It is human nature to love converts. There is something deeply satisfying about someone who has been on the other side and has now come around to your point of view. This holds true whether you are talking about politics, religion or B2B technology. For B2B technology companies, when a customer ‘converts’ from a top competitor (leaving that competitor and signing on with Company A), Company A treats that customer as proof positive of Company A’s superiority and a goldmine of competitive intelligence.
However, our advice for both the companies themselves and their potential investors is ‘Beware!’ The converts are often wrong and buying into their point of view can lead you seriously astray.
The reason is simple – Selection Bias. Let’s take a theoretical competitor with a Net Promoter Score (NPS) of 35 made up of 45% Promoters, 45% Passives and 10% Detractors (need a primer on NPS? click here). Based on Topline benchmarks, 35 is a very good NPS for a B2B technology company. The problem is that converts inevitably come from the competitor’s small pool of Detractors. While they may have legitimate grievances, they are far from representative of competitors’ customers true experience and buying into their point of view can be highly misleading.
In one case, a Topline client developed an internal narrative based on input from a few converts that their top competitor’s product catalog module was deeply flawed. This narrative became so ingrained that the client was convinced that the competitor was blatantly lying to customers and purposely showing misleading demos to win sales. However, our Voice of the Competitors’ Customers study, where we surveyed and interviewed a cross section of the competitors’ customers, found that that was only true for 5% of competitors’ customers. The other 95% broke down as follows:
- In 58% of cases, the competitor was perfectly capable of handling customers’ product mix
- In 31% of cases, the competitor, while not handling product complexity as elegantly as our client, was viewed as acceptable and had other strengths
- In 6% of cases, the competitor had a failed installation for other reason
By putting aside this false belief that represented just 5% of their customers, we were able to uncover what the real important differences are that matter to most customers and help them focus on their true competitive differences.
In another case, a company seeking funding arranged interviews with a series of customers who had converted from the industry leader. They used these converts as evidence that they could hit their growth projections by stealing share from what they perceived to be a stumbling giant (with all of these converts, of course the leader was stumbling). More thorough diligence uncovered that just a small share of the leader’s customers felt the same way. Wisely, the investor passed.
Ultimately, converts are appealing as they speak directly to our biases and beliefs. In the case of B2B technology companies, the bias is that their company’s solutions are truly superior to competitors. It is a temptation that needs to be strenuously avoided.