Can you afford to keep recruiting senior folk from your biggest clients, or do you have to compete more directly for new sales?
Siemens has hired Stanley McChrystal, the four-star US general who resigned last year as Nato’s commander in Afghanistan, to help them win more US government business and mount a bigger challenge to rivals such as General Electric. McChrystal is just another in the long line of public servants who have leveraged their contacts, knowledge and expertise on retirement from their day job.
Competitive advantage comes in many forms. Relationships and knowledge about how customers make decisions are important ones. This is particularly so with multi-level selling into big corporations, and they don’t come much bigger than the US military.
Knowledge advantage such as this is also a very common reason why small businesses get started in the first place: some start up to provide an outsourced service that they previously provided in house; some takeover a facility or activity from their previous employer; while others take their clients with them when they leave to start up on their own.
However, unless you are Siemens or its ilk and you can afford to recruit to update your corporate address book from time to time, there comes a time when, to grow further, you have to go out and compete on the basis of your products or services alone. This occurs most with small businesses that have reached a critical mass and aspire to grow further.
When faced with this challenge, you may soon realise that you don’t really understand much about marketing and that it is a tough thing to do. The transition to an open-market strategy is one of the biggest hurdles that growing businesses face. Many never manage to cross it.
Businesses that rely on such cosy relationship selling often get a shock when trying to sell to someone new. Struggling to find a competitive proposition they soon realise that what they had thought was marketing was really just keeping in touch.