Know your competition

Do you know who your competitors are? I ask this question of a lot of people that I meet in our industry and am surprised to find that not many of them know the answer. Sure, they may know the name of a competitor or two but they don't really know the details of their competitors' services. This can be very dangerous when competing on a managed services contract. If you are wondering why it is any different now than in the past, let's look at a couple examples:

If you are competing for a network integration project the pricing and solution are pretty straightforward. You price the hardware/software and hours to implement, and if you're smart you include some ongoing support in there. When a prospect is looking at your proposal vs. the competitions it is pretty easy to compare apples to apples. They look at the equipment costs, the price and detail of your implementation proposal, the resume of the primary engineer on the project, your references for this type of project, etc.

When you are competing for an ongoing relationship with a prospect through your managed services offerings, I believe that it is much harder for the prospect to make an apples-to-apples comparison. Why do I say this? Well, managed services are relatively new to the market and there isn't necessarily a golden rule as to what exactly the solutions consist of. Wikipedia defines managed services as "the practice of transferring day-to-day related management responsibility as a strategic method for improved effective and efficient operations" - that's a pretty broad statement. If you are selling a fully comprehensive solution and your competition is selling a low-end solution disguised as a comprehensive solution, you may find that you are quickly priced out of the deal. Or perhaps your competition is using managed services as a loss leader so they can win the account and then up-sell them on everything else. It sounds crazy but I have heard of one national provider that is doing just that.

There is no way that you can avoid this type of competition, but if you hope to beat them you will need to understand why your services (not just your company) are better than theirs and why you demand a higher premium for them. So how do you do this? Here are my suggestions:

First, I recommend that you identify your top three competitors in your market. Once you have them identified you need to scour their websites, research them on the web and start talking to your customers about them. Yes, I said talk to your customers about them. If you are confident in your relationship with your customer then this should not pose a threat. You may find that many of your customers have used them in the past and can provide you with some additional information about them. Read and understand their SLA if you can, as this will really give you some insight into their solutions.

Finally, when you are talking with a prospect, ask them what other companies they are looking at. Don't make the mistake of "talking trash" about the competition. Rather, use this information to strengthen your proposal so that you come out on top.