How can you steal customers from your competitors?

It is known that the cost of stealing customers from your competitors is generally higher than the cost of reaching out to new customers who haven’t purchased the industry’s products yet. This is a valid claim and a solid argument in several cases.

However, when your product or service is complex, attracting and convincing new customers who have never purchased products from industry suppliers is difficult. Customers who are already purchasing products from competitors do not need to be convinced about the general merits of the product. You only need to convince them that your offer is better than the one they are currently getting from the competitor. So, it could be a viable option to expand your revenues.

Is it possible, though? Let’s see.

First of all, we must assume that your product is superior to that of the competition. If that is not the case, forget about even starting the conversation.

Then, you should begin by inquiring about the current level of satisfaction with the supplier. If the satisfaction is low, there is an opportunity for a conducive conversation. If the satisfaction is high, it is very unlikely you’ll be able to convince the buyer to switch. But we said your product is superior to the competition, didn’t we? It’s irrelevant. Satisfied customers will be unwilling to change. It is difficult you will obtain from them enough attention and engagement to justify the switch. The return on your invested time will likely be unjustified, especially if the sales conversation is long.

So, if the clients are dissatisfied with the current supplier, will they switch if your product is superior? Not necessarily. 

Which advantage does your product have? If the advantage is cost, your conversation will be easier, and the likelihood of stealing a customer is higher. You only need to convince the buyer that you are offering the same benefits at a lower price. The buyer already knows the benefits since your competitor has already provided them. The buyer is then able to accurately evaluate the benefits. If you can build your argument on price, the switch is easier.

But if you are building your argument on a better product or a differentiated product, the switch will be difficult. The reason is that buyers are affected by a status quo bias and reluctance to take risks, which will prompt them to keep the current supplier even if your offer is potentially better. The transaction costs for the change in supplier, combined with the perceptions of risk from switching, will deter buyers from changing, unless your superiority is highly manifest.

Be careful, though, because there is a trap! Attempting to steal customers from existing suppliers is one of the core triggers of industry price wars. When industries are growing, price wars are less likely because suppliers can focus on new customers to grow their business. When industries stop growing, the only way for companies to increase their revenues is by increasing market share. Attempts to steal customers from competitors will trigger price wars that decrease everyone’s margins and only transfer value to buyers. Before you attack a competitor on prices, you have to estimate their cost structure and understand whether they can retaliate by matching your price terms. If that is the case, avoid any attempt to steal customers from your competitors, or you could trigger a dangerous price war.

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