“I never lose…I either win or I learn.” - Unknown
I've always been fascinated with how and why business deals are won and lost. As a long time product manager, I've always wanted to know why companies chose or didn't choose my product or service. What I've learned is that knowing makes all the difference.
Too often, the simple answer from sales is it’s either because of price or functionality. “Our competition’s price was cheaper,” they say, or “Our competition’s solution had a feature that we don’t have.” Now to be fair, that is often the reason the salesperson receives from their contact inside the prospect. It’s a quick and easy let down line—the old “it’s not you it’s me.”
What I've learned throughout the years is that unless you have an actual conversation with the person who either made the decision or directed the decision, then the tangible reasons of why your product or service didn't win remains shrouded. I've also learned that this is a great opportunity for product management to put a new set of ears on deals (win or lose) and ascertain what is actually happening in the trenches.
Actually knowing what is driving buying decisions, for or against your product, is critical in performing product management properly. And if 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 will not 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 the picture you will have, which will create a stronger argument to make necessary changes (which is always a key challenge for any product manager).
When talking to the actual decision maker inside the prospect’s doors, I've found the following reasons to be more predominant than price or feature(s):
- They do not believe the product or service can fix their problems and help them achieve their goals.
- They cannot afford or do not have a budget for the product or service.
- They had a prior relationship with the chosen vendor and/or the decision maker inside the company.
Let’s look at each one closer.
- “This doesn’t fix my problem or achieve my goals.” If the prospect doesn't believe your solution can help them, then price doesn't matter. This objection can be overcome with a combination of a proper needs analysis and a proper understanding of what you and your company have to offer. Does your value proposition match the needs of the market you’re in? Perhaps it isn't a question of whether you can help them immensely, but instead whether you’re conveying the message in the right way (or to the right person). If you hear this excuse often, then it may very well be a function/feature issue. When I conduct a Win-Loss analysis and hear this explanation from the prospect, I ask them to explain to me 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 not being able to afford your solution with your price being too high. It often comes across as a pricing issue when it’s not; it’s the same with budget. Often 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 go on this year’s forecast. This also becomes a sales training issue to make sure the sales people are asking the right qualifying questions. If the “we can’t afford” answer comes back too often, then don’t stubbornly reject analyzing your pricing as well. 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 great 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 here is that he isn't afraid to ask about budget upfront, and doing so allows him to gauge interest and place his energy with the greatest odds of winning. In product management, 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.
- “We've already worked 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’s not you) then it’s a tough road. I've always taught my sales people to assume this to be the case and make sure they hit all the sales marks during the process. If you truly have a superior solution, then it is possible to break through the pre-determined barrier and get the win.
With all of these top reasons, changing the price and/or changing the product probably won’t get you the win. However, understanding what really happened will help you with sales training, product positioning, market messaging, and product roadmaps—and help you with future wins.
When done properly with a committed program, you can turn losses into wins…and revenue. Have you turned a loss into a win? What worked for you and your team? Leave a comment and let us know.