Customers and the deals you lose
A fact of sales is that some deals are won and some are lost. What you do with deals that are won is well documented, but deals that are lost should not be forgotten. Ask yourself: do you believe your product or solution has unique strengths versus competitors? Do you believe that it can offer better value than competitors? And do you believe you understand your prospects business, industry, challenges and objectives well enough? If ‘no’ then you probably have a good idea of why you lost. That kind of information can be fed back to support product messaging, product development, pricing or personal development for sellers. If ‘yes’ to all of those points, however, any deal you lost should feel like a mistake by the customer. Don’t delude yourself, but you don’t have to agree with them either. Why would a prospect chose a solution that doesn’t have your strengths, doesn’t deliver as much value and doesn’t meet the biggest needs of their business?
While working for agency I went through this experience with a global HR company. We pitched for a project and lost. It was a creative pitch: they felt our competitor’s creative was more compelling than ours and allocated more of the budget to developing the assets, which they liked. Creative can be subjective, which is fine, but we had worked through significantly more detail in our plans and had made our scope of work align tightly and effectively to maximise the client’s return. We shared this information with them very transparently in the pitch process and they were surprised at the cost of some of their asks. We had worked with them previously and had proven out our ability to execute so were confident in our costs. Nonetheless, they felt the other creative approach was stronger and went with an alternative.
It did not take many weeks for both the HR company and the winning agency to realise that they’d missed the mark on the estimation. Fundamentals like localisation, content development and execution media had been underestimated or missed entirely. It would have been easy for us to walk away from a lost deal but by staying close to the client we were able to consult with them on how to get the project back on track. Within a short period of time, they’d asked us to lead the project management on behalf of both agencies and develop the elements the other agency hadn’t considered. They reallocated funds from the other agency and reduced other internal projects to cover it, and over the next nine months we billed nearly two thirds what we would have expected to even if we’d won the project. Yes, it wasn’t as much as if we’d won so clearly room for improvement. But after the nine months they chose not to continue working with the other agency and returned to working fully with us.
There are two types of loss: deals that are lost to a competitor and deals that are lost because the customer decides not to go ahead with anything. When you’re trying to sell you’re trying to create inception for three things:
I need to do something. I need to change some part of my operations or organisation that isn’t right.
I need to do it with company X. They’re the only people that can solve this problem I have.
I need to do it now. There’s no time to wait. I have to act or I will miss the opportunity.
A look at your deal data can help you understand if one of these three isn’t landing with your audience. A significant volume of deals that are lost to no-decision implies that you haven’t created a sense of urgency. The deal may be perceived as a lower business priority (#1) or easily deferred to a later date (#3). Or it may be because your pipeline has become a little polluted with low-probability opportunities. Start by evaluating whether no-decision reasons exist across all stages of pipeline maturity or whether they’re focused more on early-stage pipeline drop-out. By contrast, a large volume of deals that are lost to competitors implies that you haven’t explained the unique value that your organisation is able to deliver (#2). The buyer sees the value in the solution, but cannot differentiate why you are the best provider to deliver it. You may be perceived as higher risk or are more expensive.
These insights should be used to inform both your selling and marketing strategy. Recall from earlier that Thought Leadership is relevant, compelling, unique understanding. Thought leadership should be the thread that runs through organisation from marketing campaigns to sales engagement to value calculations to pricing and pitch documents. Deals are won by creating the idea ‘the only organisation that can deliver the value I need is company X’. The definition of value is subjective – it plays to capability, brand association, ethics, ESG principles (environment, sustainability and governance), commercial benefit and risk. Framing the shape of that value in the mind of the buyer is an integral part of the sales play for any deal. Therefore, assuming you’ve explained your uniquely differentiated value through the sales process you should be able to understand the value a customer is not getting by going with a competitor.
When you lose a deal to a competitor you know the likely date the contract was signed, the period for which it runs and when it will expire; you understand the scope of the contract in pretty significant detail and the value drivers that went into the decision process; and you probably have a pretty decent idea of how much it was worth. This information is invaluable and insight that many Sales people would see as a gift in any competitive situation. Don’t discard it just because there’s suddenly no immediate business case for creating business. Continuing to talk value after a sale has fallen through may help your prospect understand what they’ve missed with their decision. Your thought leadership position is still valid and your credibility is not diminished by a failed bid. Customers may look at a new projects with you because they can still see potential within the value calculations you share. It also makes you appear less like you’re only interested in working together because money is involved. People like people, teams and organisations that operate with principles and purpose. Alternatively if customers are not willing to engage in continued conversation you will still know when the customer’s renewal is due and similarly will likely understand where they have not seen value from their chosen vendor. Plan how you will reengage as you approach the renewal date to gain an understanding of how the work with your competitor has gone. Has it delivered the promised returns, and what unexpected hurdles were encountered? This information can then influence your re-bid, where you can hone your inception devices to increase your chances of winning.
Of course, if you don’t understand how your solution is uniquely better than the competition this may alone tell you why you are losing deals. The best remedy is to either change your solution positioning, find a new audience to sell to or change your pricing: if your product isn’t unique it better be cheaper.