The Pros and Cons of Competitive Marketing

Competitive MarketingAs a B2B marketing outsource provider, our clients sometimes ask about the advisability of running a competitive marketing campaign. This is a decision that is rich with opportunity but also fraught with peril.  So how do you exploit the opportunity while leaving the peril behind?

First, make sure you understand why you want to run the competitive campaign in the first place. To create a winner, you have to be able to identify those who have already purchased from your competitors or are planning to do so. Then you need to reach these individuals and companies with an offer so compelling that it upsets the status quo. I’ve been asked to create campaigns that target ERP, CRM and ECM competitors; the fact is, these systems are very hard to displace. Knowing when not to attack a competitor is just as important as knowing when to do so.

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While every situation is different, here are five criteria that indicate a competitive marketing program has a good chance of success.

  1. You competitor is better known. Like they say in politics, if you are the challenger or underdog, you attack because you have more to gain and less to lose. In business, when your larger competitor counterattacks, they put you on a level playing field in the minds of the target audience. In fact, their counterattacks can sometimes bring you more publicity than you could have achieved on your own.
  2. You have an identified differentiation. Few prospects will respond to a generic message like, “We are just as good as Company X.”  To get them to choose you instead of the incumbent, you need to show them how you are unique and better in some valuable aspect. This can’t be an incremental advantage; it must be a game-changer for your prospect to even seriously consider it.
  3. You make it easy to switch.  As I mentioned regarding systems like ERP, it can be a daunting proposition for someone to switch large and complex products or services. This can even be true for less expensive or complex products. The more painless you can make the transition, the better.
  4. There is a precipitous event. In a 2013 blog post, I described a precipitous marketing event as anything that causes a swift change in the business or sales climate, therefore making the prospect more receptive to your offer. A precipitous event can create a strong sense of urgency on the part of the buyer, thus shortening your sales cycle and reducing sensitivity to price points. Here are some examples of precipitous events that will make your competitive marketing campaign more effective:
    • Competitor raises its prices
    • Competitor has a product quality problem
    • Competitor has a product delivery failure
    • Competitor has a scandal of some type
    • An outside force (e.g. regulation or industry shift) changes the landscape
  5. Your offer is compelling. Even if all the stars are lined up—you have a unique differentiation, it is easy to switch and there is a precipitous event—you still need to give prospects a good reason to give up on the competitor. In other words, the benefits of switching have to be greater than the comfort and inertia of the status quo. This may require a financial incentive so strong that you lose money on the initial transaction. This is unacceptable for a one-time sale, but can be worthwhile if the lifetime value of the new customer is large.

A highly targeted approach to competitive marketing usually works better than broad-based general advertising.  However, the most daunting challenge in competitive marketing campaigns may be locating those who are already doing business with your competitor. If you can’t get an email list of your competitor’s customers, you might want to try a targeted pay-per-click campaign. We have had good success with this method.

By the way, I usually advise our clients to take the high road when engaging in competitive marketing since the overly negative attack can backfire in ways that can subject you to the dreaded Law of Unintended Consequences. If your campaign is in bad taste or not supported by a defensible business case, you may end up in a worse position than where you started.

Christopher Ryan
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