Despite the current economic conditions, people are still buying products and services. Sales volume might be down and margins might be tighter, but all this means is ever tougher competition for each piece of business. "Know Your Enemy" might be a bit of a bombastic title, but competitor analysis is essential to smart survival and growth.
At the end of the day the key to beating your competitors is to be a little bit better than them and work a lot harder. Knowing who they are, what their strengths and weaknesses can only help you. Competitor analysis can be a bit of cultural change for sales people, as it obviously involves asking the person you are selling to who you are up against. Making this part of your standard patois can take a bit of getting used to.
If you can get the information early in the sales process then it is incredibly valuable as it can shape your strategy for the sale. If this information isn't forthcoming (or your sales person hasn't got the bottle to ask) then reactively finding out who you beat or who beat you to the deal is a good second-best.
If your sales people can't or won't get you this information then why not make a "quality control" call after each sale (won or lost) to ask a few short question on why the customer made the decision they did?
Here’s a few examples of how and why competitor analysis and a properly configured Customer Relationship Management system come into play.
The Basics
In your CRM software you will be recording all of your sales "opportunities". All you need to do is link each opportunity to competitor records in the CRM. Even if this is done at the end of the sales cycle it is still worthwhile.
- If you win the deal then (well done) the CRM system will know who you've beaten.
- If you lose the deal (can’t win them all) you need to tell the CRM system which competitor won.
You now have enough information to begin competitor analysis. For example, how many times have you been beaten by and beat each competitor. Is one competitor dominating your market?
The next step is to find out why.
Building Intelligence and Using It
Once you've got the basics in place you can start building up more detailed and useful intelligence:
- Why?: When you win or lose an opportunity start recording the "why". This is best done through a series of standard responses, which make it easier to analyse. These could include "price"; "referencability"; "better product"; "geography"; "better presentation".
- What?: If you are in a market where you are not up against like-for-like products or services then try and find out what the competitors are selling. If you lose a deal on price, but you are selling your "Gold Standard Enterprise Advanced" product and the competitor is selling their "Workgroup Budget" product then you need to know about it. Either they've been sold a pup or your sales person has misunderstood what they need.
- Who?: Can you record who the competitor's sales person is for each opportunity? If so, you could see that a specific competitor is beating you to a lot of deals, but it is always the same sales person. You can then do something about it, like offering them a job! Tie this in with the "why" and the "what" and you can start to see the trends and, more importantly, do something about it.
In our industry references are very important as choosing who is going to implement and support your CRM or Finance system is a pretty big decision for any organisation. When we are choosing which references to offer it helps us to know who we are up against and which customers we have beaten won from that competitor in the past.
Worst Practice
I recently won a project where the customer told me that one of the opposition had arrogantly announced that they had "NEVER lost a deal to [whichever CRM I was selling] EVER".
This is an example of very bad competitor analysis.
The sales person had found out what product they were up against and then, having done half a job, thoughtlessly rubbished it based on no fact whatsoever. The customer didn't like this and was another negative mark against their proposition. As it happened I had beaten them to another deal the week before, which I couldn't help but drop into conversation while accepting the order.
CRM can help
None of this is rocket science, but neither is it possible unless you have a reliable, company-wide system and the culture to ask for the information, record it and analyse it.
A well-thought-out, properly designed Customer Relationship Management system can help you with this, putting processes in place and giving you the tools to explore and exploit your data.
Which CRM is right for you and how much it will cost is hard to say without talking to you about it, but if you would like to find out more please contact me and I will be happy to help. Or, (if your don't want to talk to me!) as a starting point take a look at Choosing CRM Software, try out our CRM selection tool, and take a look at our CRM software comparison table.
More?
I’ll be blogging shortly on other tips and ideas I pick up on my travels. In the meantime, check out
Survival of the Smartest? Part 1: Focus on Customer Retention
Survival of the Smartest? Part 2: Focus on Your Products
You can also see if you can answer a couple of question about Counting the Cost of Sales Leads.
John Odell - CRM Consultant
