Moving Up (Issue 427)

In which we discuss strategies for obtaining a larger share of the high margin business. "Hey, why can't I have that? ... Why did he get so much more than I did?.... That's not fair!" Sound familiar? Ever said those words or had those thoughts as a child or as an adult?

How about these?

“Because he’s bigger than you are…. It’s not about being fair…. When you show me you’re ready for it.”

Any of us who are in a “#2” position or lower in a relationship with a client have thought the first and heard the second, particularly if we’ve accepted and delivered smaller or lower margin business to clients expecting that our performance would earn us a shot at higher margin business or larger mandates or contracts.

We’ve also said, “How come they gave that business to those guys? They never even told us about it! We should have had a shot at that business!”

It stinks to be second, out of the loop. So, how do we change our position?

Position change starts with understanding the reasons, relationships, or perceptions that lead our clients to award higher margin or larger contracts to others, consistently.

There could be a variety of reasons for their preferences including “you’re not part of ‘the club'” and “it’s not your turn” and “we’re very comfortable with these other guys and they’re doing a good job for us, so we’re not going to change” or “it just costs too much to change at this point, no matter how good your ideas are.”

Depending on the reasons, one or more of the following strategies might work:

Strategy 1: Ruin the other guy’s game. Cut price… deeply. Even give the service away. (Not the way to “higher margin business” and it sure upsets things a bit.)

Strategy 2: Play the guilt card. The best I’ve ever heard for this situation is “You know us, you trust us, you owe us.” I think that’s about as good as it gets for snappy chatter.

Strategy 3: Wait it out. This is the “80% of success in life is just showing up” or the “even a blind pig can sometimes find a mushroom” approach. If we continue to nose around for a while, we may earn a shot at the bigger or more profitable business. The blind pigs could be flying then, too.

Strategy 4: Differentiate and lead. Incumbent providers frequently become complacent, comfortable, even sloppy. They get into grooves and standardize processes to reduce costs and improve margins.

The counter strategy: Presenting new ideas that are different or more suitable than those presented by current providers so that clients say, “these guys deserve some of the higher margin business” or “we should use their approaches, and we’ll pay them for them.”  Said another way, “Hit ’em where they ain’t.”

As any salmon will tell you, it isn’t easy swimming up stream and there are bears on the riverbanks. But, for every salmon that gets caught, hundreds make it past the bears. Moral of the story: It may take a LOT of ideas and repeated attempts.

So, pour on the fresh ideas. Some will get through. The question then is: Is the prize worth the fight?

Strategy 5: Outflank ‘em. But, why fight when you can cut in from another angle? To execute, we map the account to determine with whom our competitors are tight and their lines of influence. Then, we look for other paths of influence in which to share ideas and influence decisions. We can attack…

  • from the top (e.g. our President goes to their President to discuss opportunities and possibilities, hoping their President will influence his or her underlings to shoot more business our way
  • laterally (e.g. some of our people know some of their decision-makers or people at the same level as the decision-makers, so we connect with them and influence the decisions)
  • from below (e.g. we seek out the people who do the grunt work (analysis, execution, etc) in the other organization and provide them with data that will cause fear, uncertainty, and doubt, thus leading to a review of current providers)
  • from a distance, by doing such great work for a competing firm that the firm we first wanted to enter calls us and says, “Hey, can you guys come do that for me?”

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