How do we optimize our competitive position?
When you start your renewal process timely, you may be able to develop different strategies for dealing with the competition. As the current partner, you have an advantage over your competitors. You have better access to people and access to information.
What the best strategy is may vary and depends on the situation. In this box you write the competition strategy you have chosen. Here are some example strategies to consider:
One strategy is to just wait for the new RFP (request for proposal). This may be the best strategy when you are certain you will win. But in a lot of cases this will lead to price erosion.
An often-used strategy is early renewal: Proposing to renew the contract before the customer starts preparing for retendering. The most common proposition is to renew the contract with a reduced price, although that is not always necessary. There may be other ways to be of relevant value that will not cost you much.
Influence content of RFP
In cases where you cannot renew the contract privately, your best strategy may be to influence the content of the request for proposal that will go out to you and your competitors.
You may convince your client to include elements that will be in your favor. And you have a competitive advantage by knowing early what is in the RFP and how to interpret it.
When you start the renewal process early you can consider investing in a lock-in strategy. This is probably best for contracts with high margin or customers of strategic importance.
Common lock-ins will be financial in nature. For example, the ownership of equipment, tools or instruments that the customer needs to continue the (level of) service and only can obtain from you.
A well-known strategy for a long-term partnership, though not always possible. Please do make sure the decision(makers) are sensitive to this. As that is not always the case.
The definition of loyalty is the quality of staying firm in your friendship or support for someone or something. Good personal relationships matter in a lot of industries. Although loyalty only get you so far, it is worth overthinking as (part of any) competition strategy.
The overrule strategy is similar to creating loyalty. When there is someone at the clients’ side with enough power to overrule other decisionmakers and influencers, you might consider putting your cards on winning this person for your proposition. You can do this by contributing a lot to this person’s goals, making the cooperation of high personal value.
When your position as a (single) supplier is weakened, you might consider forming an alliance with a competitor in a similar position. This is usually not the first strategy that comes to mind, but it might hold real value for your customer. And as such, be the best bet to retain (part of) your current business.