Incumbents hold an advantage over challengers as they are familiar with the client, have experience, have already delivered for the client and more than likely have built up a stack of references and testimonials over the years. In theory the contract is theirs to lose, but life isn’t like that and sooner or later something intervenes to give the ambitious challenger a glimmer of hope.
Think of all the champion athletes competing in the recent Olympics in Paris hoping to retain their titles. They’d all been there, done that and worn the t-shirt. What could go wrong? Well there you have it, they all still had to perform.
Age, complacency, injury, poor preparation, bad tactics and stronger competition all conspire to topple incumbents at every Olympic games. It’s no different in business. Complacency and poor performance, for whatever reason, leads to the regular unseating of incumbents.
Client relationship
While incumbency is valuable, in my experience nothing is more important than the quality of the client relationship. I’ve seen incumbents survive poor performance in service delivery due to having an excellent relationship with the client. I’ve even seen organisations resist awarding contracts to superior challengers who submitted stronger bids because of the quality of their relationship with the incumbent.
At a minimum, an incumbent needs to have a great client relationship, a product or service that is at least on a par with the competition, a very competitive price and the ability to put together a top notch proposal in order to retain the business. I’ve seen them survive with less, but this is always contingent on having a very strong client relationship.
Opportunities for the ambitious challenger
The only way for a very strong incumbent to stumble is if there is a late change in the client relationship due to a new personality on the buying team having a different agenda, or if they make an absolute balls of the proposal. This happens more often than you would think, and the well placed and rigorous challenger will be lurking in the background to pick up the spoils.
Once the incumbent underperforms they lose all the advantages that this brings. If they also lose the client relationship the contract is in play for a challenger. If the challenger has a strategy and has been diligently working away over the entire commercial cycle they should have the measure of the competition with regard to price, value proposition and proposal quality.
They must also have a high performing brand. This is very important to a client as it shows that others rate you. It also shows that you have been investing in your products and services. Organisations love working with good brands. None of this is worth anything if the client is unaware of the value that you bring to the table. A challenger who wants to win the business must have an effective marketing engine. This improves access to the buying team along with the benefit of being able to educate them on how the products and services will solve their problems and improve their business.
Nothing lasts forever
It’s clear that it is very hard to knock a strong incumbent off their perch. But nothing lasts forever, and the clever and ambitious challenger who has a strategy and takes nothing for granted will get more than enough opportunities to win their fair share of good business.
What now?
If you are an incumbent who wants to renew a contract, or indeed a challenger who wants to win one, and would like to have a chat, get in touch by clicking on the link below or else by connecting with me on LinkedIn.
