By Ginger Cooper,
Director of Business Development,
Verity Insight Partners,
John’s Creek, GA, U.S.A.

http://www.verityinsightpartners.com

You had every reason to win the sale, but you didn't. Your prospect was well qualified, and your product/service clearly outshined the competition. What went wrong could be any number of typical possibilities, but sometimes sales are lost for less obvious reasons. The current economic climate, for instance, has fostered a hyper-competitive sales environment--one in which salespeople and their companies don't always play fair. Take these real-life situations we've encountered:

* A mobile devices vendor began losing sales to a competitor, even though executives knew they had the better product and salespeople were doing their jobs well. Prospects claimed the competitor's product appeared just as durable at a better price. Price wasn't really an issue--salespeople could demonstrate that over the life of the product, their solution actually cost less--but the durability claim made no sense. This vendor had a superior product, and side-by-side tests at the client site should have confirmed this.

What was happening? In the face of falling market share, the competitor had installed extra padding in test versions of its devices. Prospects weren't likely to pry open hardware when testing it, so they thought they were seeing an equal product at a lower price. Armed with this knowledge of their rival's deceptive practices, the vendor's salespeople began advising prospects to insist that all test devices be opened up on-site. The competitor immediately backed out of these sales, and the hardware company started winning deals again.

* A staffing company's business clients renew their contracts annually by following a standard procedure: Clients send out RFPs, and this company rebids for the business. Since the staffing company provides excellent service at a competitive price, it has a history of repeatedly winning these "easy" sales to existing clients.

Last year, however, company executives were shocked when they lost a contract with one of their largest customers, and they lost to a much smaller contender with fewer resources. The salesperson on the account had done her job flawlessly, and the Sales VP couldn't find anything that pointed to a problem. The whole situation "just felt wrong".

The only difference from the prior year was the addition of new Board members within the client company. One of these Board members, in his eagerness to help a friend whose staffing business was struggling, quietly (and illegally) provided his friend with a copy of the proposal submitted by the incumbent staffing company. When this friend subsequently submitted a proposal that--line for line--matched or beat the incumbent's proposal, the Board member argued on his friend's behalf.

Though the real reason behind this lost sale eventually surfaced, this story didn't have a happy ending. The staffing company's attorneys have the option to sue, but this would require a long, expensive legal battle that could drain precious resources. The company's executives decided to shoulder the loss, but they took a huge financial hit as a result.

* A large technology company relies solely on indirect sales channels to sell its products. After launching a new product line, the company's executives anticipated strong returns, so they were surprised when sales growth remained flat. It would be easy to blame a bad economy, but that wasn't the case. A number of this company's "resellers" were in fact selling products for the competition. They signed on as resellers so they could gain competitive intelligence to better position their other offerings. When the technology company learned that these "resellers" had no intention of selling its solutions, it swiftly severed its relationships with them.

Going Beyond the Usual Reasons

The above are just a few examples of dishonest sales practices adopted during tough times. Most businesses operate ethically, but if you're losing sales when you've got every reason to win, you may need to look beyond traditional causes. Hopefully, you'll uncover problems that point to a fixable change on your part, but if not, start thinking outside the box. To start, take these five steps:

1. Define what's happening. Look at every step of your sales process, and watch for patterns or stages where things come to a halt. If you find sales breaking down at the same stage, ask if it's a matter of inadequate sales training or perhaps a sign that you need to revamp aspects of your products or services. Don't be too quick to assume foul play, but if things don't add up, consider what your competitors could be doing that would drastically turn the odds in their favor. Could they be misrepresenting your product or company? Could they be doing something that artificially makes them look better? In one situation, a company's competitor provided false financial data that made the company appear to be faltering. In another case, salespeople blatantly lied about their rival's product. Prospects felt like they were getting the inside story when in fact they were receiving lots of false information. Because the competition's sales reps were so good at building rapport, however, prospects weren't doing their homework and getting to the truth.

2. Go back to the prospect. Ideally, you've asked for the option to follow up earlier in the sales process, but if not, find a way to get the prospect talking. You've already lost the sale, so some prospects may not consider it worth the time to speak candidly with you. Make it worth their time. Be clear that you're not pursuing the sale, and find a way to offer value so the prospect wants to speak with you. Provide information that helps the person do their job better, or offer a gift card. When you reach prospects, don't take up too much of their time, and prepare highly targeted questions so you don't waste one moment.

As numerous studies indicate, prospects and customers are typically far more candid with third parties than they are with vendors. If you feel you're not getting the full story, consider going through a sales loss analysis firm or another outside source. You may pay a bit extra, but the information you glean will likely more than pay for itself.

3. Seek out your internal champions. Contact all internal champions within the prospect company. Often, you'll learn more from them than you will from the decision maker since, after all, they wanted to see you win. Along these lines, do your best upfront to build some type of relationship with various members of the prospect's Board of Directors. This isn't being underhanded. It's being smart.

4. Hire a "secret shopper". If you're concerned about your resellers, try sending a "secret shopper" (ideally, someone within your company) to trade shows. Have this person ask resellers for their opinions on five or six vendors rather than specific questions on your product/service. This can quickly give you an idea of how you're being positioned against others.

5. For proposal issues, understand your options. If you suspect a problem pertaining to a proposal you submitted, your options vary depending on the size and nature of the company issuing the RFP.

According to Kent Webb, attorney at Womble Carlyle Sandridge & Rice in Atlanta, many large companies now have hotlines through which you can file a complaint. To locate this number, call the business directly, check the corporate website, or do an online search that includes the company name along with keywords such as "procurement hotline" or "ombudsman".

If the prospect is a government entity, you may be able to access the other proposals submitted, or at least the winning proposal, thanks to "Sunshine Laws" (there's a federal version of this and many state ones as well). These laws promote open records and guarantee public access to information held by the government entity. In the case of the staffing company mentioned earlier, this is where executives spotted their red flag. They found a small footnote on a single page of their rival's proposal that became sufficient grounds for a lawsuit.

If you've submitted a proposal to a small or mid-size company, your options are more limited. For any proposal you submit, regardless of company size, include a confidentiality provision or request that the company sign a non-disclosure agreement. These are typically included in the original RFP documentation, and they can provide grounds to pursue legal recourse should you choose. In this scenario, you would need to go through an attorney, file a suit, and have the competing proposals released through pre-trial discovery.

A word of warning: Should you suspect foul play and consider filing a protest, be prepared to face repercussions. You may find yourself making accusations against Board members or executives at the prospect company, for instance, and those people may have friends or peers within your client and prospect businesses. Sometimes, painful as it may be, it makes better sense to walk away from these lost sales than it does to pursue fighting them.

Published - May 2010