If B2B challengers compete on price, why don’t incumbents focus on value?

Challenger service providers are gaining share in B2B markets, often by presenting low-cost offers. This fact is inescapable, but there’s much that incumbent and established providers can do to counter this trend. Find out how transformation provides a springboard and can unlock more value and opportunities.

Many challenger service providers and operators compete against incumbent and existing providers for business customers on price, seeking to quickly woo customers and gain market share. Some succeed with this gambit, gaining ground against established players. Incumbents need to take note and work out how they can lead, not just respond.

Research firm Analysys Mason has a few suggestions, which you can read, here. There are several options, the authors suggest. One of these is to try to match prices, which will have a negative impact on revenue. So, fighting on price may be neither desirable nor productive. Another is to choose the status quo – which will inevitably lead to declining market share, as price-sensitive customers opt with their wallets.

A third option is to explore opportunities to deliver more, typically through an enhanced range of ICT services. Analysys Mason points out that technology shifts “such as a move to hosted voice” can drive businesses to rethink their supplier chains – but we would note that such shifts also present an opportunity for existing suppliers to regain the initiative and to recapture the attention of their customers.

Businesses today are undergoing a transformational shift. It’s easy to write in broad terms about digital transformation – and just as easy to dismiss it as an opaque and non-specific term – but the fact remains. Businesses are shifting from long-established, on-premise solutions to embrace cloud hosting. This shift began more than a decade ago, but it’s accelerating rapidly. The puzzling thing about this trend is why incumbent and established operator haven’t led the way.

Well, the rise of challengers creates a new sense of urgency. Change, or lose market share, revenues or both. That’s why the third option is much more interesting. Operators should be seeking to address the ICT needs of businesses – and, the shift from local voice to cloud voice is the right place to start, as it plays directly to core competencies and strengths of operators.

So, the only realistic option is to engage more with your clients – offer them hosted services that build on existing relationships and add value, so that you can create stronger ties that are more resistant to simple price-led propositions. It’s a tactic that is likely to be more enduring, generate more value – and be more sustainable.

That’s where we can help you. We can help you launch a range of hosted services that build on core strengths, such as voice, messaging, connectivity and more, creating a more compelling (and valuable) proposition that will, in turn, prove complementary to other ICT services.

B2B Markets, Analysys Mason, ICT Services

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