The Big Reveal

Paul Nolan

Open sourcing and Big Data are two business trends that, for all their popularity, don’t seem appropriate for blending. The former is focused on universal access and free license to a product’s design or blueprint, while the latter is all about gobbling up as much statistical information as possible about a customer base or entire industry and analyzing it for competitive advantages that are to be protected at all costs.

AskForensics, a sales consulting firm that uses a forensic science approach to sales, brought these two worlds together recently when it released its first Annual SalesForensics Report as a downloadable white paper. For years, AskForensics has conducted investigations for Fortune-ranked companies to find out why major sales or accounts are won or lost (hence the name). Up until now, the results were for clients’ eyes only. The data in the new report represents more than $626 million worth of sales transactions that were won or lost in 2013 and 2012.

The biggest takeaway is that sales teams could have turned some losses into wins by proactively injecting more innovative ideas and by providing more value. One of the biggest culprits for losing new sales is an insufficient understanding of a prospect’s requirements.

“The sales approach needs to always meet what the company’s requests are,” says AskForensics Senior Partner Rick Reynolds. “In the accounts that become daunting, we see companies stop being innovative and stop throwing out creative solutions.”

What happened in 2013

In 2012 and 2013, AskForensics evaluated 57 lost sales opportunities for Fortune 500-level corporations, representing $626 million in revenue. Since each sales opportunity averaged $11 million in total contract value, losing these contracts had a significant impact on the selling companies’ sales figures and financial performance.

Prospects’ top requirements in 2012 and 2013 were similar, but there was a noticeable shift from financial performance as the top priority in 2012 to service quality in 2013. (See the Glossary of Terms box for AskForensics’ definitions of these terms.) The requirement to improve financial performance trailed off significantly, from 26 percent in 2012 to only 14 percent in 2013.

Overall in 2013, prospects were most interested in measurably benefitting from providers’ capabilities and expertise. This was reflected in their comments about service quality, program management, account support and financial performance.

Reynolds attributes some of this change to an improved economy and a better overall business climate in 2013. Corporate customers were more willing to invest in 2013 and not focus as heavily on price as they did in 2012.

Primary reasons for losing

Prospects’ perceptions of the bidding company’s service quality, account support and culture played a significant role in why companies did not win deals in 2013. Price, while important, was less of a factor (Chart 1). Reynolds notes that when price was significantly off compared to other bidding companies in both 2013 and 2012, it meant that the bidding company did not fully ascertain the prospect’s needs.

Another key takeaway, the report states, is that in new sales, your reputation likely precedes you. How you are performing in your existing or past accounts may influence your prospect’s decision.

Why the competition wins

Competitors’ ability to effectively sell their company’s account support capabilities worked in their favor in 2013. Providers were able to instill more confidence in their prospects’ minds about how well they would service needs and requirements. This became the primary focus of prospects in 2013, while selling on the financial model, which was effective in 2012, fell off the radar screen in 2013 (Chart 2).

“In new sales, it is most important to thoroughly identify your prospects’ needs, both pronounced and subtle,” says Reynolds. “That is where separation between your company and your competitor occurs and you can get a competitive advantage.”

The top six actions overall that respondents to the AskForensics survey mentioned when asked how sales slipped through their fingers.

SOURCE: askforensics

Glossary of terms

It’s important to clarify how AskForensics defines key terms in order to understand the importance of its findings.

Service Quality
The total quality and consistency of the service provided to the end customer

Financial Performance Degree of meeting the end customer’s financial requirements through competitive pricing, sufficient profits to the end customer, commissions, the overall financial model, or helping them achieve compeititve operating costs.

The net price of the product or service to the customer

The formal document and supporting material that were submitted to the prospect for formal review and analysis

The seller’s and buyer’s interactions and the rapport that is established. This relates to interactions between both companies’ entire organizations, including corporate and prospect facing teams.

Chart 1. Primary reasons for losing

Price, while important, was less of a factor for winning or losing sales in 2013 compared to 2012. Service quality, account support and culture took on more significant roles.

Chart 2. Winning actions by competitive sales teams

Competitors won deals in 2013 by instilling confidence in their capabilities. Selling on the financial model, which was effective in 2012, all but disappeared in 2013.