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Listening for Bad News: When to Stop Investing in Prospects

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Listening for Bad News: When to Stop Investing in Prospects

Written by: Don Linder

Bob Ramsay, the President and majority owner of a medium sized consulting company, has just finished an awful week.

On Monday, Mary, one of Bob’s business development managers, told Bob that her biggest potential project was being delayed for at least six months by her client. The client’s reason? “We’re going ahead with another project that has a higher return on investment. We’ll call you again in six months.”

On Friday, Lance, another business development manager, delivered even worse news. After Lance and his team had invested six months of intensive effort, their biggest prospective client had decided to proceed with a competitor. Why this decision? “Not only was your price too high, you didn’t understand all of our needs.”

Bob is stunned by the wave of bad news.

Based on the confidence of his business development managers in forecasting these two projects, he had already purchased some of the material needed to deliver the project. He’d also added another technical support person to ensure the new clients would be delighted with his company’s service.

Bob realizes that his company can’t survive more disasters like this and resolves to find a way to prevent these terrible surprises.

The Risk Of Optimism
 

Most business developers and their managers are optimists. They have to be. They need positive energy to deal with all the no’s they hear. The downside? They can be overconfident about their company’s chances of winning major contracts.

Companies need to contrast this positive viewpoint against the (sometimes harsh) reality of their exact status with the prospect. A reality check will determine if there is any bad news (or good news) and allow for a change in strategy.

If there is a discrepancy between reality and the optimistic view and you don’t realize it, you may select inappropriate sales strategies and tactics, which usually lead to catastrophic results.

Bill Gates has been quoted as saying: “Sometimes I think my most important job as CEO is to listen for bad news. You have to be consistently receptive to bad news, and then you have to act on it.”

The Reality Check
 

Understanding what is actually happening in a complex sales environment is a challenging task, but it is possible with a Confronting Reality process. With one, you can monitor and adjust your sales investment and develop the best strategy to win the contract.

This process must examine and define all the stakeholders and their roles, their exact issues, the competitive status for each issue, and the stakeholder emphasis on each issue.

The first step (which many business development teams involved in large complex sales have learned) is identifying the classic three buying influences:

  • User buying influence
  • Technical buying influence
  • Economic buying influence
     

You need to go much further than this basic identification. You need to understand the concerns and criteria of each buying influence in sufficient depth to effectively monitor and influence the decision-making process.

For each of the buying influences, the business development team should know what that person’s top three buying criteria are. In addition, they should identify:

  • The threshold – minimum acceptable standard – for each criterion.
  • Your competitive status for each criterion for that person. (Remember, the prospect’s opinion is the only reality that counts.)
  • What emphasis that person has for each criteria. (For instance, is the threshold level acceptable? Is superior performance on that criterion valuable?)
     

You must have a realistic picture. This includes:

  • Your present position with the prospect relative to your direct competition.
  • Your position relative to other potential investments that the prospect is considering.
     

A realistic picture will help prevent what is an all too common scenario:

After a long and expensive campaign, you’ve submitted your proposal with very attractive pricing. But now your client contacts have stopped returning your calls. Your business development team is unsure about what to do next at this critical point in a very important complex sale.

The Strategy Decision
 

Rigorous examination of your status and strategy often leads to an unusual insight…

“Bad news early is good news.”

Successful executives have the discipline to seek out and deal with bad news head-on while there is time to affect the result. Whether the result of your examination is good news, bad news, or neutral news, you are then equipped to decide what to do next.

You usually have two options:

  1. Stop investing: Sometimes, the best decision is to stop investing in that specific opportunity because you can’t win that contract. Focus that effort into another project that you can win.
  2. Reorganize and continue: If you decide to continue investing in the opportunity, you need to determine the optimum advanced strategy to win the contract. This realignment of strategy is essential in determining the precise actions and timing that you must implement to ensure you win the contract.
     

A Real Life Example
 

During a Confronting Reality review of an important opportunity with one of our clients, we determined that their present strategy would result in losing the contract to another supplier.

As we continued to drill deeper into their knowledge of the prospect organization and the specific issues of each of their major contacts, we realized that the solution favored by the prospect was the most effective short-term solution, but was a very poor long-term solution.

Based on this essential insight, we created a strategy to have the prospect understand the superior business value of a long-term solution. Specific action steps we took included:

  • Investigate with the prospect the potential weakness of the short-term solution.
  • Top executive level conversations with the prospect.
  • Justification for much higher than budgeted initial investment.
     

A great result; the prospect awarded our client a contract at a price 30% higher than their original budget for initial investment.

We had three key learnings:

  1. Business development strategies that aren’t based on reality have a very low chance of succeeding. Remember “Bad news early is good news.” You must be willing to confront reality at a number of stages in the campaign and then adjust your strategy to ensure you win.
  2. To effectively change a client’s buying criteria, you must understand their needs very well. Your strategy will only work if it helps the client as well as you.
  3. Pursuing major contracts is a very expensive undertaking. The investment to come in second is the same as winning the contract, but the reward is much, much worse.
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