Is incumbency a curse?

Based on my observations over many years, it seems to me that existing solution providers are more likely to lose than retain a customer who decides to “test the market” for that solution. There could be many reasons for this but at the end of the day, unless you have delivered what you have promised and serviced your customer to the nth degree, your chances of retaining the business when you need to compete to do so, are slim.

I don’t believe however that it is a simple case of providing good customer relationship management: nor is it a case of there being just one reason behind failing to retain a customer. Having thought about possible causes for incumbency being a curse, I came up with the following conditions which may be contributing factors.

·        The original business case was too optimistic in terms of proposed benefits realisation. This is a challenging one for the solution provider in that they are often not aware of the terms of the internal business case. Even where the project is regarded as a success by the provider, it may still fall well short of the customer’s expectations. They may still have the same optimistic business case for a potential replacement solution but that won’t help the current provider.

·        The customer went to market looking for a pre-conceived solution without disclosing the underlying problem. The solution then didn’t really solve the underlying problem. The provider in this case must take part of the blame in that their sales process was lacking in not getting to the underlying problem. However, often in tender processes it is difficult to get to the underlying problem and even more difficult to change the process once it is under way.

·        The solution provider sold and implemented and then moved on to securing the next customer without continuing to ensure the customer was totally satisfied and obtaining full value from the solution. Modern solutions are comprehensive and complex and in most cases customers may not use or need all the capability, at least in the initial implementation. As they mature in their use, it is then up to the provider to ensure they utilise all the capability that is applicable to the customer's business. This is a classic case for many software vendors and often leads to the next point.

·        The customer failed to keep up with and implement upgrades which would have provided extra benefits and value from their initial investment. Again, the provider must take responsibility for this in not conveying the value proposition correctly for upgrading the solution regularly. The effect of this is that the customer has a view of the existing solution which could be years behind the competitors’ current offerings. All the cajoling and demonstrating of the latest capability of the existing provider may not get past this prevailing view of the customer that their current solution is well behind market capability.

·        All the providers people with whom the customer dealt when the solution was first chosen and implemented have moved on. This could also apply on the customer’s side where their people who chose and implemented the solution have moved on. Despite what others may say, selling still has a high personal component to it, especially in terms of the ability to engender trust. When the people change, it is likely that the new people will have different views and different relationships which will put incumbency at no advantage and therefore at risk.

·        The customer’s business requirements have changed since the solution was implemented. If the provider has maintained a close relationship with the customer, they should be aware of this and therefore their incumbency should be an advantage. However, if they have not been that close to the customer and not been addressing how they could assist the customer’s changed requirements, their incumbency will be a disadvantage.

All the above conditions and more will contribute to incumbency being a curse and yet time and time again I see providers wondering why they lose a customer in competitive re-assessments. Finally, don’t assume that just because you are not hearing about problems from a customer, then they must be happy. That is a sure way to your customer being on the path to going to a competitor either sooner or later!