“I never lose … I either win or I learn.” – Unknown
I’ve always been fascinated by how and why business deals are won and lost. As a long-time product manager, I want to know why companies choose or don’t choose my product or service because knowing this makes all the difference.
Too often, salespeople will say that deals are lost because of price or functionality. “Our competition was cheaper,” or “Our competition’s solution had a feature that we don’t have.” To be fair, that’s often what they hear from their contacts. It’s a quick and easy letdown line—the old “it’s not you it’s me.”
But unless you have a real conversation with someone directly involved in making the decision, the tangible reasons why your product or service didn’t win will remain a mystery. Having this conversation provides a great opportunity for product management to learn what’s actually happening in the trenches, win or lose. Left unknown, product roadmaps, pricing decisions, new release requirements, messaging and marketing campaigns can get off track and ultimately lead to an ineffective product.
So how do you discover the real deciding factors? The key is to collect enough empirical evidence to make effective product management decisions. One or two interviews won’t paint a true picture. It takes 15, 20 or more interviews to identify sustainable trends—it’s truly the more the merrier. The more evidence you have, the clearer picture you will have. This will help you create a stronger argument for making the necessary changes, a key challenge for any product manager.
By talking to the actual decision maker inside the prospect’s doors, I’ve found the following reasons to be more predominant than either price or features:
This doesn’t fix my problem or achieve my goals. If the prospect doesn’t believe your solution can help them, price doesn’t matter. You need to have a proper needs analysis and an understanding of what you and your company have to offer.
Does your value proposition match the needs of your market? Perhaps it isn’t a question of whether you can help them, but whether you’re conveying the message properly or to the correct person. Or, if you frequently hear this excuse, it may be a function/feature issue.
When I hear this explanation from the prospect, I ask them to explain what problem they’re trying to solve and then match it back to what is being offered. This helps define whether it’s a sales training issue, a feature/function issue or a product positioning issue.
This is out of budget. Don’t confuse being unable to afford your solution with your price being too high. It often comes across as a pricing issue when it’s not. Buyers have to get a price to know what to budget. However, if it’s not going into their budget until next fiscal year or beyond, then it should never have gone on this year’s forecast to show up as a loss. Be sure that salespeople ask the right qualifying questions.
I know a homebuilder who prides himself on unique and expensive houses. Occasionally he will build one on speculation with no buyer in place. During his open house, he will greet you at the door and immediately ask, “So tell me, can you afford a home like this?” If you say no, he will graciously invite you to look around the house. If you say yes, he will personally walk you around the house. The point is that he isn’t afraid to ask about budget up front, and doing so allows him to gauge interest and place his energy with the greatest odds of winning.
In technology, many are reluctant to ask the “can you afford/do you have the budget” question early on in the sales process. This is a training issue. On the other hand, if the “we can’t afford” answer comes back too often, don’t stubbornly reject analyzing your pricing.
We’re already working with them. It’s tough when you’re only brought in to complete the prospect’s checklist item of “Did you compare your vendor choice with other companies?” It’s doubtful that the prospect will tell your sales rep that they are only being used as fodder. Honestly, if the vendor of choice has been pre-determined (and it isn’t you) then it’s a tough road. I teach my salespeople to assume this is the case, and make sure they hit all the sales marks during the process. If you truly have a superior solution, it’s possible to break through the pre-determined barrier and get the win.
You can’t change the price or product every time you lose. However, if you understand what really happened, it can help with sales training, product positioning, market messaging and product roadmaps. It will also help you with future wins. When done properly with a committed program, you can turn losses into wins and revenue.