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Competitive Replacement Program - an Untapped Golden Nugget
Ask 20 people what their approach to competition is and you will get 20 different responses. Most statements about the topic of competition are expressed with bravado or fear.
It floors me that most firms, large and small, reference the competition and then do little to nothing to actively deal and cope with it.
I could fill this article with case examples of firms that underestimated their competition, ignored it or overstated their own position and strength to find themselves victimized. Any firm that genuinely believes it is immune to competition and shifting fortunes is one that is currently in trouble or will approach it around the bend.
Let’s discuss one angle that will allow you to wreak havoc on competitors and build your customer base at their expense.
A great industry leader, Peter Drucker, once said, “It takes three to five times the effort and cost to develop a new customer, as compared to growing an existing one.” With this in mind, I will outline the basics and fundamentals of implementing an effective Competitive Replacement Program.
Program Overview
The Competitive Replacement Program (CRP) is utilized in situations where it has been recognized and confirmed that a competitor is repositioning its business around a different target market than its traditional base. This means that the competitor is potentially vulnerable to an “unhook strategy.” Its customers will inevitably seek out a replacement supplier once they realize what is going on. This class of CRP is designed to exploit the competitor’s weaknesses and drive the reality and message home that it will eventually abandon the traditional customer base in favor of a new growth segment.
CRP can also be used when a competitor is vulnerable because of inherent problems with its product or services—this leads to dissatisfied customers—or because of financial or organizational problems such as the following:
• Sustained financial losses (particularly evident with public companies) resulting in loss of customer confidence.
• Inability to pump out new products effectively, resulting in a product trough, which allows you to pick up the opportunity base (in the short run)—your competitor is caught off-guard and has no clear product solution. Customers are forced to switch just to maintain the competitive pace and demands of their projects.
• Organizational inefficiencies, which allow you to drive a wedge into your competitor’s dilemma. Active customers will tell you where the “chinks in the armor” are in your competitor’s delivery and fulfillment mechanism.
• Preoccupation with acquisitions or other activities that cause your competitor to take its eye off the ball and leave the active customer base reeling for a proactive replacement supplier.
Other conditions also justify CRP. The key is that you do the homework to be sure you are dealing with facts and reality about your competitor’s situation—and then strike! CRP requires a well-thought-out game plan, which involves the internal and external organization (field sales and support as well as third-party channel partners).
The make-up of an effective CRP can include the following:
• Direct-response campaign (including e-mail communiqué, direct mail, Web site promotion, electronic spot ads, banner ads, E-Casts and so on). This depends on what works in your particular business.
• Prospect contact information—this identifies the make-up of your competitor’s installed base, which fuels the campaign. There are third-party specialists that can provide contact databases, prospect lists or other media that allow you to pinpoint the target audience. Additionally, your field team and third-party partners can help identify “where your competitor lives.”
• Campaign package—this is intended for the target prospect audience and outlines the purpose of the campaign (straight talk), the impending situation with the competitor (optional), benefits of doing business with your firm, a transition plan and probably some financial incentive to make the switch painless.
• Telemarketing—this is a means of introducing the campaign, providing continuous follow-up and guiding the prospect through phases of the campaign (all leading to a successful switch). Telemarketing is coordinated with the field sales team.
• Implementation package—this is designed to familiarize and ramp up the field team and third-party partners that will be the implementation vehicle to drive the campaign at the account level. The package includes a program overview that explains the purpose and objectives, baseline strategy, make-up of the target audience (drivers and hot buttons), initial approach and action plan. This must include performance metrics. Otherwise, the campaign results will not be measurable or manageable.
• A campaign report (simple and easy to use) should be introduced to monitor all aspects and provide insights that fuel mid-course changes and enhancements. Additionally, an “owner” must be assigned who takes accountability, driving and managing the campaign from inception to completion.
The campaign can be spiced with competitive analyses, transition tools (depending on the nature of your business) and financial incentives (for each competitive-replacement win). A theme can also be wrapped around the campaign to make it challenging and stimulating. One campaign was packaged and promoted as “Mission Possible” and was patterned after the TV show. It kept the drive alive for the full campaign period.
CRP lends itself to be introduced at the beginning of a fiscal year and carried through for a 9- to-12-month period. The key is to track the competitive dynamics and make sure the timing is right.
Before going full steam ahead with a CRP, conduct a pilot phase to test the water (with marginal prospects). This will also allow you to properly initiate your field team and third-party partners to the program.
Campaigns such as CRP have created new customer sources of business and generated millions of dollars of return—and without breaking the bank.
What is your rationale for not applying CRP to your business?
Will you be victor or victim in the competitive jungle?
Copyright 2007
Performance Marketing Group
Edmond Hennessy
About the Author
Edmond Hennessy is a seasoned, well-recognized veteran in the COTS Embedded Market. He has authored many works including the “Mission-Ready COTS” Industry Guidebook, “COTS Supportability & the Life-Cycle Proposition” and “Beyond COTS: Repackaging, Reformatting & Tech Transfers.” He has participated in key industry panels, has been a keynote speaker in E-casts dedicated to signal-processing applications and has been tapped as an industry executive to comment on disruptive and emerging technologies that impact the Defense & Military, Homeland Security and Healthcare/Medical Target segments. Mr. Hennessy heads up the Performance Marketing Group (PMG), a private market programs & consulting firm. His new book Market Warfare: Leadership & Domination over Competitors will be released in early 2008. For more information visit http://www.pmgresults.com/ or call (603) 552-2096.