Hey — it’s Nico.

This is Behind Tactics 🧠, the Failory newsletter where I share the strategies behind the best startups.

This issue takes 7 mins to read. If you only have one, here’s what you need to know:

• SavvyCal uses a bold buyout strategy to attract customers from competitors like Calendly.

• The strategy works by offering to credit the value of a competitor's unused subscription toward a new annual plan with SavvyCal.

• This approach helps lower the cost and risk of switching for users, making it more appealing for them to try a new product.

• The strategy can be risky for startups due to high costs and the potential of attracting users who may not convert into paying customers.

This issue is brought to you by HubSpot’s free Sales Guides and Templates Kit, giving you all the tools you need to close your first $1M in sales for your startup.

Let’s get into it!

The Founder's Edge: 5 Tools To Sustainable Startup Growth ^AD

Picture this: closing deals with ease and integrity. Imagine an inbox brimming with interested prospects. Envision a sales team consistently exceeding targets.

This isn't wishful thinking. It's your potential reality with HubSpot's Sales Guides and Templates Kit.

Unlock this goldmine of resources:

• 21 compelling email templates that resonate with prospects

• A discovery call checklist that turns conversations into partnerships

• The social selling guide that puts you leagues ahead

• 100 curated interview questions to build your dream team

• A forecasting template that charts your growth trajectory

We understand the startup juggle. That's why we've distilled years of sales expertise into one free, immediately applicable kit.

The Strategy

Buying Competitor Contracts

When you’re running a startup and aiming to grow quickly, one of the biggest challenges is convincing potential customers to switch to your product. People often hesitate to leave behind something they’re used to, especially if they’re locked into a contract with a competitor. 

That’s where a strategy like the one SavvyCal uses comes in. It’s simple: offer to buy out your competitor’s customers. This aggressive but effective tactic can help you gain market share quickly.

So how does it work? Imagine a competitor's customer has a subscription they’ve already paid for, like a Calendly annual plan. Your offer is to credit the value of that unused subscription toward their account with you.

Essentially, you’re giving them a free ride with your service until the competitor's subscription runs out. Once that happens, they’ll need to start paying you—but by then, they’ve already gotten familiar with your product and, hopefully, prefer it.

SavvyCal, a scheduling tool that competes with Calendly, uses this exact strategy to lure customers away. Their pitch is simple: "Forward us your Calendly receipt, and we’ll credit the remaining value when you sign up for our annual plan."

It’s easy, direct, and very tempting for anyone frustrated with Calendly or just curious about a new alternative.

Switching Sucks

Switching services can be tough for users, especially after they’ve already invested time and money. People often stick with what they know because of loyalty or the feeling that they’ve already committed too much. 

There’s a sense of sunk cost when switching—users feel that abandoning their current service means losing the time and money they’ve already put in. This makes them hesitant, even if they know a better option exists, as the idea of starting over can seem like a bigger sacrifice than sticking with the familiar.

SavvyCal’s strategy recognizes this psychological barrier. By offering to cover the financial aspect of switching, it helps ease some of the emotional burden as well. The idea is to make the transition feel less risky and more like a win for the user. After all, when customers feel like they’re getting something for free, the decision turns into an exciting opportunity rather than a stressful leap.

This also builds trust. When a company is willing to front the cost of a transition, it signals confidence in their product. They’re essentially betting that once users experience what they have to offer, they won’t want to go back.

SavvyCal’s buyout offer isn’t just a financial incentive; it’s a psychological nudge that reduces hesitation and creates an opening for users to explore something new with minimal risk.

Should I?

Why This Works

• Lowers Switching Costs: One of the biggest barriers to switching services is the financial commitment customers have already made to your competitor. By offering to credit the remaining value of their existing subscription, you remove this obstacle. Customers can transition to your service without feeling like they’re wasting money, which increases the likelihood they’ll give your product a try.

• Targets Dissatisfied Customers: Many of the customers who take advantage of this kind of offer are already unhappy with their current provider. By targeting this group, you’re focusing your resources on an audience that’s more likely to make the jump and become loyal customers.

• Captures Key Market Share Early: For companies in a competitive space, capturing market share early on is critical. By reducing the cost of switching for your competitor’s users, you’re not just gaining customers—you’re taking them directly from your competitors. This makes it harder for competitors to maintain their hold on the market, giving you an edge as you grow.

• Leverage Competitor Contracts: When competitors lock users into long-term contracts, it means those customers are already committed to paying for similar services. By buying them out, you’re targeting users who are pre-qualified and ready to appreciate your product’s features. This gives you a chance to win over customers who have already shown a need for what you offer.

How to Apply It

• Start Small with Key Competitors: You don’t need to target every competitor at once. Focus on one or two direct competitors whose users are likely a good fit for your product. By keeping the offer specific, you’ll be able to manage costs and track the impact more effectively without overextending your resources.

• Offer a Seamless Transition: Make the switch as easy as possible for users. This could mean automating the receipt forwarding process, integrating features that allow users to import their data from the competitor’s platform or offering a concierge migration service. The less friction there is, the more likely they are to give your product a shot.

• Leverage Comparison Articles: If you’ve published articles comparing your product to competitors or offering alternatives, you’re already attracting users who are searching for a new option. Make sure your buyout offer is prominently displayed on these pages. Users who land there are likely ready to switch, and seeing your offer could be the final push they need to make the jump.

• Engage with Negative Reviewers: Monitor review platforms like G2 and Capterra for users leaving negative feedback about your competitors. These users are already dissatisfied and actively looking for a better solution. Reach out to them directly with your buyout offer, making it clear that you can provide a superior experience and help them switch without financial loss.

Yes, But

• High Cost with No Guarantee of Conversion: Offering to buy out a competitor’s contract can be expensive, and there’s no guarantee the user will stick around once the credit runs out. Some people may just take advantage of the free service and leave when it's time to pay, making it a costly experiment if conversion rates are low.

• Limited Appeal to Small Startups: For smaller startups with limited resources, this strategy may be hard to implement effectively. The financial strain of covering competitors’ contracts could outweigh the potential benefits, especially if you’re not operating at the same scale as larger players in the industry.

• Attracts the Wrong Customers: There’s a risk of attracting users who are only interested in getting something for free rather than those genuinely looking for a long-term solution. These customers might not align with your target audience, and their retention rate could be low, leading to wasted resources on support and onboarding.

Keep Learning

Others Playing It

Gorgias, an AI-powered customer experience platform, has a similar Buyout Program. If you’re currently using another customer support tool, all you need to do is send them a copy of your contract, and they’ll grant you free access to their platform until your existing contract expires.

Clio, a management platform for law firms, takes a slightly different approach. Instead of offering free access until the competitor's contract runs out, Clio provides significant discounts once users make a purchase. For example, if you have six months left on a contract with another tool and decide to switch to Clio, they’ll apply a discount to your new subscription. This strategy minimizes the risk of “free riders” who might use the tool without ever converting to paying customers.

Refer Failory, Get Rewards

Share Failory

Chances are you have some more friends who would enjoy Failory as much as you do. Share Failory with these friends and cash in on premium resources and swag.

You currently have 0 referrals, only 1 away from receiving my Pitch Deck Airtable.

_{Or copy and paste this link to others: https://newsletter.failory.com/subscribe?ref=PLACEHOLDER}

Help Me Improve Failory

That’s all for this edition.

Cheers,

Nico