Inside Sales Telesales Tips Blog

5 ways to lose a deal: are you sure you really want to write that proposal?

  

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Toward the end of each year, I like to review my closed business, deals lost, and proposals that didn’t fly. We’ve had another terrific year for our inside sales training courses, so the business we didn’t get is always interesting to review. And probably the most interesting element is looking at the business that we chose not to compete in. This post might have value for you, as you look at and analyze the deals you didn’t win. It’s always valuable to diagnose why you lost, why you sometimes chose not to compete, and where you had already lost, but didn’t know it. This last area falls under the categories of proposals that maybe shouldn’t have been written in the first place, an area I’ve covered in a previous post about avoiding the dangers of being “shopped” by prospects that are merely using your pricing information to get a better deal from the vendor they’ve already chosen. If you haven’t read that post, you should. 

So let’s diagnose some “losses.” I break down lost deals into the following categories: 

1) Chose not to compete, because the prospect had already chosen a competitor, and was requesting a proposal from us as a tool to negotiate price with our competitor. 
2) Lost to a competitor. We chose to compete, but didn’t get the business. 
3) Lost because of price. There was no way we could provide an exceptional solution for the price the prospect wanted to pay. 
4) Chose not to compete, because we didn’t agree that the prospect’s requirements and stipulations wouldn’t make our solution successful. 
5) Chose not to compete, because there was an ethics issue that we felt was insurmountable. 

I’m going to discuss these five types of losses, as they apply to my business. I’ll bet you all of them apply to yours. 

1) Chose not to compete, because the prospect had already chosen a competitor, and was requesting a proposal from us as a tool to negotiate price with our competitor. In this situation, it was presented to us that we’d be competing with a current vendor. I asked why the e prospect was considering making a change, but he or she couldn’t give any concrete answers. I asked what the prospect liked about the current vendor and got a positive response. I then asked how the current vendor could improve, and there was no response. Then I asked what I could put in the proposal that would give us the business. The response was “I don’t know, but we’ll compare both proposals, and reach a decision.” Because we have to craft a training schedule as part of a proposal, it takes 1-2 hours to create one, so we really like to know we have a shot at it. In this case, we didn’t. I asked the prospect to please give me a reason why he would consider changing from his current vendor, and again, couldn’t get an answer. And this was from a Director. So we declined to compete. I told the director “Looks like you’ve got a solution that’s working for you. If that changes, we’d love to submit a proposal.”

This doesn’t mean the current vendor was better than we were, only that the level of dissatisfaction hadn’t reached the point of necessitating a change. In this case, the prospect was clearly looking for some competitive price analysis so he or she could convince the current provider to lower the price. 

2) Lost to a competitor. It happens, and sometimes it doesn’t matter how good you are or how well you sell. Maybe a competitor got there first, or maybe there was a pre-existing relationship that was very strong, which could be everything from a business relationship to a personal one. 

3) Lost because of price. We try to be flexible, be we can’t give it away. Our solutions are all customized to the client, and that’s one of our strengths. If a prospect insists on a “cookie-cutter” approach, we’ll do our best to discuss it, but sometimes we just have to walk away. 

4) Chose not to compete, because we didn’t agree that the prospect’s requirements and stipulations would make our solution successful. This happened earlier this year. Upper management had mandated a training formula that we knew wasn’t going to make their reps immediately successful. Middle management (our prospects) felt they had no leverage to change the mindset, and were reluctant to discuss this with upper management, or get us involved with them. Yes, we could have gone over their heads, but we knew we were competing with others that would immediately take the business in its present form. This was about protecting our reputation. We’ve got great testimonials, because our program really works. Ultimately, we felt we’d be short-changing both the sales reps and the prospect company, so we opted out. 

5) Chose not to compete, because there was an ethics issue that we felt was insurmountable. In one memorable situation, we were asked by middle management to train sales reps on a certain element that upper management had specifically asked them not to address. The prospect asked us not to disclose this fact to upper management. Upper management interviewed us, and asked us specifically not to do it. We were stuck in the middle of a “no-win” situation that we felt required ethical compromises we couldn’t make. This was a huge company that all of you have heard of, too. We suggested the company keep looking for a solution, and opted out. This was a tough one, because middle management was angry at us for walking away, and no one won in this situation. It's not always cheap to do this, either, as one time we walked away from a six-figure transaction. On the subject of ethics, you have to make your own decisions, and this one allowed us to sleep better at night. 

To paraphrase an old baseball adage, some of your best deals are the ones you don’t make. It’s important that every transaction create a win-win that works for your company, as well as the prospect company. For younger reps, that’s how you build a reputation for honesty that will last your career. I believe in making so many calls that you can avoid transactions that give you the heebie-jeebies. You’ll still make money, because you’ve prospected, qualified, and closed well and often. Diagnosing lost sales is a great technique that you should add to your Best Practices Playbook, and there’s no better time to do it than right now.