Ask most sales reps the reason they lost their last sale and they will most likely say; “price, the competition undercut me to win the business”. Price is easy to blame and sometimes it really is the culprit, but, more often than not, it is not the problem. In fact, our research has shown that salespeople blame price far more frequently for a buying decision than buyers do. So, if price isn’t the problem, what is?
While working with the sales team of a large manufacturing company, we discovered that salespeople were constantly complaining to management about losing deals on price. Management thought the current pricing model was correct, but to be sure they asked us to lead a post-mortem analysis. So, we gathered the names of nine top sales reps in the company that recently said they lost a major opportunity due to price.
In our interviews with these reps, the first question we asked was; “Other than price, what were the other top three decision criteria your customer used to compare you against the competition?” Now, we knew that most of the reps would not be able to answer the question, because if they did, “price” would not have been the reason they lost their sale. Given the tenure and success of these reps, they avoided saying; “I don’t know.”, especially since their manager was on the call as well. Instead, they provided us with their best guess as to what the other decision criteria the customer was using to compare their solution to the competition. However, when we asked three follow up questions, they had to admit to themselves, that they honestly didn’t know the other criteria. The three additional questions we asked were;
- Considering the decision criteria you just provided, how did your customer rank that criteria from most essential to least essential? (of course, “Price” was at the top of the list)
- When considering the criteria your customer was using in their decision, how did your customer perceive your company’s ability to meet the criteria as compared to the competition? In other words, when you said, “reliability” was important criteria, did your customer believe your product was more reliable or less reliable than the competition?”
- When considering the multiple influencers involved in the decision, how did the decision criteria of the top three influencer differ?
All we needed was 15 minutes with the Customer
In addition to interviewing the sales reps, we also wanted to get the perspective from their customer. So, we were provided access to initially speak with the sales rep’s strongest advocate in their account, and in most cases not only did their advocate provide us answers to our questions, they also provided us access to two other individuals involved in the decision process.
The customer interviews were less than 15 minutes, that’s all we needed to determine if the customer based their final decision on “price”. We asked the customer similar questions we asked the sales reps, starting with; “Other than “price”, what other critical decision criteria did you use to compare Company A to Company B? Although the definitions used by the prospects to describe their decision criteria weren’t always the same, the most common criteria mentioned was post-sale support, supplier innovation, reliability, ease of use, safety and price. We then asked the customers to rank their top two criteria. Surprisingly, price was only in the top two for 15% of those customer’s we interviewed. Instead, most customers cared more about reliability and ease of use. One customer was even quoted as saying, “If the product isn’t easy to use, then our staff wouldn’t use it and productivity wouldn’t improve.”
When we took this feedback to the sales rep and their manager, they were surprised. Even more, they were disappointed. They had industry reports proving that their product was the most reliable product on the market. They had references that could speak to the ease of use. Unfortunately, this is a common scenario. Many sales reps don’t know the decision criteria or know which criterion is most important to the customer.
Try answering this question; “If you’ve lost a major opportunity recently, why did you lose?” If your answer is PRICE, then we’d like you to dig deeper to see if there is more to that answer.
Answer the following questions about a recent lost opportunity:
Considering the key influencers involved in the decision, whose criteria mattered most?
- What were those customer’s decision criteria?
- How does the decision criteria differ from the top three key influencers?
- How did these customer’s stack rank their criteria?
- What were those key influencers perception of your ability to meet their criteria as opposed to your competitor?
The questions above help explore one critical element to consider when managing a customer’s decision-making process, and if answered and analyzed correctly, a better plan of action can evolve.
We have identified some additional content on the various facets of a customer’s journey and have highlighted how can sales folks influence this process. Click on the link to read these.