Competitive analysis: the most important thing not in your sales methodology is part 1 of my content series discussion managing competitors in complex sales. Stay tuned for more posts covering this topic.
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Competitive analysis in sales comes up almost every time I coach; one of the most common questions I get during sales coaching is “what do I do when a prospect asks about a competitor?” Everyone has an opinion on this. Some people believe they should go after competitors like Jabba the Hutt going after Han Solo — relentlessly until they’ve literally frozen their competitor out of the deal (maybe not hanging in on carbonite on the wall like a trophy). They may go as far as “shooting first” (like Han), going after competitors before a competitor goes after them. And the unprepared sometimes act like a nervous C-3PO, quickly becoming overwhelmed and stammering nervously until their more confident colleague comes to the rescue.
(And what’s with all the Star Wars references? Well, my references are usually from Star Trek, so I figured it was time to include the other space nerds.)
Believe it or not, I love hearing about competitors in a complex sale. Seriously. It’s 2024. The internet exists. Your client has access to G2. LinkedIn. Google. ChatGPT. Twitter/X (note: it’s entirely possible that, by the time this is posted, Twitter/X will have been run into the ground, so if this post isn’t updated by then please ignore the reference to the failed social network). They may just text people they know and ask what they use. No matter how they do it, your client is going to do research. You will have competitors in your deal (besides the status quo, which is a bigger point for another post).
Here’s the thing: You can learn a whole lot about your deal by learning who the competitors are. Especially when it’s a complex sale. I’d argue that, the more complex your sale, the more important it is to consider including a competitive analysis in your sales methodology. Because running a competitive analysis isn’t just about the competitors, but rather, it’s about competitors in the context of your complex sale. Read on, young padawan (or maybe you’re a Jedi master. I don’t know your life) — here are a few things that you can learn about your SaaS deal by learning about your competitors:
Question 1: Is this deal real?
That’s what a sales manager will ask after the first meeting. Is this deal real? How real is the deal? Do you feel that the deal is real? Is there an executive at the wheel? And did they like your appeal? What, your sales manager isn’t Dr. Seuss?
But seriously, deal confidence is usually determined by a sales methodology. Maybe BANT. Or MEDDICC. Or Challenger. Or SPIN. Or Sandler. Or an in-house methodology. And yet, most sales methodologies don’t consider competition at all. BANT: budget, authority need, time. MEDDICC: metrics, economic buyer, decision criteria, decision process, identify pain, champion. You get the idea. All of these sales methodologies basically identify: does this company have a reason to buy, and can the people in the room get done.
All of these questions are important, but they look at the deal in a vacuum. Can they buy? Check. Do they have a reason? Check. Do they have money? Check. Do we think we can get it done this quarter? Check. Are we the right fit? Probably check. Is someone else a better fit? Well…crap.
Also, there’s the matter of timing. Yes, methodologies look at time (it’s literally in the BANT acronym), but that time is always based on when they want to solve the problem. Not where the client is in their own process.
Let’s say you’re the only vendor a prospect is looking at, and they don’t have a previous relationship with your company (e.g. they used your product in their last job). This might sound great, but there’s a downside. It’s an indication that they may not know what they’re looking for, or they’re still feeling out the market. They may be building their initial competitive set, which is fine, but that process is going to add at least a month to your cycle, if not more.
Let’s say you get through the early stages of the deal with no other competitors. That also may sound great, but, in my experience, these are the scenarios with later stage entrants (especially in more complex organizations). Let’s say you and your champion put a plan together and everything looks great, so they take it to the economic buyer and/or legal/finance/procurement. I’ll bet you lunch that someone from one of those groups asks “who else did you talk to?” Because of course they will. It’s their job to reduce risk, and they’ll want to make sure your champion did their homework.
I’ll talk about this scenario more in section 4, but this may not be as bad as it sounds. Sure it can add time, but if the process is more of a “let’s go through the motions of talking to competitors” then your deal is probably safe. But if they’re serious about looking at other vendors, your deal is in serious trouble.
A few years back, I sold a deal that essentially had 2 cycles. The first was competing against more “niche” competitors, and we were selected as the vendor of choice. But then, after we went through the entire sales cycle, someone at the prospect’s organization called a Gartner analyst. And said analyst told the client to look at 3 more vendors. So we had to go through another sales cycle before winning the deal. I’m proud to say that we won, but the round 2 competitors were far more difficult to compete against.
Question 2: Do the Competitors align with the requirements? And Does the prospect even know the requirements?
When you’re qualifying your deal, one of the most important things to establish is a use case (which, again, most methodologies don’t explicitly call out, but let’s put that to the side). Not just a use case, but a primary use case. What’s the thing that’s really driving this. When your champion goes to the CFO, what is most likely going to persuade them?
I’ve found the more complex a sale, the more complex the requirements, but I’ve rarely worked a deal where the requirements were perfectly defined at the outset. They tend to be more fluid, especially as prospects meet with vendors and learn about solutions.
You know your competitors well enough to know where they tend to win, and where they tend to lose or churn. Let’s say the client tells you they’re looking at 3 vendors, but each one has a different primary use case. That may tell you that your client is unsure of the priorities, or hasn’t figured out the primary use case.
It can also tell you if the client is prioritizing elements beyond the primary use case. Notably, are they looking at point solutions, suites, or both? In which case, you need to find out if they’re prioritizing functionality of the individual parts, or ease of the entire suite. If it’s the latter, you may have the best solution on the market, and that will be meaningless because the client isn’t really looking at how good the solutions is.
Question 3: Do they understand what this technology is going to cost?
As a buyer, there are few things as infuriating as “contact us for the price.” Seriously, buyers hate that. I get it, vendors do it so the competition doesn’t figure out what the price is. But come on, it’s not that hard to figure it out (see “it’s 2024” above).
Even if you don’t know the exact pricing for your competition, you probably have a general idea. You know who is expensive, and who is not. If you’re an enterprise solution, and the other competitors in the deal typically support SMB or mid-market, that would raise a large red flag. You know in that situation you’re going to be the most expensive. Can you overcome that? Sure. But if your competitor is charging 50% what you are, finance or procurement may not care how much better your solution is.
By looking at the competitors, you can also understand if the client is thinking about total cost of ownership (TCO). You may be the most expensive solution, however, if your competitor is going to have a longer deployment, require extensive services, or perhaps need custom integration work, you may be able to make a more compelling budget argument. This is particularly true if your sale is complex, as more complexity means more time and requirements, which usually means a higher TCO.
Question 4: If there’s an RFP, Who Wrote It?
A long standing debate in complex sales, particularly SaaS sales, is how to handle blind RFPs. To me there’s no debate. The answer is always “don’t respond.” But I know not everyone agrees.
Years ago I was the SC on an opportunity with a CPG company. I remember reading the RFP, and it was quite clear it had been written by our biggest competitor. In particular, there were questions about a feature that was unique to the competitor that “demoed well” — it looked slick in a demo and had very little practical value, but prospects usually didn’t realize that until well after the deployment. My immediate reaction to the AE was “I don’t think we should bother with this,” but we ended up responding.
We went to the meeting, and ended up being there for about 3 hours. I was pleasantly surprised at how well the meeting went. The prospect was engaged, asked great questions, and it seemed like maybe there was an opportunity here after all. Perhaps I was wrong?
Nope. Not wrong. We found out the next day the prospect was going with a competitor. We never had a chance, but were just “procurement fodder” (a company procurement brings in to say they did “due diligence” even though the winner is already decided).
Now I always try to find out who wrote the RFP. Because if it wasn’t you, it was probably your competitor. And if it was an RFP consultant, is it someone known for being truly objective, or someone who typically steers companies to the vendor they like? Both types of consultants exist (my friend Roy Wollen is an excellent example of the objective consultant and has published excellent content about his approach), and you need to know which one you’re working with.
If you want to know your deal, know your competition
Managing competition in a complex sale can be a bit like threading a needle, or like piloting an X-Wing through a random trench in order to shoot a torpedo at a very narrow weak spot. It takes skill and practice, and it also helps to have someone at your side giving you advice (sales engineer, competitive analysis team, a droid that beeps at you yet somehow you can understand it, whatever works).
Try as we might to accurately forecast deals, it can be difficult, especially as the sale gets more complex. Or, in the words of Yoda, “Difficult to see. Always in motion is the future.” But competitive analysis can give you incredible insight into your deal. You can learn where your prospect is in their process, how serious they are, what their budget is, and what they care about. The next time you’re in a sales meeting and competition comes up, don’t run from the topic. Embrace it, and you may be surprised what you learn.
If you’re interested in managing the competition in your deal stay tuned — next week I’ll talk about how to handle the conversation about your competition. Subscribe today and you’ll be the first to know.
What do you think? Do you like knowing who your competition is, or have you found it to hurt your deals? Let me know in the comments.
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