The definition of an indirect competitor is the subject of some debate and is nearly always stated in contrast to the definition of a direct competitor. When it comes to selling a newly developed technology, the difference in my mind is rather clear. Any solution that addresses the same need, relieves the same pain, or delivers the same benefit as your solution is a competitor. The distinguishing quality of a direct competitor is that your solution and the direct competitor’s solution are mutually exclusive. The only way to win a customer when there is a direct competitor is for the direct competitor to lose.
The indirect competitor is a more complicated beast, especially for those of us who sell new technology. Indirect competitors can comfortably co-exist at the same customer, even if one does not particularly appreciate the other. When it comes to selling new technology, it is rare to find a target customer who “needs” the new technology. If the target customer were actually in need, it probably would have gone out of business years ago because your new technology simply did not exist until very recently. Instead the target customer has what is commonly called “latent pain.” Latent pain is like an old football injury. The target customer has already employed the best of the established solutions and considers it normal to tolerate the pain that remains.
In fact, it actually goes further. New employees at the target customer are socialized to accept the latent pain and to be highly appreciative of what the incumbent has done for your target customer. Your target customer’s employees have gotten quite adept at dismissing the solicitation efforts of the incumbent’s direct and indirect competitors by pointing out what a fine job the incumbent is doing for them. Responses, like “we’re good,” “we’re not interested,” “we’re not looking for that right now” or my personal favorite “someone will get back to you if we’re interested” indicate the acceptance of latent pain and either a failure or an unwillingness to consider the business case for your solution. In those rare moments when the incumbent may actually be at risk of falling out of favor, the target customer’s first thought is not to explore what new technologies could vastly reduce the pain but instead look to see if the incumbent’s direct competitors might provide the same or slightly higher level of relief at the same or lower price.
Incumbent indirect competitors make introducing a new technology to target customers a difficult dance. Starting with a direct attack is the wrong idea. But a direct defense might be necessary if the incumbent’s account managers or the corporate culture try to dismiss your new technology as a bunch of nifty features but no actual benefits not already enjoyed courtesy of the incumbent indirect competitor. The goal when it comes to dealing with most incumbent indirect competitors is to first present your technology as what the target customer needs to introduce into its solution “stack” to enjoy the significant incremental benefits as soon as possible. In the process, you can praise indirect competitors (often lumped with their direct competitors) in a way that is consistent with the corporate culture but in such a way that the next logical thought is excitement about how your technology can take them even further than either the incumbent or its direct competitors alone could ever take them.
To accomplish this goal, your best weapon is metrics. Estimates or anecdotal metrics seen by other customers are usually not enough to win over your target customer but they go a long way to motivate the target customer to test. When you encourage your target customer to test and take measurements, you are in the strongest position as a sales executive because you have moved from the realm of “claims” which are questionable to “results” which are not questionable. Before scheduling a test, it will be important to agree in advance what the target customer will be measuring and how the target customer will take those measurements. Ideally, the target customer will share their results with you but it is possible they may want to keep their figures to themselves because revealing the results of their test would reveal figures about their operation they might consider proprietary. Before scheduling the test you should also secure agreement to broadcast both the intent to test and then later the results of the test broadly among stakeholders, especially among key decision-makers and decision-influencers. A post-test meeting to review the metrics with the key stakeholders is also important. Ideally, you will know in advance what results will generate a “buy” decision from your target customer but in most cases the target customers will be secretive about how they will interpret the metrics in order to be in the strongest price-negotiating position possible. In fact, they might even claim they somehow cannot measure certain things that are most compelling in order to gain this price-negotiating advantage.
But there might be another reason your target customer says they won’t be taking certain measurements. The incumbent indirect competitor may be at work here. If your indirect competitor offers a platform, that competitor has no incentive to invest in tools that would allow their customers to measure the effect of introducing a third party solution. The indirect competitor likely has specific goals for up-selling add-on features which are competing for the same solution stack budgets. The smart indirect competitor will make it very easy to test their add-ons while simultaneously very difficult to test a third party solution. If your indirect competitor has add-ons to sell to your target customer, you will be further challenged by the general preference of legal and accounting staff to have as few vendors as possible. Your solution may deliver superior results to any of the incumbent’s add-ons but the burden of adding yet another vendor may offset the value of those superior results in the collective mind of the target customer.
The reality for those of us who sell new technology is that incumbent indirect competitors can often be a much greater challenge than any direct competitor. To win, the sales executive must develop an intelligent strategy that anticipates and plans for the challenges any incumbent might present.
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