A couple years ago, I did a loss analysis for a customer-onboarding software vendor. The sales team for this vendor were convinced (all the way up to the global head of sales) that the buyer for their product was the head of the onboarding team – essentially the product users and their direct boss. So that’s who they sell to.
An Excited Prospect with a Compelling ROI
They were working on a deal at a medium-sized investment bank, and it seemed like the deal was going forward. The users, IT department, and head of customer onboarding LOVED the product. They were convinced that they’d be able to reduce the time it took to onboard new clients by 75-80% and reduce the headcount focused on that role by 80%. That department had several open job requirements, that could be filled by the staff currently doing onboarding. Which meant the company would not need to lay anyone off to experience the cost savings.
This would allow them to put the existing people into more revenue-centric roles while giving customers better support. The ROI was very compelling.
My client was convinced this deal would close, and it would make their quarter.
But then it stalled. The prospect went dark and stopped answering the sales person’s calls. And the deal stayed stalled. For months.
The Deal Fell Through
After about seven months of not returning calls, the prospect’s head of onboarding finally told the vendor’s sales person that they were not moving forward. They were sticking with the status quo, even though they knew it was a bad idea.
So the VP of Sales asked me to do a loss analysis and see if I could figure out why the deal didn’t close.
I started out talking to the customer onboarding guy who initiated the interaction. We’ll call him Joe. Joe was very disappointed that they weren’t going to buy the product. He liked the vendor. He liked the sales person. He felt the offer was compelling and the price reasonable. So why didn’t they buy?
Joe referred me to his boss, whom we’ll call Mike, to learn more.
Mike told me the same thing as Joe. He agreed that the ROI was there. He told me he had 6 open job reqs for projects his team needed to do above and beyond the daily work of customer onboarding. He was going to have to HIRE to fill those spots, when he could have moved his onboarding team into those roles, and they would have been thrilled to take on the new (and more challenging) responsibility. In essence, sticking with the status quo wasn’t just keeping costs the same. It was going to increase the firm’s direct costs.
So why didn’t it close?
Mike said he had tried to convince his boss whom we’ll call Scott. Scott seemed to be on board and was planning to present it to the executive committee. But then, it didn’t happen. Mike wasn’t sure why. He referred me to Scott to get more info.
Scott was harder to reach, but when we finally spoke, I realized that he didn’t have nearly as much insight about the product offering as Mike and Joe had. He understood that there was an ROI to using this vendor solution. But his problem was much trickier than just showing an ROI.
It Takes More than Just ROI
Three years back, Scott had convinced the executive committee to invest a few million dollars to build an onboarding system in-house. Then, each ensuing year, he had to ask for budget to maintain the system, to the tune of about a million a year. Now his team wanted to rip that out and replace it with a vendor system.
“I knew that they felt there was a strong ROI, but I never saw the demos and didn’t personally understand what they felt were the big advantages. I would have pushed for it anyway,” Scott said. “But it meant I would have to fall on my sword for making a poor decision three years ago. I didn’t have enough information to back up my recommendation and make a business case that was strong enough to address the questions that would undoubtedly come up. So I didn’t push very hard at the committee meeting, for fear of looking like an idiot. I’ve got a family. I can’t afford to lose my job over this.”
The Deal was Lost to NO DECISION
And so, the committee decided not to make a change. The vendor lost to NO DECISION, after a long, arduous, and expensive sales process.
Could the vendor have changed this outcome?
I think they could have, but they needed to do things differently from the beginning. Let’s unpack this and see what could have been done differently.
Who Was the Buying Committee?
First off, the vendor was dead wrong about who was involved in the decision process. Because of this misunderstanding, they spent the entire sales process selling to managers who had no power to buy. They needed to find out how that company’s buying process works. Had they done this, then they could have negotiated access to Mike, Scott, and even the executive committee. They could have built a business case for each buyer’s unique perspective.
If your deal size is over $200,000, do not buy into the idea that only one or two people in an organization represent the entire buying committee. Your sales team might not get access to the others, but I guarantee that others are influencing the decision.
Arm Your Advocates
Both Scott and Mike told me that they didn’t have a lot of information to help them sell this idea internally, and they didn’t know how to produce it on their own.
When you’re selling to an organization, it’s important to equip your internal advocates with the information they need to act as your proxies internally. Tools that help equip internal advocates include ROI calculators, sample business cases, implementation plans, getting started guides, even materials to help them address objections being brought up by their colleagues and bosses.
Educate all the Buyers
In this case, the members of the executive committee were completely uninformed about the onboarding solution. They didn’t know there were better approaches than what they were currently doing, and they didn’t know to question the status quo.
A Perfect Case for Account Based Marketing
Had it closed, this opportunity would have exceeded $1,000,000 in revenue the first year and $500,000 annually thereafter. A deal of this size justifies an account-based marketing strategy.
The vendor could have targeted Mike, Scott, and the executive team with content that was developed to specifically build awareness of their current needs, without putting Scott’s reputation on the line.
For example, they could have:
- Written use cases that described the prospect’s situation without naming them.
- Acquired the contact information for the committee and sent out case studies or articles that talk about the specific problems the firm was experiencing.
- Helped Joe and Mike prepare a presentation for Scott, that he could customize to help him pitch to the executive committee.
- Arranged events or webinars targeting specific decision-makers this firm.
- Published thought leadership about the specific issue and promoted it to the committee over social media.
- Used thought leadership insights to negotiate access to the decision-makers.
Think about it. Losing to “No Decision” costs your organization time, direct sales costs, lost revenue, and lost morale. Yet research shows that sales teams generally lose about 60% of sales opportunities to No Decision.
Isn’t that worth investing in a strategy to help move a buying committee toward a decision?
Video on Solving the No Decision Problem
If you’re ready to investigate how to reduce your No Decision loss rate, check out this video on the issue. On the same page, you’ll also find lots of information about how to reduce your company’s no decision loss rate.
Loss Analysis Services
We offer loss analysis packages as part of our coaching services to help you uncover the reasons deals fall through so you can reduce your “no decision” rate. Call me if you’d like to discuss this further. You can learn more about our coaching service here.
Latest posts by Candyce Edelen (see all)
- Why Your Business Needs A Content Strategy - February 15, 2017
- Are You Recycling Lost Opportunities? - January 10, 2017
- Roadmap to Strategic and Compliant Email Marketing - January 5, 2017