B2B Buyers–Please Tell the Losers Why They Lost

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by: John Caddell

I’ve worked on a lot of sales proposals over the years. It works this way: a company needing to buy supplies, services or products invites a number of companies to bid on the business. Frequently, they’ll develop Requests for Proposal laying out all their needs, criteria, etc. Companies submit their proposals, and over several iterations, the buyer selects.

It’s, as succinctly described by Harvard’s John Quelch, a winner-takes-all contest.

Problem is, there are many losers in that contest. Depending on the industry, perhaps only one out of ten proposals results in a sale. It’s a terribly opaque process for the bidders (which opacity benefits the buyer). Not surprisingly, sellers view "the RFP process" as undesirable and frequently unfair.

There are countless systems for increasing your company’s odds of winning proposals. Identifying the power base, deploying flanking strategies, etc. Dave Stein at ES Research can help you sort through who offers these services, if that’s your aim.

I’m interested in something else. How to extract value out of a losing proposal. And it’ll take some behavior changes on the buyer’s side. Ready?

I’ve been working more on the consumer-marketing side recently, and I am amazed by the following: companies really want to know how customers use products and why they buy the way they do, and customers, by and large, are willing to tell them.

On the B2B side, it couldn’t be more different. Losing bidders are frequently afraid to ask or eager to look forward to new opportunities. Buyers don’t want to dwell on the process after it’s done, nor do they want to spend time with a bunch of bidders asking questions or, worse, trying to rescue a losing sale.

It’s got to change, and here are two reasons why: (1) a failed proposal effort is expensive for the seller, and (2) lousy proposals are costly for buyers. The process needs to be mined for all the value possible. Insight is the most valuable mineral in a failed proposal effort. Why did I lose? What did I do wrong? What did I misinterpret? How do you view our product/service against our competitors? What was most important to you? What was less so?

The answers to these questions are the B2B equivalent of consumer market research. It’s not enough to ask those who selected you why they did (though that’s rarely done, either). It’s even worse to make assumptions, but that’s what I’ve experienced, or committed, most. "The product was insufficient." "They didn’t like our terms." etc. are only meaningful if they reflect the true thoughts of the client.

So: buyers need to have after-sales reviews with each losing bidder, explaining (without violating confidentiality provisions) why they chose the way they did, and what the bidder could do differently to improve its chances next time.

Losing sellers need to listen with open ears, seek clarification and elaboration, not challenge the decision nor try to reopen the process. (It might be less threatening if disinterested parties attended these sessions, not the lead salesperson.)

Putting this simple protocol in place will help buyers make better decisions, and sellers create better products, services, and proposals.

Please weigh in with your thoughts. Email me (john at caddellinsightgroup dot com) or twitter me (@jmcaddell) if you’d like to discuss this idea more.

Original Post: http://shoptalkmarketing.blogspot.com/2008/10/b2b-buyers-please-tell-losers-why-they.html