often trounces David. If that’s what happens to you, read on.
When a sales team loses, whether they sell for the small company or the larger one, for that matter, it’s for one of two reasons: They didn’t properly qualify the opportunity, or they we outsold by the competition. There is no third alternative.
Let’s take a look at these two outcomes and explore specifically how to improve your effectiveness when selling against a much larger competitor.
Qualification (sharing the same root as the word quality) is the process through which we determine if it is worth our time and effort to continue to pursue a sales opportunity. Yes, qualification is a process, not an event. That means you don’t qualify your sales prospect once, when initial contact is made. You’ll need to qualify vigilantly and unendingly. The reason? There are a lot of them. Buyers have been known to mislead sellers when they are losing. Things change during the course of the evaluation. In fact, these days, things change a lot, often. Budgets disappear. Influencers take on other responsibilities. Buyers who say they’ll buy from a smaller company—no problem—feel differently tomorrow.
Every company must have a set of appropriate qualification criteria by which they determine (1) whether or not to pursue business and (2) how to pursue it. For most companies, these criteria will differ somewhat for each product they offer as well by geography, competition and market.
When you are qualifying your prospect, you are asking them and yourself the many of the same questions again and again, such as:
- Who is the real buyer, the person who is going to make the final decision?
- When are they going to buy?
- What are they going to buy?
- Why are they going to buy?
- Where in their company is the order going to get signed?
- Does our product fit their requirements?
- What is the decision process?
- Who is the competition?
- How will they pay for what it is that I am selling?
- What is my unique value?
- Why are they going to buy from me?
There are many, many more.
Qualification criteria for smaller companies who compete against the big guys must contain questions about the prospect’s buying preferences. For example, you need to ask yourself, “What evidence do I have that the prospect will do, or even more importantly, has already done business with a company of our size?” Also you’ll need to know what guidelines they must follow in terms of suppliers’ company size, revenues or financial viability. (You may think your company is in great shape, since you have a team of savvy VCs who not only have invested in your company, but also sit on your board of directors. That may not be of any value to the CFO of a conservative manufacturing company. In fact it may hurt your cause.)
Does Size Matter?
It’s hard to ask these questions, but it is irresponsible not to. I want to be certain that if I meet or exceed all the prospect’s requirements, that size—for size’s sake—does not matter. You may have the greatest product, innovative implementation services, committed people, stellar customer satisfaction levels, top product quality, most respected investors or anything else that you consider of value, but if size matters, little else will measure up. And if size does matter, and I can’t convince my prospect fairly quickly that it shouldn’t, I’m out of there—and quickly on to another opportunity.
You’ll need to be careful here. Sometimes the size issue is less obvious. For example, your prospect may have a requirement that a vendor install and implement demand chain management system in twenty-five plants within a year’s time. They may have no specific issue with vendor size, but do have a legitimate business requirement that is directly related to size. And if you are a smaller supplier, without pre-established partnerships with service firms who are capable of delivering the service levels required for that size deal, your chances of winning are remote.
What all this means is that there are certain opportunities for which you should not compete, because you can’t win them. Sorry, but that’s a fact. And if you do spend time trying to win business that you can’t win because your company is too small, you are squandering time and resources from those opportunities you can and deserve to win.
They Are Qualified, Now What Do You Do?
Here is where competitive selling comes into play.
You’re going to need to influence your prospect’s decision criteria, so that the perceived value of your competitor’s size as well as other size-related capabilities are diluted, neutralized or, in the best case, seen as a disadvantage. Many salespeople are accustomed to highlighting a competitor’s weaknesses. In the situations where you are competing against a bigger company, you will (professionally and subtly) attack their strength.
Here is a simple, well-used example. Let’s say I sell for a smaller enterprise software company and I am up against a major player. Based upon preferences and needs of the buyers, I may decide to use the “small-fish-in-a-big-pond” approach.
It goes like this: “Ms. Prospect. There are few people who would not be impressed by my competitor’s size, global reach and financial as well has human resources. I’m sure they proudly reference some very prominent customers. However, you might consider that a project such as yours, although highly critical for you, might very well not have the same level of importance for them and therefore may not generate the ongoing attention within executive levels of their company that their premier customers’ projects would. It’s only natural…”
From that point, you would discuss how you would meet their technical requirements and establish a business relationship going forward, stressing attention that would be paid to the progress by your executives. You’d convince them that your company’s success would depend directly on their success, not the other way around. You’ll be portraying them as big fish in a small pond—how important their business is to you.
If you are effective with this approach, you will have moved down in importance the size and impressiveness of their customer list and up in importance the attention paid to them by you’re your executives as well as your company’s interest in their success.
Here are some ways that a larger competitor might attempt to exploit your size and potential considerations for handling those objections with your coaches and allies in the account:
Challenge: The competition questions your viability to the prospect. “What would happen to you, Mr. Prospect, if they were to go out of business or be acquired?”
Your strategy: Don’t wait for this to happen, as it most likely will. This is the first card most salesreps who sell for large companies play against the smaller guys. You need a solid story, prepared in advance—concise and compelling—which must be credibly and sincerely delivered first by you, then echoed by your most senior executives. Mitigating perceived risk is on the critical path to success when competing against a much larger rival. Don’t wait. Immunize.
It is so important to know your prospect’s history regarding doing business with smaller companies. It may mean nothing to them, since they do it all the time. On the other hand, you may be the first and may have a long, bumpy road ahead.
Challenge: The competition attempts to expand the scope of the evaluation into areas where you don’t have a solution.
Your strategy: Again, pretty standard practice for the big guys. Alert your prospect in advance that this may happen. Praise their efforts in defining their requirements as well as they have. Ask if they are prepared to have the scope of their initiative, project or investment substantially expanded. If they say no, alert them that other vendors may employ this “sales” strategy to differentiate themselves as well as to increase the size of their contracts.
Please understand that I don’t advocate negative selling, mud slinging or “slamming the competition.” On the other hand, when you have built relationships in your accounts with influential people who are willing to help you, you’ll need to provide them with the messages—the sound bites—to position your company in an advantageous position.
Challenge: The competition attempts to impress your prospect with hordes of resources to demonstrate their prowess and convey a “safety in numbers” message.
Your strategy: Again, prepare your prospect in advance that this may happen. Suggest that these bigger companies have extra resources on board just to impress prospects to make a sale. If you know your competitor’s bid will come in considerably higher than yours, you may want to subtly suggest that using resources to win business may be a reason that their overhead is so high. And, remind the prospect that if they do go with your competitor, nothing will be free anymore.
This approach is mandatory when you compete against companies who lavish prospects with toys, gifts, free trips and other goodies to try to influence their decision. It’s amazing how those trips stop, as do the gifts once the prospect becomes a customer.
Challenge: The competition, because they are bigger, is willing to guarantee results in a way that you cannot.
Your strategy: They may be able to guarantee that their software will get installed and implemented within a certain time, but what if they don’t? The customer may not have to pay the vendor any more cash, but what about lost business opportunities, reduced customer satisfaction levels and employee morale if things go wrong?
“Fire a Prospect” and Raise Your Competitive IQ
In the scenarios I portrayed above, you might have wondered how you could possibly know in advance what your competition is going to do? I call it raising your competitive IQ. That will require “firing” one or more unqualified prospects and investing the time you would have wasted on them to collect, then analyze information about past wins and losses against a few key competitors. When you do, you’ll start to see patterns of behavior that those companies and the people who sell for them use against you. Big companies often develop a default strategy they use against all smaller competitors.
I agreed that it’s hard to find the time to gather information like that. But you really don’t have a choice. If you don’t, you’ll constantly be surprised by what your competition does and therefore be in a defensive position. Tap into other sales reps in your company, your customers and business partners to find out how those one or two big competitions position against you and how the individual reps manage their sales campaigns.
Learning to build sales strategies based upon accurate, up-to-date competitive information will enable you to begin to qualify out of deals you can’t win and to outsell your competitors on a consistent basis in those you can.
Remember the Two Components. You’ll Be Glad You Did.
Tough qualification combined with strategic competitive selling does work. After confirming that size did not matter in a face-to-face meeting with a division president of a $5 billion corporation, my client, the CEO of a small enterprise software company commanded that his team pursue a $2 million contract competing against a $750 million rival. Now there is a David and Goliath scenario.
I coached that sales team during the nine month sales cycle. Among other things, we diluted the competition’s apparent strengths and portrayed their large size as a liability, which in this case it really was.
My client’s team outsold the competition and won the business. And earned a lot more business after that, because they delivered what they promised to their customer. As the CEO related to me, elated with a contract five times larger than anything his team had secured up to that time, “the most important thing for me is that this process is repeatable.”