DOING BATTLE with the large company
Feb 1, 2000 12:00 PM,
One of my favorite pastimes is to write down quotes from well-known people.The ones worth remembering condense a powerful, complex idea, which may bedifficult to communicate, into one or two short sentences, or they have thepower to evoke strong feelings, stirring the passions of human emotion.Remember Dr. McCoy from the original Star Trek series? One of his mostnotable quotes, which stirred deep emotions from TV audiences, is now partof the curriculum of all medical schools. Always said when he was in alife-or-death situation, his standard retort to Captain Kirk was, “Jim, I’ma doctor, not a mechanic.”
Another of my favorite quotes is from President Franklin D. Roosevelt. Itwas right after the Japanese had bombed Pearl Harbor in 1941 when heuttered a statement that became part of history: “There is nothing to fearbut fear itself.” Think about it. Fear is a common human emotion, createdand controlled by the brain. And although F.D.R. probably feared thecarnage to come, he knew that he had no choice but to overcome his emotionsand focus on the issue of the day.
F.D.R. was right about fear. Most of us in business are afraid of theunknown, especially when it comes to the mega-companies, the big companieswith revenues in the tens if not hundreds of millions of dollars, usuallygrowing by acquisition, amassing a huge war chest along the way. Theirmission is simple – grow, grow, then grow some more by any means necessary.
Fear begins the moment they enter your comfy little market. You are scaredbecause you do not know how they will affect your business. Ultimately, themain question that races through your mind is: “How will I compete againstthe mega-companies? Is all hope lost?”
Mega-companies can be tough competitors. Their major selling features toclients are “We’re large and have the financial resources to take care ofyou,” and “Wehave a large technical infrastructure, with hundreds ofcustomer-service personnel to support clients.”
Being scared when a mega-company (MC) enters your market is a normalreaction, but being frozen like deer in the headlights guarantees that youwill be mowed down. The best way to compete against an opponent is to findits weak spots and make them your strengths. When we competed against theMCs, we used several successful strategies.
One strategy involves defusing the size advantage. For many prospects,company size is important because it conveys stability. One way to defusesize as an advantage is to level the playing field by enhancing your sizeimage and stability. Even if your company has been in business for 30years, hearing it from your sales reps usually means little to a client. Aneffective way to show stability is having a quality brochure. It does nothave to be a 10 page glossy; it can be a simple 8.50 infinity 170 folded inhalf. Not only does this project stability, but it also informs the clientabout all the other services provided by your company.
Another approach is to make size a liability. To highlight the liability ofbeing too big, I took a large duffel bag full of ping pong balls labeledwith different numbers on a sales call. When asked the difference betweenmy company and the MC, I put my hand in the bag and pulling out a ping pongball, replied, “With our company, you will not be just another number;every client is important.” I usually followed by saying, “If you ever havea problem, you can talk directly to the president and owner of the company.Your interests are his interests.”
Further, emphasize service. The weakest link for many MCs is service. Theirservice revenues are usually too small to impact an MC’s annual growthtarget. At best, service is an after-thought.
At our company, we used service as a strong lever to squash ourcompetitors, small or large. We developed a full service agreement package,which guaranteed around-the-clock service, instant replacement of defectiveproducts, problem correction within 24 hours or less and all parts andlabor covered. By creating charts highlighting the features of our serviceprogram, we were able to educate the prospect that not all service programsare the same. If you treat service as a commodity, you are only giving theMC an upper hand.
Also, seek niche markets. As Captain Kirk once said, “The mission of theStarship Enterprise is to go where no man has gone before.” The sameconcept applies to competing against MCs. If you compete head-to-head onthe standard cookie-cutter projects, where price is the only determiningfactor, you are probably wasting your time. To enhance our win rate andincrease gross margins, we went after only the niches where price was notthe key factor, and we could demonstrate added value. Sometimes, addedvalue meant off-site software programming services or providing a productnot available to our competitors. In either case, offer what MCs cannot.
Finally, drop your prices. One way to discourage a new competitor fromentering your market is to reduce your prices on every major new projectwhere both companies are competing. It is not the preferred way, but it isan alternative. If your adversary cannot make headway, maybe it will giveup and check out another market.
Just as there is no single way to skin a cat, there is no single set ofways to compete against the MCs. Their entry into your market means onlyone thing – you have to take the offensive. Although they are big and canafford to lose money, you can leverage their size to your advantage. As welearned at our company, being small has its advantages. Down the road,after the big, ugly MC has packed its bags and left town, you can be quotedas saying, “I’ve never seen anything that big run so fast.”