How Effective Is Competitive Displacement?

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E-mail security firm Spam Soap is launching a competitive displacement program targeting Google Postini customers. Aerohive Networks is doing the same with Meraki. Like department store sales, these promotions come and go, but how effective are they?

It’s an old story: A well-recognized vendor gets acquired, shuts down or makes an irreversible gaffe. With open season on the remaining market base, smaller competitors scramble to fill the void. They pounce on opportunity through competitive displacement programs that reward end-user customers for supplanting existing solutions with a smaller/lesser-known alternative.

But are these programs effective at capturing market share? Is this something that can be sustained over the long term?

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In the short term, the answer to the first question is yes -- but there are a lot of qualifiers that include branding, reputation, customer satisfaction, market and mind share of the targeted vendor. At some level, these programs work. Vendors have consistently found creative ways to edge into the market and generate business with competitive displacement. Recent examples include the following:

  • E-mail security firm Spam Soap Inc. launched a promotion offering Postini customers a three-month free trial and free migration services to move an account away from Google Apps.
  • Barracuda Networks Inc. offered a free six-month e-mail security, spam and virus firewall trial to Postini customers resistant to Google App migration.
  • Backup and archiving firm Unitrends Inc. offered a 50 percent discount and related services around its backup offerings, taking on competitors Symantec Corp., Veeame Software, Dell's AppAssure and Barracuda Networks Inc.
  • Cloud networking vendor Aerohive Networks is luring customers with a competitive displacement program for Meraki Inc. customers uneasy about falling under the umbrella of Cisco Systems Inc.

It's fair to say these programs have success, especially smaller vendors. Why? When you don’t have much, you have everything to gain. This holds true when the targeted vendor shuts down or changes its offerings through an acquisition. The resulting void turns into a market-share vacuum.

Many of Postini’s 26 million users, for example, will be divided and dispersed among the competitors that get there first. For smaller competitors, any amount of growth is significant, which makes competitive displacement an investment with guaranteed returns. In that regard, competitive displacement becomes a valuable tool that can be leveraged by up-and-comers occupying negligible market share to get noticed in the market and acquire incremental business.

One of the biggest challenges then becomes competing with other displacement programs, especially those with existing market and mind share. Postini’s anticipated assimilation into Google Apps, which its parent company says will happen next year, paves the way for competitors. But Spam Soap had some stiff competition also scrapping for the territory with their own promotions and displacement programs.

Even still, it’s likely the stage was set for an impending customer migration, whether Google chose to disband the popular e-mail service. Postini ranked low on Gartner’s May 2012 online customer satisfaction survey, and there’s a good chance a significant portion of end users were considering a migration.

Competitive displacement gets a lot trickier when going up against well-established market leaders. Backup firm Unitrends Inc. launched a displacement program earlier this year following a problematic Backup Exec 2012 release that, among other things, replaced the solution’s job monitor with a server-oriented interface and made the tool more complicated and harder to navigate. The release elicited strong backlash from the channel. Symantec took steps to quiet the firestorm, but the incident allowed smaller, lesser-known players such as Unitrends to wedge into the backup and recovery market.

Just how long that window stays open remains to be determined. In the short term, Unitrends' offer capitalized on the frustration around the Backup Exec release. The firm touted that 20 percent of its third quarter sales came from competitive trade ups.

However, Symantec’s Backup Exec is one of a handful of industry leaders occupying Gartner’s Magic Quadrant -- a list that includes EMC Corp. IBM Corp. and CommVault Systems Inc. This well-established industry prowess and loyal customer base goes a long way in rectifying mistakes that could prove disastrous for smaller firms. In the short term, a few customers may cross over. But over the long term, chances are slim Symantec and other major vendors will lose market share to any one niche player.

Promotions, like department store sales, come and go. In most cases, the targeted vendor doesn’t acknowledge them, indicating they have bigger things to worry about.

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