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By Patrick Hill, Director
In today’s dynamic sourcing marketplace, higher volumes of smaller deals with shorter contract terms mean clients have a larger pool of specialized providers to select from. Providers, meanwhile, have a wider range of opportunities to pursue but face the challenge of articulating their value proposition in a crowded and noisy space and risk spreading themselves too thin by chasing too many deals.
Here are the Top 5 keys to success for service providers operating in an increasingly competitive environment.
1. Prioritize deal pursuits. Identifying the opportunities that best match capabilities and experience is more important than ever. Providers simply can’t afford to invest resources in pursuing deals where they stand little chance of winning. Insight into client requirements and competitive offerings is therefore essential. Successful providers understand their true market differentiation and align their sweet spot to a client’s specific needs.
2. Start the “A Team.” Involving subject matter experts and key delivery leads early in the sales process is essential to establishing credibility and demonstrating capabilities. Because of bandwidth constraints, providers often exclude subject matter experts and delivery leads from early discussions, assuming they can be brought in at the end of the sales process to close the deal. Effective go-to-market strategies ensure that the contribution of top performers is maximized throughout the sales cycle.
3. Stand out in the crowd. As many services become increasingly commoditized, more and more players compete for razor-thin margins. In this market segment, a provider’s claims of being “different” often merely underscore how similar they are to their competition. At the other extreme, vendor specialization and client interest in innovative niche solutions put the onus on providers to clearly stake out their market positioning. The ability to communicate credible success stories is especially important – clients are interested in innovation but won’t be guinea pigs for unproven solutions.
4. Build relationships. Relationships within client organizations allow providers to understand the client’s perspective and speak to it. Without that understanding, providers tend to push their capabilities from their own point of view, forcing the client to adapt to the provider’s perspective; a failure to connect typically results. A relationship with the buyer also gives a provider insight into the real organizational and individual agendas driving an outsourcing initiative. By addressing these nuances, the provider is better positioned to engage the buyer.
5. Manage the brand. Successful providers understand and influence how they are perceived within the marketplace. Existing reputations may or may not be deserved and may or may not represent the current reality, but they exist nonetheless. A proactive approach to reputation management leverages positives and takes steps to correct false or negative perceptions.
The changing sourcing marketplace and service provider go-to-market strategies will be a central topic at ISG’s 2014 Sourcing Industry Conference, to be held in Dallas, Texas, September 29 and 30. Contact Patrick Hill to discuss further.