The Value of Relationships and Social Capital: Advantages of the Incumbent Vendor – Part 7

 

Social capital is another area of advantage for the incumbent vendor. As the entrenched vendor, you have undoubtedly established and grown relationships with important customer players, including champions, management, key users, system admins, etc., as well as built relationships with Purchasing, Legal, Accounting, IT, Data Privacy, Security, and other departments.

 

You’ve developed good working relationships. Vendor and customer teams have established comfortable processes for communication and interaction that are now familiar to both parties. Your implementation team and your customer’s team have shared and overcome the challenges they faced, together, and your customer success folks have developed rapport with key users and managers. 

 

This is valuable social capital that you’ve established, in contrast with your competition who would have to develop these assets separately. And while the competition’s salespeople might be known by your customer, they have not earned the trust and credibility that you have generated through a successful implementation process and resulting realization of value.

 

You are the proven vendor! Reinforce this when competitors loom and when you discuss renewals, expansion, and other sales opportunities.

 

When you have successfully completed a difficult, but satisfying mountain climb with one expedition company, wouldn’t you prefer to work with that same organization when contemplating a new adventure? They know your food tastes, your preferences, your stamina level, your allergies; they’ve laughed at your jokes and listened in appreciation to your travel stories. It’s a comfortable relationship!

 

Resources:

 

Parts 1, 2, 3, 4, 5, and 6

https://greatdemo.com/blog/

 

Doing Discovery

https://www.amazon.com/Doing-Discovery-Important-Enablement-Processes/dp/B0B8RJK4C2/

Implementation and ROI Failures – Dealing with “Burn Victims: The Advantages of the Incumbent Vendor – Part 6

 

There is great risk in change, often accompanied by fear and loathing. And for good reason!

 

Have you ever seen a software implementation effort fail? Have you ever met a customer who was unable to gain the desired value from the “solution” they purchased? Have you ever encountered someone who had to roll back to a previous state?

 

People in business who have suffered these fates are known as “Burn Victims.” They may be angry about being burned, and they will be hard to convince to pursue the same or a similar route again! (You can find more details on working with burn victims starting on page 298 in the paperback version of Doing Discovery.)

 

In our mountaineering analogy, this would be like paying for and participating in intense preparation for a major expedition only to find that the guide-company failed to provide proper provisions, requiring you to turn back without even glimpsing the summit! All that time and energy invested – for nothing.

 

Opportunity cost is also an issue. A customer who decides to change from their current state will consume the resources described in Parts 1 and 2, including time, people, money, and political capital. What else could they have used those resources for, instead? Perhaps a more profitable expedition could have been launched in its place.

 

This is also painful for customers who go through the entire evaluation process only to decide to do nothing (the No Decision outcome). Very expensive! (“We spent months preparing for the expedition, but then called it off at the last minute…”)

 

Accordingly, customers who were previously Burn Victims (with other vendors) who are now enjoying success with you will be predisposed to buy more from you than risk pursuing another vendor. You can leverage this experience in your renewal and expansion discussions, and in fending off competitors’ advances.

 

Resources:

 

Parts 1, 2, 3, 4, and 5

https://greatdemo.com/blog/

 

Doing Discovery – page 298

https://www.amazon.com/Doing-Discovery-Important-Enablement-Processes/dp/B0B8RJK4C2/

 

Why Risk Trying Another Vendor? The Advantages of the Incumbent Vendor – Part 5

There is risk associated with anything new. As consumers, we tend to repeat purchasing from vendors who deliver sufficiently on their goods, expected capabilities, and associated promises. 

 

Why take the risk of trying another vendor?

 

It is only when we have a bad experience that we consider changing (and many people still won’t change – it’s the hell that they know!).

 

A similar situation exists in business with software purchases. If you have had a good experience with one vendor, you’ll preferentially return to that vendor for other offerings or more licenses (upsell and expansion), because the perceived risk is lower. This is true even if a competitor’s offering appears to be “better.”

 

Example? For a period of about 1000 years (plus or minus a few), there was a famous expression, “No one ever got fired for buying IBM…” It is much less risky to stay with the current, well-characterized vendor and their products than to move to a new, unknown provider.

 

Returning to our mountain climbing analogy, why would you engage a new, untested expedition company when you know and are comfortable with how your current guide-company performs? Why take the risk?

 

As the incumbent vendor, you can take advantage of this risk by calling it out, when appropriate. If your customer begins to explore alternative vendors, gently (but firmly) remind them that you are a known quantity, whereas other vendors represent significant, unquantified risks!

 

Resources:

 

Parts 1, 2, 3, and 4

https://greatdemo.com/blog/

 

Doing Discovery

https://www.amazon.com/Doing-Discovery-Important-Enablement-Processes/dp/B0B8RJK4C2/

 

Change? No Thank You…! The Advantages of the Incumbent Vendor – Part 3

 

Fundamentally, most people don’t want to change.

 

Let me say that again: Generally speaking, people don’t want to change. Even if they don’t like their current state, they will preferentially stay with their current situation rather than take on the tasks above.

 

They would rather stay with “the hell that they know” rather than seek a solution. Oh, they’ll whine about their current condition; they’ll talk for hours about how much they don’t like it. But if the problem isn’t big enough or the solution isn’t sufficiently compelling, then most people will stay with what they have.

 

Want proof? In the world of software sales, one of the biggest “competitors” is No Decision, where the customer chooses to do nothing. On average, 43% of all forecasted opportunities end up as No Decision outcomes. Fascinatingly, some of the people who are most resistant to change are… wait for it… salespeople!

 

Why do No Decision results happen so frequently? Because making a business decision on a major software selection is expensive, as described in Parts 1 and 2, and it involves substantial risk as I’ll outline my next installment!

 

Resources:

 

Parts 1, 2, and 3

https://greatdemo.com/blog/

 

Uncovering Critical Business Issues – What, Why, and How

https://greatdemo.com/uncovering-critical-business-issues-what-why-and-how/

 

Why Buyers Have Lost Their Ability to Reach Decisions

https://now.iseeit.com/why-buyers-have-lost-the-ability-to-reach-decisions/

 

Doing Discovery

https://www.amazon.com/Doing-Discovery-Important-Enablement-Processes/dp/B0B8RJK4C2/

The Advantages of the Incumbent Vendor – Part 3: Leveraging the Investment!

 

Once your solution is in production use, the appetite for your customer to repeat their selection and implementation experiences (see Parts 1 and 2) is typically very low. Reinforce and leverage this! During renewal and expansion discussions, remind your customer that all of these steps are already done (and don’t have to be duplicated, as would be the case for a new vendor).

 

You customer doesn’t have to climb that mountain again; they don’t have to face freezing winds and oxygen deprivation (in the form of excruciating presentations, demos, and other vendor activities). They can enjoy the rewards of that journey without reexperiencing the pain!

 

Furthermore, any competitor that tries to displace you hasn’t even defined a plan for their proposed expedition, as far as your customer is concerned. You are in a competitively advantageous position.

 

Important Caveats

 

However, here are very important assumptions for the above to remain true:

 

1.     Your customer achieved their Value Realization Events and is tracking well on the path to full ROI or has already achieved it (see page 110 in the paperback version of Doing Discovery for more on Value Realization Events).

 

2.     You have regular meetings with your customer via your account management and/or customer success teams, so you are aware of any issues your customer is facing with your product or implementation (and have concrete plans to address them).

 

3.     You regularly discuss product roadmaps with your customer to head off competitors’ “new and improved” offerings and capabilities. Your objective is to stay “ahead” of the competition, with respect to functionality, or to minimize any perceived negative functionality gap between your offering and competitors’.

 

Roadmap discussions are also opportunities to bind your customer more closely to you, by giving them more “weight” in the feature/function definition, prioritization, timing, and implementation processes. Interactions with colleague companies at users’ group meetings help reinforce this.

 

In our expedition analogy, this last item is similar to discussing future excursions, encouraging your customer to participate in decisions about desired destinations, routing, daily travel distances, food and beverage choices, and sleeping arrangements. They enjoy a growing amount of ownership in the process and the results.

 

Resources:

 

Parts 1 and 2

https://greatdemo.com/blog/

 

The Incredible Value of Value Realization Events

https://greatdemo.com/the-incredible-value-of-value-realization-events/ 

 

Doing Discovery

https://www.amazon.com/Doing-Discovery-Important-Enablement-Processes/dp/B0B8RJK4C2/

 

The Advantages of the Incumbent Vendor – Part 2: Solution Implementation – More Costs, Time and Energy Investment

 

The previous post explored selection, now let’s look at implementation!

 

Solution Onboarding: It is likely that you and your customer invested significantly in the process of implementation. It’s another, different expedition:

 

-       Assembling the implementation team

-       Implementation kickoff, strategy and planning meetings, and assignment of resources

-       Identification of Value Realization Events

-       Pre-installation or implementation assessment

-       Installation, as necessary

-       Administrator training

-       Customization meetings to determine and agree upon fields, configuration and profile parameters, dashboard layouts, processes, rules, approvals pathways, alert thresholds, etc.

-       Data migration; data loading; QC

-       Implementation of configuration, profiles, processes, rules, alerts, dashboards, etc. 

-       Interoperability testing with the customer’s existing software and communication with those vendors

-       Pre-rollout QC

-       User training

-       Go Live and initial rollout

-       Tuning and changes as needed

-       Broader rollout

-       Internal progress reviews and updates

-       Old system shutdown and removal (and termination of license agreements with the old vendor, as necessary, by Legal, Purchasing, and Accounting)

-       Periodic internal progress meetings

-       Periodic meetings with your Customer Success/Account Management team

 

Again, there was a terrific investment in time, people and money to bring your solution aboard, similar to staging an expedition into the Himalayas. It was an enormous effort, including numerous side-trips, solving problems with supplies and provisions, unanticipated challenges, injuries and other difficulties. 

 

Most customers really don’t want to go through that effort again, particularly in the short term!

 

Resources:

 

Part 1:

https://greatdemo.com/the-advantages-of-the-incumbent-vendor-part-1-vendor-selection-sunk-costs-time-and-energy-investment/

 

The Incredible Value of Value Realization Events

https://greatdemo.com/the-incredible-value-of-value-realization-events/ 

The Advantages of the Incumbent Vendor – Part 1: Vendor Selection – Sunk Costs, Time, and Energy Investment

Leveraging Its Impact on Managing Competition, Renewals and Expansion Sales

 

“Get their data, and their hearts and minds will follow”

 – Michael Cusumano, The Business of Software

 

It is likely that a large amount of energy was expended by your customer in bringing your software aboard and implementing it successfully into production use. Very simply, this is work they really don’t want to do again, without a very compelling reason to change!

 

This can be compared to a trek where you and your customer climb a mountain together. After a great deal of preparation work and an exhausting ascent, you and your customer are now enjoying the view from the summit. Starting again at the bottom with another vendor is not a pleasant thought!

 

The climb probably included the following energy investment:  

 

·      Problem Recognition: At the beginning of your customer’s process, their first stage was realizing that they have a problem, followed by effort to define it accurately. Additionally, the owner of the problem may have struggled to convince others that it was important to solve, and to allocate budget and other resources to make it a real project. That took significant work and political capital as well.

 

·      Solution Evaluation: The bigger the problem (and the more expensive the solution), the more thorough the evaluation process. Your customer may have had numerous discovery calls, demos, and other discussions with several vendors, including you. There may have been an RFP process, competitive bakeoffs or POCs executed with multiple people involved from the customer’s side. This could have consumed several people’s time over a period of months.

 

Here’s a partial list of the activities your customer may have completed:

 

o   Formation of a buying committee

o   Problem and timeline definition

o   Researching solutions

o   Internal “build vs. buy” discussions

o   Managing “Group Dysfunction”

o   Identification of possible vendors

o   Initial discussions with SDRs or BDRs

o   Initial demos

o   Discovery conversations

o   More demos

o   Vendor elimination to a “short list”

o   Data privacy and security reviews (often extensive)

o   IT architecture reviews

o   Reference checks and other social proof

o   Vendor bakeoffs or POCs

o   Building and presenting the business case

o   Vendor selection (and communication with the losing vendors)

o   License agreement terms negotiation

o   Purchasing SOW and terms negotiation

o   Price negotiation

o   Raising the purchase order(s)

o   Signing the license agreement

o   Implementation discussions

 

·      Each of these steps involved members of the buying committee, often plus other impacted departments, including Data Privacy, Security, Governance, IT, Purchasing, Legal, plus senior management, as well as users and users’ managers.

 

That was a big investment! And all of the above are now sunk costs that organizations don’t want to reincur.

 

That’s a lot of climbing with a large team, in our analogy. Perhaps it’s more like an expedition seeking to summit a major peak like Everest or Mount Khuiten. And while the expedition did reach the summit, consider how many people contributed substantial time and energy in planning and logistics, preparing gear, load-carrying, and camp setup and maintenance, not to mention repairs and rebuilding after a serious storm. This may be very similar to the internal processes and challenges involved in selecting a vendor!

Do’s and Don’ts: Fabulous Framing for Founders!

 

Demos, Discovery, and Business Growth: 

 

“Peter E. Cohan shares how storytelling, sales strategy, and business thinking drive real growth. Learn how to communicate value, build strong business cases, and position yourself as an expert.”

 

I joined Craig Sheets and “Behind Closed Books” for this engaging and pragmatic discussion of founding and growing your business, including: 

 

00:00   Introduction

03:30   Have you ever seen a bad software demo?

04:00   Do the Last Thing First: The founding story…!

06:30   CRO’s desired deliverables

07:30   Flip your demos upside down!

09:00   A demo horror story…

10:30   Buying a car: an analogy!

12:00   CRM systems as examples of the challenge

14:00   An illuminating conversation with a founder

15:00   Presenting information using Inverted pyramid

19:00   How demos change based on job titles

22:30   Pain… and a tale of two doctors

27:30   “But you already know their workflow…”

30:00   Uniqueness, culture, and discovery

32:30   How much proof is needed?

36:00   What is the least expensive form of proof?

41:00   Introducing… Buyer Enablement!

41:30   The horrors of lead churn

43:30   Experienced vs inexperienced buyers

47:00   Anticipating your buyer’s needs

50:00   My favorite discovery question!

51:30   Automated demos – avoiding harbor tours

53:30   Automated demos and Vision Generation

54:30   Wrap up!

 

You can find the full recording here – enjoy!