In any industry, working out where to play and how to win can be tough if everyone else is offering the same things. Technology is no exception.
Some products and solutions have become entrenched as “gold standards” within cloud and SaaS sectors. These solutions saturate the market from top end providers all the way down to small business.
So, how can partners find growth opportunities in highly competitive, crowded solution categories? We tapped into the rhipe hive mind to explore this question with a few of our partners.
What are the top two most crowded categories?
Business Continuity tops the list, with some debate around whether Cloud Infrastructure or Security comes in second.
Business Continuity
Backup and disaster recovery (BCDR) is “generally a frictionless sale” according to Aedan Glasby, Director and Solutions Architect at Online 3. “Not many customers in the market would argue that backup is not required for their business.”
Steve Dawson, Director at ONGC shares this view, agreeing that most customers have experienced the kind of pain that aids seeing the value of BCDR solutions.
Where there is high demand, supply will follow, and this has seen a raft of new BCDR vendors enter the market. “A multitude of PE [private equity] firms have doubled down over the last decade on these types of organisations,” said Dawson. “There is so much choice when it comes to choosing a preferred solution, margins have continued to thin out.”
Cloud Infrastructure and Security
Glasby and Dawson agree that crowding in these sectors is due to customers becoming more educated. Customer demand is driving increased solution consumption, with providers fighting to differentiate themselves.
Glasby notes that market conditions during the pandemic have raised buyer awareness of security risk.
“The increase of cyberattacks, ransomware and international espionage has conditioned customers to see this category as an absolute requirement. A significant portion of the partner market have monetised on the back of this by expanding their portfolio to accommodate high margin add-on products,” he said.
Cloud infrastructure is where Dawson sees increased demand turning up the competitive heat and tightening margins. He notes margin-squeeze is not down to vendors alone. “It’s also at the partner level where many are undercutting the competition to win deals.”
Adaptation is key to staying in the game
When competition drives a race to the bottom on pricing and margins, staying in the game relies on being willing and able to adjust your strategy.
For ONGC this means leveraging the value on offer for its professional services to reduce reliance on cloud services margins. They also seek out new ways to ease the day-to-day workload burden for its customers.
‘Significant increases in day-to-day operational costs means most businesses are in a cost optimisation phase to ensure every dollar spent is delivering some kind of ROI,” said Dawson.
“Where we have been able to differentiate is by helping to ease the burden of managing not only technology, but also the myriad relationships that ensue as organisations increase their digital footprint.”
Meanwhile, the team at Online 3 mitigates competitive encroachment by leveraging a single platform wherever possible. This reduces total cost of ownership and simplifies deployments.
“In that respect we see very little direct competition as we are typically selling against higher cost, higher complexity solutions that don’t provide any extra value or significant advantage to the customer,” said Glasby.
Customer centricity matters in saturated markets
One thing shines through from Dawson and Glasby’s comments: each business is on the path to true customer centricity through their business models, strategies and culture.
Customer centricity is one of those phrases that’s easy to dismiss as marketing jargon. Want to stand out from the crowd? Understanding customer centricity and how to get on the path will get you there.
In a nutshell, Online 3 and ONGC are changing from an ‘inside out’ approach to create an ‘outside in’ culture.
Confused? Don’t be. Let’s break it down.
Inside Out
An ‘inside out’ approach is where most businesses start. This is the belief that the inner strengths and capabilities of a business will produce a sustainable future. There’s a strong focus on internal systems and processes, resources, and work orders. With this approach, business activity is largely reactive. Sales strategy tends to emphasise ‘everything our customers should know about us.’
As businesses nail down their infrastructure and refine processes, the focus changes toward service centricity. Priorities are set around establishing best practices, capability statements and service portfolio catalogues. Improvements to customer interactions are made through investment in apps and portals to streamline service requests.
Ultimately, service centricity delivers greater operational effectiveness for the business. The customer just happens to benefit a little along the way.
However, the benefits of service centricity won’t pay dividends forever. Partners need to know when it’s time to move out of this phase, or they risk stagnating.
Outside In
At the ‘outside end’ of the journey are companies that believe customer value creation is key to success. This approach focuses on understanding the hidden or latent needs of customers and serving those in a proactive way.
Deep relationships, business outcomes and satisfaction based on new value generation are key. The sales mindset is ‘everything we should know about our customers’.
Customer centric businesses do not need to rely on selling add-on products. They focus on gaining excellence in a few core areas that can be iterated to fit many use cases, and constantly improved for customers. They are also more likely to create value for customers by bringing other partners to the table.
Partners that constantly reinforce their core strengths and focus on customer value creation improve offerings and profits.
The path to customer centricity
Moving toward customer centricity
Glasby reflects the push to customer centricity when he talks about what makes or breaks a decision to diversify the Online 3 portfolio.
His first priority is “what is the value to the customer and is this evident?” Next, he prioritises finding the benefits or advantages a new offering can provide to the customer over existing products or solutions.
What is notable is that in every response offered by Glasby on portfolio diversification, the issue of margin, revenue or profit to Online 3 never came up.
That’s not to suggest these things should not matter, just that they are not the first focus for businesses headed to customer centricity.
The philosophy at ONGC is similar. Steve Dawson also cites the importance of identifying whether expansions to the portfolio can solve true customer issues or derive more value from existing technologies. Most of all, for Dawson, it all comes down to trust in the relationship.
“It hasn’t been about cost at all, it has really come back to relationships,” notes Dawson. “True partnerships and engagement win and retain business. Customers want to know when the cards have fallen, you’ll have their back
To beat saturation, know where to play and how to win
The proof of the customer centricity pudding is always in the results. While Online 3 and ONGC are getting underway with transforming their approach, each is already enjoying the rewards that come with training the value creation lens beyond the walls of their own businesses.
For ONGC, this means working with new customers acquired all over the country and a drastic expansion of its service areas. Growth has made ONGC even more commercially competitive, helping the team to secure wins over much larger service providers.
Aedan Glasby and the team at Online 3 have proven that a focus on customer value wins market share. They know their best playing field is against traditional price and margin providers that rely on multiple add-on product sales.
They also know how to win. Online 3 has hard metrics on the new business value generated for its customers.
Top tips for saturation success
- Look at where you can offer more value in other areas
- Leverage the integration benefits of single platforms to control TCO and keep deployment models simple
- Consider the customer value generation opportunity first when placing bets on portfolio diversification
- Identify niche customers with similar and sustained demand and go after them
- Get completely comfortable with talking business outcomes as well as you can speak to technical enhancements
Winning in saturated markets is possible, as the growth for Online 3 and ONGC demonstrates.
To get your own strategy underway, why not make use of the Partner Centricity map in this article to consider where you are today? It might help you to think about what a move toward ‘outside-in’ would look like in your business.
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