Ever lost an important deal that you were sure was going to close? Conversely, have you ever been surprised when you emerged as the winner?
Recently, I had a chance to interview Stu Perlmeter, an expert in Win-Loss Analysis. His team at 1st Resource helps clients avoid innumerable deal-killing blind spots. They also look at what's working—critical data for success in today's ever-evolving sales environment.
If you want to close more sales, you'll find some great insights in our conversation below.
JILL: Thanks for taking the time to talk today, Stu. Let’s start out with an easy question. What exactly is a Win-Loss Analysis?
Stu Perlmeter: When a sale is lost, the first question is always “Why? Why did we lose this deal we worked so hard to get and had fully expected to win?"
That’s usually the starting point for the selling organization—the burning need to know more than they do.
A Win-Loss Analysis allows truth to enter the picture—the truth that usually isn’t easy to hear, but is the springboard for other, truly meaningful things to happen.
JILL: Sounds like a lot of trouble to go through—especially when the company or rep may already have some insights. Why do it?
Stu Perlmeter: Typically, if your company is short-listed on a deal, you’ve spent a lot of time pursuing it, and the company has devoted many other resources to drive to the finish line. Company leadership wants to make sure it wins its share of those significant deals. So do reps.
Improving the sales win rate is the lifeblood of the company, and of course, the driver of the sales rep’s compensation.
If it’s a Win, there’s a pattern of success you want to learn from and clone to use on future opportunities. Plus, you’ll also gain insights into improving deal size and profit margins.
If it’s a Loss, you have a living laboratory for what you need to be working on to increase your competitiveness.
JILL: So let’s talk about unsuccessful deals? What are the biggest mistakes commonly made?
Stu Perlmeter: Usually, it’s a combination of factors. Often the sales rep is late for the game. He or she found out about the RFP after it was already “on the street,” or simply in his or her inbox.
Another big issue is failure to contact key decision makers and influencers. Commonly, the opportunity arose from an area of the organization that the rep isn’t usually in touch with, but they learned about it from their “day-to-day” contacts. In lost deals, the rep is not making the effort to contact, qualify and influence the other key buying influencers.
Finally, we see a lot of moving target issues. By that, I mean a failure to recognize the buying organization’s changed perspective of problem/solution during the course of the decision cycle—something that’s usually been influenced by competitors.
In this failed, static view of the opportunity, an initial discovery reveals a “snapshot” of the organization’s solution definition that the seller then crystallizes into a proposal and selling strategy.
This static view is then subverted by a competitor who succeeds in “redefining” the problem and ideal solution. This “new” solution definition then becomes a de-facto “sole sourced” solution, wrapped inside an RFP process that becomes irrelevant in the final decision process.
JILL: Now let’s look at Wins. What contributes to a high win ratio?
Stu Perlmeter: First off, successful selling organizations master proactivity. Reps are highly engaged with the key accounts in their territory and leading the procurement process, not following it. Related to that, marketing has great content pieces that can shape the solution thinking of the buying organization early in the process.
Another key Win factor is that salespeople have multiple touch points. They’re already in touch with many key influencers. They gently assert the right to contact buying influences that are part of the deal on the table. In addition, they often “deputize” their key relationship to facilitate these peripheral conversations.
Leading with innovation has a big impact too. The way to win the parity game—where competitors are pretty equal—is to think deeply about the client’s situation and adapt the solution to be more ideal, and to mitigate risk. Today it’s not enough to be responsive to changes in your buyers’ thinking.
Additionally, in Win scenarios, bringing the right team makes a big difference too. Both in the “demo” phase and for the finalist presentation, the most commonly heard customer comment is that the winning team brought the right people to each and “wowed” the decision team.
This is not about bringing the “suits”’—the senior execs who show up at the last minute, unprepared and just do a lot of chest beating about how great they are. In successful finalist meetings, the rep driving the deal becomes the quarterback, calling the play for the entire finalist team.
JILL: Let’s talk about price. What role does it play in the success formula?
Stu Perlmeter: It’s well known that price is the most commonly cited reason for losing a deal. Win-Loss Analysis reveals that price was the true driver in less than 25% of instances.
More frequently, the winning provider was higher priced than the low bid by a significant margin.
One of the benefits of Win-Loss Analysis from a company leadership perspective, is that it provides more data and supports an effort to optimize pricing, so that profit is not “left on the table” for deals that are won.
Since many customer relationships are based upon recurring contracts, it’s hard to adjust back to “normal” pricing, once a “drop your shorts” low bid was given to win the initial contract. Needless to say, there are longer-term implications of pricing too low to win the business.
JILL: Does a Win-Loss Analysis only look at sales process?
Stu Perlmeter: We look across the sales and marketing spectrum. For one thing, many of the factors that customers consider are in fact owned by marketing. From a brand and positioning point-of-view, creating compelling and relevant content and solution materials is paramount. Since most companies are relying on marketing qualified leads (MQLs) to feed the sales funnel, that whole sphere of activity is critical as well.
It's not a new story that misalignment between Sales and Marketing creates a drag on sales success. A Win-Loss Analysis provides an independent, third party view, fueled by verbatim comments by customers. The goal here is not to blame anyone, but to show where opportunity lies.
JILL: How is a Win-Loss Analysis different from other market research?
Stu Perlmeter: First, unlike other market research, Win-Loss Analysis MUST be done by a third party. Even though a failed prospect or lost customer may speak to a company representative, it’s universally accepted that deep and actionable insights will not result.
Second, the deals that get put under the microscope are handpicked ones; they matter most to the selling organization. This is totally inverse to the random sampling and extrapolation of market research. In a Win-Loss Analysis, you get rich and compelling stories that need to be told, analyzed and galvanized into corrective action in order to improve future results.
Jill: Thanks a million, Stu. We truly appreciate your sharing your insights with us.