5 Ways to Compete and Win Against Larger Competitors
Guest: Juergen Rochert, a coach at CEO Coaching International. As an innovative and driven leader, Juergen has been highly successful in various executive roles for the Mercedes-Benz and Daimler Truck Financial Services Companies around the globe, including Mexico, Canada, the United States, Germany, Australia, and New Zealand.
Quick Background: According to a study by McKinsey & Company, the top 10% of the largest companies in the world earn nearly 90% of the economic profit created. Meanwhile, the bottom 20% are coping with steep losses. That translates into a BIG opportunity for small-to-medium-sized companies that can leverage speed and creativity to compete with larger incumbents.
On today’s show, Juergen Rochert identifies five areas where smaller firms can compete and win market share if they follow an effective plan.
How to Compete with Larger Companies from Juergen Rochert
“You probably have been on the phone with a call center at an airline or bank,” says Juergen. “Typically the first or second thing an agent is going to say is, ‘My system is slow today. Can you tell me your name again?’ The agent is not lying. They’re just not telling you that the system is slow every single day because it’s a legacy system. That’s one of the huge weaknesses of large companies.”
Smaller companies can use a much simpler system to identify who their best customers are, connect with them as people, and deliver exceptional service: FORD. Customer service expert John DiJulius trains all of his staffers to learn a new customer’s Family, Occupation, Recreation, and Dreams, and record that info right next to their phone number, email address, and payment option. With that info at the company’s finger tips, every contact with a customer can be personalized and expedited. And if you make FORD an established best practice when you’re smaller, you’ll be able to scale up that database and that level of service as you grow.
Those interminable customer service calls are also symptomatic of large companies that are very invested in large infrastructures. There are plenty of good reasons to have these complex systems in place, including outsourcing to control costs or passing new initiatives through your compliance department. But growing companies that don’t have that complexity in place can adapt more quickly to customer needs and empower their best people to take more ownership over their work. That’s good for your customers, and good for the team you’re hoping to retain and grow.
“Smaller companies have two or three layers of management maximum,” Juergen says. “Maybe just one. So people can make decisions. People are empowered. It’s a lot more fun to work in a smaller company where you can actually make a difference versus a company where you have to report an issue and raise a ticket. Competing for labor is where smaller companies have huge advantages. People leave larger companies, even with better pay, and go to smaller places that are more flexible. People can see the impact from what they do to help the customer. They actually talk to the person versus sending an email. And they’re actually enjoying work much more.”
A company’s ability to “move fast and break things” tends to slow as it gains the bureaucracies that often accompany scale. The opportunity to transform yourself now before those roots get too deep could be a major competitive advantage over more entrenched firms.
For example, when CEO Coaching International’s Don Schaivone was an executive at Grasshopper, he led the company through a transformative exercise. The leadership team imagined they were a startup and asked themselves three provocative questions about how they would plan to compete with the current company. When they looked at their answers, they decided that they’d rather be running this “new company,” and went about building it. They disrupted themselves so well that Grasshopper eventually sold for $170 million.
Juergen used a similar strategy when the financial services teams he led were planning to compete with emerging online credit firms. “We put a team together and said, You are the disruptors,” Juergen says. “Your job is to put us out of business. And they did. They came up with a very solid business plan and model. It was a fantastic exercise and I can recommend it to any company, regardless of whether you then go and become a disruptor or you learn something to protect yourself from one of the possible disruptions.”
4. Niche, Segmentation, and Pricing
After the Great Recession, many trucking companies that had lost money during the downturn were struggling to get assistance from large lenders. Where those companies saw more red ink, Juergen saw an underserved niche of potential customers who were willing to pay a higher premium for service they couldn’t get anywhere else.
“Some niches are just too small for larger companies to handle,” Juergen says. “Because that is the case, those customers actually don’t mind paying more for better service versus getting no service at all. They were just happy that somebody would answer the phone. We put a system in place where if there was a problem, customers don’t make payments for two months, catch up, and then eventually we’ll do the calculation so that these companies could keep going and do their jobs. You’re not here to deal with the finance company. You’re here to serve your customers.”
This is why racing to the bottom with your pricing is never an effective strategy, especially if you’re trying to compete with large firms who thrive on volume and discounts. New and existing customers alike are going to flock to quality service they can’t get anywhere else. If a reasonable price hike drives away a significant portion of your customer base, then the problem isn’t your pricing, it’s your product or service.
5. Thinking BIG
Why do so many of the successful CEOs and entrepreneurs we’ve coached to exponential growth and BIG sales still get misty about the early days? Because as hard as it is to get a company off the ground, there’s something really special about those times when anything seems possible.
Many established firms get so dug into the grind of the business that they lose the creativity and courage that helped them compete and get BIG in the first place. We pride ourselves on helping CEOs stay in touch with that visionary spark and create winning game plans for every stage of their company’s progress.
“The key thing to Making BIG Happen is actually sitting down and making a plan,” Juergen says. “What do I really want? If you don’t have a plan, whatever you get, is it good or not? You don’t know. So regardless of size, I think that the key thing is, have a plan. Think through, what does it mean? If you would want to double, what would that take? What things can you actually put in place? How can you measure them? Who can do them? I think that applies to any business, any size, any day.”
1. Make price irrelevant. If your product or service is world-class, customers will pay for it.
2. Disrupt or be disrupted. Embrace your growing company’s ability to experiment and change course.
3. See BIG possibilities that your competitors are overlooking.
About CEO Coaching International
CEO Coaching International works with CEOs and their leadership teams to achieve extraordinary results quarter after quarter, year after year. Known globally for its success in coaching growth-focused entrepreneurs to meaningful exits, CEO Coaching International has coached more than 1,000 CEOs and entrepreneurs in more than 60 countries and 45 industries. The coaches at CEO Coaching International are former CEOs, presidents, or executives who have made BIG happen. The firm’s coaches have led double-digit sales and profit growth in businesses ranging in size from startups to over $10 billion, and many are founders that have led their companies through successful eight, nine, and ten-figure exits. Companies working with CEO Coaching International for two years or more have experienced an average EBITDA CAGR of 67.8% during their time as a client, nearly four times the U.S. average and a revenue CAGR of 25.5%, more than twice the U.S. average.