The Marketing Strategist:
Are you the Incumbent? Don’t Become Complacent
You have been working with a particular client for five years. The relationship is great. They are happy. You are happy. So when the client sends out an RFP for a comprehensive digital workplace solution you figure that your company, as an incumbent, is a shoo-in to win the deal…only it doesn’t. What went wrong? Understanding the dynamics of incumbency will shed some light.
Buyers cast a narrow net
In a recent ITSMA survey (PDF) of buyers of complex, high-consideration services and solutions, we learned a surprising fact: Buyers are casting a narrow net. We asked participants how many solution providers they researched for their most recent solution purchase. The mean number researched was only 3.6. Nearly two-thirds (65%) research only three solution providers and half of those considered only one!
Furthermore, survey respondents reported that they include, on average, two providers on their shortlists. In almost half of the purchases, it was a sole-sourced deal.
Incumbents have an advantage
Nearly three quarters of the respondents reported that they included an incumbent on their shortlist. Buyers value existing relationships because solution providers know them and can create highly personalized customer experiences. They have already worked out the kinks in the relationship and know how to collaborate. In many cases, incumbent solution providers can use their intimate knowledge of the customer’s business to help them improve business processes and innovate.
But incumbents don’t always win
The incumbent advantage, however, does not preclude newcomer success. Just under one-third of deals do not include an incumbent. Additionally, even when an incumbent is considered, the incumbent solution provider does not always win. Our research shows that 23% of buyers opted for a new provider rather than their incumbent.
Buyers looking to stay ahead during a period of disruption are looking for the best ideas—they may or may not come from the solution providers they traditionally work with. Consequently, there is ample opportunity for solution providers to break into new accounts.
Win more with relationships and insight
Given the narrow net cast by buyers, how does a solution provider get on the radar screen? It comes down to existing relationships and insights-based, personalized marketing.
An existing relationship will help a solution provider get into the consideration set, but relevant and fresh ideas will be needed to secure the win. If a solution provider is new to the account, the provider will need to focus on what matters to the buyers. That is going to be different for every account and even every person within the account, decision committee, or buying center.
Whether a provider is the incumbent or trying to break in, using insight to engage the target audience with more personalized marketing will be the key differentiator.
To learn more about the advantages of incumbency with existing customers and the growing importance of investing in executive-level innovation programs, please see our 2018 study How Executives Engage: Connecting with Customers at Every Stage of the Relationship Lifecycle.