In public sector procurements, conventional wisdom says the only way to unseat an incumbent provider is to have a lower evaluated price. New entrants typically anchor on “better, faster, cheaper” approach in their win themes. So how does someone topple an incumbent when being the lowest evaluated price is not feasible? It requires a very nuanced approach to strategic pricingand offering a compelling value proposition that justifies a higher price point while addressing the specific needs and concerns of the customer. Here are several key strategies and considerations:
Understand the Value-Driven Approach
Conduct a Comprehensive Needs Analysis:
Success starts with a deep understanding of the customer’s needs and objectives. This involves not just the surface requirements of the procurement but also the underlying challenges, objectives, and constraints the customer will face over the term of proposed opportunity (and often beyond).
Identify Value Drivers:
Identify what is most valuable to the customer. This could be long-term cost savings, superior service quality, innovation, sustainability, or in the case of non-federal procurements, other factors like local economic impact.
Differentiate on Quality and Service
Highlight Superior Quality:
Emphasize the superior quality of your product or service. This can include durability, efficiency, or advanced features that the incumbent doesn’t offer.
Commit to Exceptional Service Delivery:
Stress superior customer service and a demonstrated commitment to high-performance delivery. This can be a major differentiator, especially if there are known gaps in the incumbent’s service.
Demonstrate a Technological and Innovative Edge
Propose Innovative Solutions:
Leverage the latest technology or innovative practices that can offer long-term benefits to the customer, such as increased efficiency, lower long-term costs, or enhanced public engagement.
Demonstrate Future Readiness:
Showcase how your offering is future-proof, aligning with emerging trends or regulatory changes, something the incumbent may not be positioned for.
Add Economic and Social Value
Contribute to Socio-Economic Programs:
Highlight contributions to local economies, job creation, or partnerships and/or subcontracting relationships with underrepresented economic entities. Shape the evaluation criteria to reward bidders that exceed historical minimum requirements. Your customers often have their own utilization requirements, so helping ensure they reach their goal is a win-win situation.
Partner and Collaborate:
Offer a partnership approach rather than a vendor-client relationship. This might include collaborative problem-solving sessions, ongoing consultation, or co-development of solutions.
Define Risk Mitigation and Management
Implement Risk Management Strategies:
Address potential risks upfront and offer strategies to mitigate them. This could involve contingency planning, robust support systems, or guarantees.
Demonstrate Stability and Reliability:
Provide evidence of your organization’s stability, reliability, and track record. This can counteract the “safe choice” appeal of the incumbent.
Provide Customization and Flexibility
Tailored Solutions:
Customize your offering to meet the specific needs of the customer. This personalization can set you apart from the one-size-fits-all approach of the incumbent.
Flexible Pricing Models:
Offer flexible pricing models (when possible), such as performance-based pricing or phased transition and/or implementation costs, to provide financial flexibility to the customer.
Build a Compelling Case
Craft Compelling Proposals:
Craft a proposal that communicates the total value of your offering, not just in terms of product or service features, but in how it meets the customer’s broader goals.
Use Effective Storytelling:
Present case studies or examples where your company has added significant value in similar scenarios.
When it is unlikely you will have the lowest evaluated price and you are trying to unseat an incumbent, your focus must shift to delivering superior value through quality, service, innovation, risk management, and customization. You have to construct a compelling narrative that demonstrates how your offering aligns with the customer’s broader objectives and delivers benefits that go beyond cost savings. This value-centric approach, backed by strong relationships and effective communication, can be instrumental in defeating an incumbent that you can’t beat on price.
