courtesy of Microsoft Clipart

Bidding to Win

What has to be in place?

Formal bidding processes can appear very challenging and are often a source of belief that the incumbent always wins but in fact although complex such bidding process are typically scrupulously fair to all concerned.

So regardless of whether you respond to formal bid requests or create your own opportunities the first thing needed to get you on the radar is a compelling proposition that addresses two common questions a prospect would ask; “why would I buy that“ and “why would I buy it from you”. Even if they don’t ask out loud these questions will be in their minds. As part of the proposition you also need to elucidate the value you deliver and consider the price you would charge.

Next you need to consider how you will identify your ideal market, how you will take your proposition to market and which routes you will use.

The final piece in the jigsaw is the sales engagement process; the stages and steps you need to follow to mirror the buying processes of prospects in your chosen market.

Ensuring these four elements; proposition, market selection, routes to market and engagement process, are contiguous and fully integrated will increase the proportion of well qualified opportunities that you are dealing with.

As a result you will increase your win rate without increasing the bidding effort and gain increased revenue whilst enjoying a better RoI on your sales and marketing investment. What’s not to like?

Compelling proposition

So, what is a compelling proposition, in fact; what is a proposition? Is it your product or service or something extra? It is something extra. The product or service only defines what you make or do, it may also define the problem the customer will solve by using your product or service. For example you could consider installing a low energy lighting system that would give; better quality light, lower energy bills and reduced maintenance costs. This is what the product does for the customer, but is it attainable for them?

Maybe, the customer cannot afford the capital outlay to buy and install the new lights so is unable to enjoy the benefits. At this point the supplier could introduce the idea of the customer acquiring the new lights by way of finance or operating lease; the supplier’s proposition is now to use a financial instrument enabling customers to enjoy the benefits of the low energy lights without the need to spend or raise capital.

If the only objection the potential customer had was affordability, then the supplier’s ability to provide various financial options makes their proposition compelling by removing the only objection to proceeding with the transaction.

Selling tip; before making a final offer, always ensure you understand all of the prospects objections. If you don’t then the prospect will probably say; yes but – yes I like the different financial approach but I don’t like …

Most readers will have heard the term Unique Selling Point or Proposition (USP) and it is often argued that nothing is truly unique or if it is it doesn’t stay that way for long. While this may be true when it comes to product or service features the factors that contribute to the proposition provide fertile ground for the creation of uniqueness. If the finance option offered by the low energy lighting company is underwritten by the manufacturer of the lights it is likely that the finance rate will be very low enabling the supplier to offer lower financial terms than its competitors.

USPs are typically a combination of relatively small elements which taken together make the proposition compelling and this is what enables the supplier to keep the prospect interested whilst also countering competitive threat.

Pricing Policy

Arriving at a price that will be competitive and attractive to potential customers is a key part of proposition definition process but pricing policy is so important I felt it deserved a section on its own. There are three main approaches to arriving at a price; cost plus, competitor/market matching and value based pricing. Of these, value based pricing provides the most likely positive outcome for the supplier as the customer will be able to see ‘what is in it for them’.

Briefly the three approaches work like this:

  • Cost plus; it costs £10 per unit to make your product, £5 per unit to take it to market and cover business expenses and you want to make 25% profit so your selling price needs to be £20.
  • Competitor/market based pricing; you look at what others are charging for similar products or services in your market and you position your price according to where you think you fit between the cheapest and most expensive alternatives, but where it is still viable for you.
  • Value based; your price is determined by charging up to the amount the customer will gain by buying and using your product or service.

Strictly speaking you will gain most benefit from value based but you will need to review the other approaches as a sanity check. Using the cost plus example you know you need to sell at £15 to break even and if you judge your value based price to be less than £15 you will need to review what you are doing to find ways to reduce your costs or increase the value you can deliver.

Similarly, if you arrive at a price that makes you a profit and delivers value to the customer but it is higher than an apparently equivalent competitor price you will likely fail when the customer asks the “why would I buy it from you” question. You need to ensure you are comparing like for like with the competitor’s offering; if your offer includes ‘added value’ items that are not visible to the customer your offer will look expensive. You will also need to ensure the competitors’ current price is genuine rather than a special offer.

Having sense checked your selling price against cost and competition you make the value you can deliver, for the price you will charge, a key part of the presentation of your proposition.

Identifying the market

This activity flows naturally from the process of defining your proposition and why it might be compelling. If, for example, the companies that will really benefit from what you do are in a particular business sector and are above a certain size then simplistically your market is those companies that meet these criteria. Just having two parameters; business sector and size, may produce a very long list of potential customers so you will probably need to add a few more parameters to bring the long list down to a manageable size.

The parameters you use to define and identify your target market should relate directly to your proposition. Returning to the example of the low energy lights, if an important part of your USP is the financing options that you offer then companies who prefer not to use capital are more likely to be interested. While it may not be straightforward to determine a company’s financing preferences from the outside it is something that can be achieved during the first prospecting meeting.

I said it “may not be straightforward to determine a company’s financing preferences from the outside”, not straightforward but not impossible. It is often said that buyers are more empowered than ever by the ready availability of information on the web but so are suppliers. A quick scan of the company accounts of your target prospects will provide clues as to their preference when financing different types of purchase.

Selling tip; having defined the key elements of your USP ensure your sales discovery process explores these elements at the earliest possible opportunity. If those elements are not present for a particular prospect you will have to modify your sales approach or perhaps qualify the opportunity out if you think you stand little chance of winning.

Routes to market

There are now at least 10 routes to market to choose from courtesy of; networking, social media, digital marketing (out/in-bound), all of the traditional marketing mechanisms and direct and indirect sales options. While there are a few business sectors where one dominant option is the obvious one to use, for most businesses the solution will be a blend of several approaches.

The above routes are largely driven by the supplier, but other routes such as; partners, re-sellers, referrals and recommendations may be a better source of leads in some business sectors. In addition, for companies who have large corporate or public sector customers, the route to market will probably involve becoming ‘approved’ under the terms and conditions the customer applies to selecting suppliers.

To get the best RoI for the investment in sales and marketing it is crucial that the mix of marketing and sales options is optimised to match the supplier’s proposition and the needs and demands of their chosen market.

As with any investment, the assumptions that led to your chosen sales and marketing strategy need to be challenged on a regular basis to ensure what you are doing is still providing the results you need while delivering a good RoI.

Marketing tip; don’t assume that everything that is new will be good and everything old will be bad.

The sales engagement process

Whatever approach is used to generate interest and bring about that first contact with potential customers the crucial part of the process starts when someone from the supplier speaks with someone from the potential customer. This is the beginning of the sales engagement process that will build towards the creation of a customer and the identification of opportunities to bid for work with that customer.

For the sales person to enjoy maximum success, converting as many opportunities as possible, the following needs to be in place:

  • An opportunity identification or, better still, creation process using question based analysis to establish the prospect’s; position, wants, needs and budget. This analysis will provide guidance on the best way to proceed and may lead to an early decision to no bid the opportunity avoiding wasted time and effort.
  • An understanding of the decision making process and everyone who will be involved in making the decision. The sales person should ensure they engage with each decision maker understand what matters to each of them. Now, the rest of the bidding activity can be structured and tuned to satisfy the needs and interests of all those who will be involved in the final decision.
  • A bidding process that marshals all of the internal resources that will be required to produce a solution that satisfies the customer’s selection and decision making criteria. For some companies this may be done through a dedicated bidding, proposal writing or pre-sales function but in many cases managing the bid falls to the sales person for the account. However this is handled in your company it is very important that ‘bidding’ for new work is recognised by all as a critical success factor for the whole business and people need to give this activity proper focus and attention. It is not ‘another bit of admin!
  • Presenting the solution to the customer can be done in a variety of ways with proposals still being a common approach. Most proposals are written documents but they don’t have to be and we often use workshops as a mechanism to present our proposed solution to the customer. The customer is empowered to shape the final solution by engaging in discussion and questioning with the end result being a solution that the customer has helped to create.Even if the customer insists on a written proposal you should always endeavour to ‘present’ the proposal rather than just putting it in the post or attaching it to an e-mail. The purpose is to enable you to highlight the key beneficial points of your proposed solution.
  • You also need to have in place anything else that is relevant to the business sector you serve and the solutions you provide. Hence, where appropriate, you will need to provide; trials, pilots, demonstrations, site visits, satisfied customer references, etc.One word of caution; just because you and others in your business sector have always provided, for example, trials don’t assume it is still a useful engagement technique. I suggest you regularly review and challenge the processes and practices you employ in all areas of your go-to-market approach as customer needs change and the optimum way to win more business is to ensure your approach makes it easy for the customer buy not just easy for you to sell.

A final thought; two very important factors in effective sales engagement are sequence and timing. The order in which you undertake the various activities, the timing between individual steps and the overall timing of the bidding cycle will have an impact on your success rate. For example; presenting your proposed solution should be done as close as possible to the point when the customer has said they will be ready to make a decision. If the typical cycle in your business sector is six months involving four or five meetings with the customer then you should not be presenting a proposal after the first meeting.

courtesy of Microsoft Clipart

Incumbent always wins

– or do they?

This is a commonly held belief, especially in B2B sales, and in some cases there may be justification.  However, if you view each new potential opportunity from the perspective that the incumbent is going to win you will behave like a loser in waiting and, guess what; you will probably lose.  Optimists and pessimists tend to have one thing in common; they are both right most of the time – anticipating failure increases the odds that this will be the outcome.

Far from incumbents getting an easy ride, from my own observations, I think customers may actually be more flighty today but, in many cases, suppliers often fail to recognise the signs.  Both incumbent suppliers and hopeful new suppliers may be behaving in such a way that increases their chances of losing as a result of subtle signals they send to the customer.

If suppliers assume, while prospecting for new customers or bidding for new work, that the customer will favour the incumbent it conditions behaviour towards a loser’s frame of mind which in turn increases the chances of actually losing.  There is nothing more likely to lead to a lost sale than a lack of self-belief from the supplier’s sales people.  This is compounded if management fail to put their full weight behind bidding for an opportunity resulting in the effort put into the proposal lacking commitment; the prospect will spot this very easily.  If the opportunity met the qualification criteria management should back it and if it didn’t qualify out. This is a binary decision; either pull it or support it fully!

On the other hand an incumbent that takes the customer for granted is simply moving themselves closer to the exit door.  A common engagement model involves customers being moved from the new business team to the account management team once the relationship has been established and the first piece of business has been secured.  While it is good to move to managing an account with a ‘customer service’ mentality what is not good is to move from a hunter to a farmer or, worse still, a browser/gatherer mentality.  An important fact never to lose sight of is that the incumbent’s farmer will be competing with the hopeful new supplier’s hunter which may not be a fair fight.

The key questions that I address here are; why might a customer consider changing suppliers, why might a customer be reluctant to change suppliers, what can incumbents do to keep their customers and what can hopeful new suppliers do to win the customer over?  This assumes the customer still wants to buy that type of product or use that type of service so having a supplier is of strategic or tactical importance to the business.

Why might a customer consider changing supplier?

There will be a variety of reasons but they basically boil down to the customer becoming less satisfied by what the existing supplier is doing.  This can be an expression of an absolute position or it may be a relative position compared to what competitors may now be offering.  It is also the case that public bodies are driven by procedure to put work out to tender at certain time intervals and some large corporates have similar habits.

For the incumbent it is very important that the relationship management approach never slips into a casual, maintenance frame of mind.  Existing customer relationships must be managed proactively including regular formal account reviews that look at the performance of the relationship as well as the products and services being supplied.

It is the responsibility of the supplier to explore and probe to look for areas where the customer’s expectations might have changed and therefore where there are opportunities to do things differently.  Failure to do this, enabling small changes to be made along the way, will often result in the customer suddenly declaring that they are no longer satisfied; the feeling that may have been growing over time could by now be entrenched.  This is bad for the supplier as the customer will have built up the impression that the supplier did not care enough to find out how the customer was feeling.

Cases where customers like the product but no longer like the supplier are a common trigger for change.  If a disaffected customer decides to look for a new supplier the incumbent will have to work hard to keep the customer as overcoming a loss of faith or trust is a tough ask.

Why might customers be reluctant to change suppliers?

There are many reasons but they tend to fall into two main groupings:

  • Fear of change based on the disruption it might cause and the risk that things might be worse. A common and perfectly reasonable concern to have and the same feelings probably existed when the customer entered into the relationship with the incumbent. As in all sales situations a key activity for the supplier (incumbent and potential new) is to recognise the fear, uncertainty and doubt that naturally exists as a part of decision making and work to address it as a part of convincing the customer that they can be trusted.
  • Loyalty; if the customer feels the supplier has done a lot of good work in the past they may feel the incumbent deserves another chance to fix the things that are no longer working. From a customer perspective this is a sensible approach as they have also invested time and effort in the relationship so it makes sense that the first action is to try to repair rather than replace the relationship.

What can incumbents do to keep customers?

There is an interesting engagement philosophy that might be worth considering called ‘partnership sourcing’.  During the early 1990s a company called Partnership Sourcing Ltd (PSL) was set up by the joint action of the DTI, CBI and a number of large corporates which if I recall correctly included BA.  The basic principle was to foster an environment that would lead to the creation of mutually beneficial trading relationships between customer and supplier.  This was a reaction to the ‘master-slave’ approach that was common at the time and especially where the supplier was a minnow compared to the customer whale.

An excellent example of a PSL type approach can be found in Just-in-Time relationships where although the customer and the supplier are separate businesses they function as one unit with a common aim.  A key PSL principle is ‘no blame’; if something goes wrong the customer and supplier sit down on the same side of the table to address the problem.  Terms such as “the customer is always right” and “it’s my way or the highway” do not exist in PSL thinking.

PSL led to the creation of BS 11000 Collaborative Business Relationships, continuing the principles of customer and supplier working together to a mutually beneficial outcome; just as important now as they were 25 years ago.  Customers and suppliers should regularly sit down together in a no blame environment to discuss the relationship openly, sharing issues and concerns.

In trust-based relationships the supplier should be invited to attend part of the customer’s periodic business review to be informed what the customer needs to achieve in the next period enabling the supplier to plan whatever changes are required to continue to meet service levels.

If the supplier can convince the customer to include their budget when putting projects out to tender, effectively saying “we need this and our business case says we can spend £x; can you deliver what we need for the budget and if not how much can you deliver?”, this avoids the supplier guessing what the budget might be, thus offering solutions to match a perceived budget rather than a business specification.

Suppliers should manage customer relationship pro-actively through positive account management.  If the only time the supplier contacts the customer is to; renew a contract, sell them something new or ask a favour such as acting as a reference, the customer may justifiably begin to feel taken for granted.  Similarly, if the only time a customer contacts the supplier is to chase an order or complain about something the feeling will progressively turn negative.

It is very important that the supplier’s account manager has the responsibility to manage the relationship above and beyond the basic task of supplying products and services.  Account review meetings should be held between the parties at regular intervals and whilst part of the agenda will focus on product or service performance the bulk should focus on the performance of the relationship. Mutual discussion of future plans permits development of joint plans thus enabling both parties to prepare.  In the spirit of partnership sourcing conversations should be frank and fair.

The account manager should also be equipped to share war stories about other customers and projects; this is commonly done by new business sales people but all too often as soon as the customer becomes established no one from the supplier bothers to update them.  I have seen many situations where a customer buys from a competitor because they didn’t know the existing supplier made such a product or provided such a service.

What can a hopeful new supplier do to replace an incumbent?

Perhaps the first thing to say is that this is a very common scenario.  Established business will have relationships with various suppliers for a wide range of things; accounting services, office cleaning, photocopiers, IT, vending machines, building security and the list goes on.  So, in a majority of cases hopeful new suppliers will be working to replace an incumbent.  The two main scenarios where this might not be the case are; with start-up or young companies and where the product or service is genuinely new.  Recent examples of new might be cloud computing five years ago and more recently big data.

So, the starting point for thinking about this is to recognise that most new business effectively involves the hopeful supplier taking business away from an incumbent.  It is also worth recognising that some or all of the following factors will be present:

  • The customer may genuinely be happy with the relationship, products and services they get from the incumbent
  • The customer may think they’re happy but they do not know what better alternatives exist
  • The customer may say they are happy as a defence mechanism against being sold to – a classic rebuttal to fend off a sales call
  • The customer may not realise they have or will have a particular issue or that it is creating a problem or they may know they have a problem but not that a solution exists

It is important for potential new suppliers to have a sales engagement process that approaches all potential prospects with an open mind.  Don’t assume anything about the current position; use a process of structured questions to explore the current situation, problems they may wish to address, problems they may not have thought of, their desire to solve the problems and willingness to pay for a solution.  This process of discovery will of course include exploration of existing suppliers enabling the hopeful supplier to differentiate between situations when an incumbent is truly embedded or when the customer will be open to considering a change.  This needs to be achieved early in the sales engagement process otherwise selling effort may be wasted.

 

The ACD of buying behaviour

Many organisations that we work with struggle as their customers often prevaricate when it comes to simply saying yes we will go ahead and buy what you have proposed. Although not the preferred answer, even a no would be acceptable because it is at least certain. What none of us likes is the uncertainty of will they won’t they.

Understanding what happens in someone’s mind when considering whether or not to buy can help the seller both to understand why there might be a delay in the decision and more usefully what can be done to minimise or eradicate that delay. The three main stages in a buying process are Awareness, Consideration and Decision. The solution to eradicate or at least minimise delayed decisions can be found in the earlier stages of awareness and consideration. Waiting until the prospect has entered the decision phase to influence how it might proceed is too late and the seller has, in the main, become a passenger in the process. That said, many “purchasers” don’t have a process for making the decision so there is nothing obvious the seller can do to apply influence.

By the way; I am of course fully aware that the majority of people reading this wear both hats; sellers and buyers and understand the ACD of buying behaviour can benefit all.

Looking at the three stages and what happens in them gives a valuable insight to what sellers can do to influence buying behaviour. The messages in the article are designed to be of equal use regardless of which hat you may be wearing; seller or buyer – no one wants to waste time prevaricating over a decision any more than they would wish to wait for that decision.

Awareness

This is the point or, more likely, series of events that makes a prospect aware that they have a problem that may need to be solved. Imagine; you have had an occasional mystery noise from the car but ignored it. Then there comes the rainy night when it won’t start but eventually it does, then it does it again, then it runs badly in hot weather. Eventually you will conclude that this series of issues might just be clustering together into a real problem. You are now aware.

The above scenario is common in a domestic setting but there is another more common scenario in the business world. As business leaders and other decision makers typically have a multitude of competing issues to consider, the process of issues “clustering” to create an actual problem may take quite some time. This is where the role of a sales person or account manager can provide a valuable service to the prospective buyer. The sales person who understands the industry that the prospective buyer is in will be familiar with the typical issue and problems of that industry so can play a valuable part in raising awareness and in many cases before the problem stage is reached.

Consideration

LI Choice
This will include; can I ignore it or must I fix it, when does it need to be fixed by, can I fix it myself, how much will it cost to fix/ignore, how will I finance it, what impact will the decision have on the business? There will be many other factors especially when making complex business decisions or potentially costly personal ones.

We have written in previous articles about the research which suggests that a “buyer”, especially for a complex or bespoke solution, will on average be 57% of the way through the buying journey before they engage with potential suppliers. We have also publicised another piece of research that found some 75% of new business orders go to suppliers who engage before the potential buyer has reached the 25% mark in their buying journey. We have drawn a number of conclusions from these two sets of findings:

  • The supplier who engages early will be in pole position to win more of the available business
  • The suppliers who wait for the buyer to engage them will be left fighting against pre-conceived ideas, or just fighting over the crumbs and in most cases will need to compromise on price and margin to win the work
  • The buyer who engages early benefits from the suppliers’ knowledge and experience to inform the process of consideration
  • The buyer who engages with suppliers late in the process may fail to get the optimum solution as the engagement process typically focuses on price not value. Critically, they may also address only symptoms and miss the root cause leading to new symptoms popping up. (the operation was successful, but the patient died)

Most cases of prevaricating buyers are found in late engagement scenarios. This is bad for both sides; the buyer is delaying solving the problem which often causes waste (time, money and other resources) and the seller does not have a clear picture of future revenue as the sales forecast cannot be relied upon.

Decision

Hopefully this won’t offend too many of our readers but most people are poor at decision making. The cause is the lack of a systematic process for evaluating and selecting a solution. That process should mainly focus on clinical matters such as; performance, reliability, quality, service levels, etc. It is also natural that the process will include an element of emotion as the decision maker will be concerned about the consequences of making a mistake and this leads to risk aversion behaviour driven by fear, uncertainty and doubt.

A common mistake made by both sellers and buyers is to try to mitigate the risk by doing a financial deal. How odd – “I am uncertain about your offer but if you make it cheaper I will go ahead”. Who is kidding who!? How can a lower price suddenly make a risky purchase acceptable? Similarly, how can a lower price make something that was not ideal for the job at a higher price an acceptable option?

The decision process is always smoother and more predictable, for both parties, when the initial engagement point occurs early in the buying cycle. One key reason is this gives more time for the parties to work together which means more time to test the potential relationship; principles, ethics, capability, delivery mentality, etc. It also allows time for the seller to meet and understand everyone who will be involved in the decision and for the parties to work out a mutually acceptable decision making process.

Another important factor in decision making arising from early engagement is that it gives suppliers time to understand the real problem, not just the symptoms, which in turn enables them to offer the correct solution. Some of the more cynical amongst us might consider this allows the suppliers to have too much influence over the thinking of the buyer to which I would say the buyer always has the ultimate sanction – “NO!”

In summary:

  • Engage early – this is good for both seller and buyer but is more likely to be driven by sellers.
  • Engage widely – both sides need to meet all key people who will be involved in the delivery and operation of the solution as part of the process of deciding the best fit for a successful implementation.
  • For the buyer – choose your preferred supplier before starting to look at solutions; someone that understands your problem and empathises with its impact on your business. A key reason leading to delayed or failed decisions stems from confusing the selection of the supplier with the decision over the product or solution. The initial effort should focus on building the working relationship including how and when a decision will be made.
  • For the seller – decide who you want as your customers and proactively approach them. By all means accept introductions and referrals but beware of compromising your market strategy – you don’t have to say yes to everything!
  • Once the parties have agreed they wish to work together then they can focus jointly on designing and building the solution. This can now be done from a position of mutual trust and interest which is the best way to get the optimum solution while controlling the risks.

Get the ACD right and the decision will flow naturally from the process with a contract close behind!

Do you use compelling events to drive sales decisions?

Previously we have written a number of articles about an issue that is currently a problem in many business sectors and that is prospects who delay making decisions, or become un-contactable, once a proposal or quotation has been submitted. This can happen in any type of businesses but seems to be hitting those selling B2B the hardest.

The solutions that we have proposed in the past focus mainly on changing how the process of engagement is conducted from the very first point of contact with a new potential customer. Whilst this is the only effective way to bring about a long-term and permanent solution the use of ‘compelling events’ will in some cases help to move an opportunity that has become stuck.

The most common compelling events involve the use of time or money to get the prospect to “act now”. While both have a place they are often used in a very unsubtle way which risks doing more harm than good. So, in this article we have provided some tips as to how this powerful tool can be used to unstick some deals and if applied rigorously to new opportunities it will help to avoid the sales pipeline log-jams of the future. This will help you to gain some certainty about if, when and how a prospect will make a decision and in some cases whether they will make that decision in your favour.

Viewed as a buyer

For suppliers to understand how to use compelling events to smooth decision making it is necessary to first understand decision making through the eyes of the potential customer.

A compelling event is quite simple in concept; it is something that prompts the prospect to make a decision. At a high level decision making falls into two main areas; to satisfy a need or to satisfy a want, for example, you need to insure your car and your house but although people say “we need a holiday” this is in fact a want driven decision.  Need based decisions are driven by the head while wants are driven by the heart. However, in most cases, there will be a mix of head and heart even though one will dominate.

So, taking the insurance need above, if your insurance expires at midnight tonight you must make a decision during business hours today; time becomes the compelling event. If however money is the compelling event, early research will be required; to obtain several quotes and then drill down into the detail to make the final decision. When getting down to the fine detail of the similar quotes the heart may start to play a part in the decision making as you choose between known and less well known providers and their ‘specials’.

The holiday is mainly about satisfying a want so is driven by the heart but as you close in on the final choice, money will become a factor and the head will get involved.

While the examples above could apply to a business they are more typically personal buying examples.  A common business issue requiring a decision could be about a new website; do you need or want a new website?

  • If the website is delivering less and less good enquiries and it is a key route to market for you then you need a new website.
  • If the website is still functioning well but you feel it is looking a little dated then you may want to replace it.

Note the hard fact of falling levels of enquiries = need whereas “feeling” that the website looks dated = want; head and heart.

Viewed from the seller’s point of view

Simplistically this is a mirror image of the buyer’s view point and the concept really is quite simple. Find out what really matters to the buyer, satisfy it and it will increase your chances of getting an order when you want it to happen. The point to emphasise here is what matters to the buyer? Sellers make offers that they hope will be compelling but all too often the offer is driven by the seller’s need rather than the buyer’s. “If you buy by X date we will give you an extra 5% discount.”  The seller wants the order by X date but does it matter to the buyer?  Will 5% incentivise them to make a decision now when they do not really need what you are selling at this precise point in time?

The problem here is that the inducement is focused on the monetary aspects of the transaction and will have the effect of destroying any work that has been done to build interest in the value of what is being offered.  Even if the decision is delayed for another two or three months the supplier may still feel obliged to give the extra 5% but they have not gained what they needed; an order now!

Useful examples of compelling events

Time: most effective when you know what matters to the buyer and this should be established as early as possible in the engagement process.  This gives you the opportunity to discuss timing with them as a part of the complete negotiation and they might agree to a timescale to suit you. Calling them today looking for an order by the end of the month can only ever look desperate.

Could you resist the opportunity?

Could you resist the opportunity?

Time can be useful in a number of ways:

  • If you genuinely have limited stock “buy now while stocks last” can work.
  • If what you provide is seasonal then timing is important.  No point taking an order so late that the Christmas cards get to the shop on Christmas Eve!
  • If what you are selling will save them money, has a safety implication or could prevent an expensive problem occurring then the sooner they have it the better.
  • If you can provide a solution to accommodate an impending regulatory or legislative change, they have a limited window in which to decide.
  • If you know they are running out of stock they have a real need to make a decision.
  • If you know their current supplier contract is up for renewal, regardless of how happy with that supplier they claim to be, this is a great time for you to propose your solution.

Money: most commonly used through a discount offer but as with time, calling a few days before the end of the month and offering a discount for a decision is transparent and looks desperate.  If you do offer a discount it must be tied to something that you need or want and if it does not happen you must withdraw the discount offer – I know you won’t want to but you must!

Money can be very useful to create a compelling event:

  • If you are able to demonstrate through, for example, the RoI that will be gained by buying your proposed solution then the buyer will have some tangible evidence as to the value of what you will deliver.  If what you sell reduces energy costs then the sooner they have it the more they can save.
  • If you genuinely have a price increase coming along in the new year you should share this with the buyer as they may wish to buy ahead to save money.
  • Discount can be useful in some businesses but in others it will have little effect; but beware as there is always the risk that it can damage your brand and also any case you might have built up based on the value of what you do.

Problems: Understanding the problems your prospect has will provide the raw material for building your case around a compelling event.

  • If the company has breached a regulation such as Health and Safety and what you provide would have prevented this breach they will be interested.
  • If buying your solution now will help them defend their case with the H&S Executive they will be interested.
  • If the business has lost money due to a production failure that your solution would have prevented they will be interested.
  • If the company is suffering high levels of staff turnover, and you can help them reduce this, they will be interested.

It is important to note that the examples above are generic as this will be read by people from a cross-section of business and industries types.  This technique is at its most powerful when used by a supplier who really knows what makes their industry tick and what really keeps their customers awake at night.

The other thing to bear in mind is that the supplier must take the actions to create the feeling of ‘compulsion’ in the prospect.  A useful technique for this is the SPIN® approach to selling.  In effect SPIN® is a specific application of the structured questioning approach where the mnemonic stands for Situation, Problem, Implication and Need-payoff.  By asking the sequenced questions you will be exploring the situation the prospect is wrestling with, help them define the associated problem, help them to realise the implications of not resolving the problem and finally you demonstrate the value you will deliver by satisfying the need.

Within the above process; around the ‘P‘ and ‘I‘ stages, you will be able to demonstrate your industry knowledge and perhaps even introduce new ideas they had not considered that will make working with you even more compelling; you are an extra brain on their problem!

Thank you for reading this, but don’t let those queries slip away unanswered, or for a deeper discussion on researching your prospect to create compelling events, feel free to get in touch.

(Photo:   Kakakrokodil, Flickr)

Article produced for Talk Business News November edition

Adapting to the Supplier Lifecycle

Why is it important for salespeople to understand their customers’ or potential customers’ supplier lifecycle?

It is an undeniable fact that the more we know about our customers’ requirements, the more we know about their procurement and selection process, the more successful we will be. No sales organisation would disagree with this statement; any sales training consultancy would claim that they train sales people to be customer focused.

However, isn’t the reality that usually the first time we get to see the customer requirements clearly defined is when we get sight of the RFP? The same RFP that prescribes what information you must provide, and in what format. If you have not been able to influence the RFP in any way, your chance to differentiate your offer, post RFP, is limited.

So how will understanding the supplier lifecycle help you – not just in the pre-sales phase, but post sales as well?

Put simply – understanding the supplier lifecycle will enable you to map your sales process and thinking to the process and thinking of the customer. This is because the supplier lifecycle is a holistic model – of which procurement is just a part. It covers activities pre RFP and sourcing, and those post engagement – how the customer seeks to work with a supplier once the service delivery or project is live.

As with sales models and concepts, there are a vast number of supplier lifecycle models; however the generic 5 stage approach described here is typical.

“IRSID”

Identify – For the product, service, or project in question – establish objectives, outcomes and the detailed requirements at the business, user and technical levels

Research Investigation and planning before moving to sourcing – to ensure that the strategy is focussed on the most effective engagement models with the right “screened in” potential suppliers

Source The formal procurement phase – the step of going to the market with defined requirements, receiving proposals and making selection decisions against pre- defined criteria

Integrate Engaging and transitioning -The iterative stage between sourcing decision and deliver. Designed to ensure that people and processes are aligned in moving from current state to the new business as usual

DeliverImplementing and developing -To ensure that the supplier delivers, as a minimum, what they are contracted to deliver, to quality, time and price. Developing is about investing in the relationship, to enhance performance, and maximising value.

So how can you use this understanding to help you win more sales, and to develop an account?

  1. Use your contacts in your customers to find out what the lifecycle model looks like in their organisation – just asking the question will demonstrate you are trying to understand their world
  2. Investigate to find out who the key stakeholders are at each stage of the cycle
  3. Use your awareness of the integrate and deliver stages to highlight in your RFP response that you understand their expectations of you as a supplier throughout the service/ project duration
  4. Demonstrate your understanding of this holistic approach by asking in depth, searching questions for each phase; more than the usual questions, important though they are, of “what are your requirements?” and “what is your decision making process?”
specialist in improving management of strategic suppliers

improving management of strategic suppliers

Richard Moxham is MD of Supplier Management Training Ltd, a specialist consultancy advising and training clients in improving their management of strategic suppliers – in performance and relationship terms. In a previous life he worked in a number of sales and sales management roles, so can see the world from both customer and supplier perspectives

Helping Buyers to buy

Should sales people break the rules to win?

In his article Richard says “Put simply – understanding the supplier lifecycle will enable you to map your sales process and thinking to the process and thinking of the customer.” I heartily agree but would add that from the suppliers’ point of view, there is a risk that they could end up in a restrictive process with limited scope to demonstrate the things that differentiate them from others bidding for the same work. This is also a risk for the potential customer as although they will of course get answers to questions they have asked, they probably won’t get answers to the questions they should have asked.

Incidentally, supplier lifecycle may mean a formal process with RFI, RFP and the like but the points made in this article apply equally well where there is no formal process. In this case when we talk later about the supplier and the users cooperating to define the ideal solution they will also be cooperating to define a mutually acceptable buying process.

Provided the procurement process allows suppliers some space to make a ‘freeform’ presentation then the potential customer could get the best of both worlds. All responses will conform to a standard structure so all will provide answers to a set of fixed questions but the prospect will also gain an insight to the suppliers’ knowledge and experience if they are allowed to also present their own thoughts and ideas. After all, prescription will constrain innovation, but we acknowledge that not all customers will be happy to be on the bleeding edge.

If the procurement facilitates both a fixed and a flexible response then both the suppliers and the prospective customer apparently have the ideal situation. So why might sales people need to break the rules?  There are two main reasons;

  • Firstly if a prospect has a very strict and restrictive procurement process then the sales people may need to find other ways to gain visibility of the things that really make their company different.
  • Secondly, even a flexible procurement process will tend to sanitise the responses such that the solutions all look rather similar with the main differentiators being price and terms & conditions.  If the intended purchase is something such as a piece of equipment with a very clear functional purpose, then a restricted purchasing approach will usually work.  However, if the intended purchase is for a service or a solution, then for the customer to enjoy the best outcome the procurement process will need to be more interactive and flexible.

How has the procurement scene changed?

We quoted the results of a couple of surveys a few months back which demonstrate clearly that the real issue for suppliers is the easy access that potential customers have to apparent information.  Apparent as much of what is found on the web is often just data and unsubstantiated opinion.

A further piece of recent research suggest that ‘buyers’ are some 60% along the way through their decision making process before engaging with potential suppliers and as a result the buyers are in the driving seat.  This often leaves the potential suppliers with the task of dealing with the consequences of misinformation and this task is not easy if the procurement people are, as is understandably the case, of a skeptical nature.  This is a classic procurement scenario where the engagement is led by the ‘buyer’ with the potential supplier being left to react when responding.

Another piece of research sends a dire warning for those suppliers who wait for the prospect to contact them as it found that 76% of the orders go to the suppliers who engage early leaving just 24% to fight over for those who wait to be approached.  This supports a long held view that ‘blue birds’, opportunities that turn up unexpectedly, are often just a prospect wanting a few make-weight bids and that the likely winners of the work are already well entrenched.  Many companies qualify out such apparent opportunities saving themselves the time, effort and money of bidding for something they almost certainly cannot win.

Why and how should sales people break the rules?

The why is simple; if the situation is that the prospect has a restrictive procurement process then the sales people will need to act to change the ground rules to improve their position over that of competitors who will be bidding for the same piece of work. To some this will seem very self-serving of the suppliers but the reality is that the ‘users’ of whatever is procured as a result of a more open approach typically get a better outcome hence both sides benefit equally. If the procurement specification is restrictive and the ground rules can’t be changed then, as with the blue bird mentioned earlier, consideration should be given to whether this is in effect an opportunity to be qualified out.

The how is also not too difficult;

  • Scenario one is that sales people build relationships with the procurement people in their target prospects and the engagement process is then driven by the procurement rules.
  • Scenario two is built around the idea that the role of the sales person is to engage long before a procurement process has begun. That engagement will commence with the user community and the financial people, then the procurement people and other stakeholders who might have a say or an interest in the decision that will be made.

Scenario two will be familiar to anyone who has been involved in professional selling over the past 10 or more years but may be less familiar to those who have only more recent experience. It is a tried and very well tested approach that hinges on one key strategy; suppliers must engage with the prospects they are targeting before there is a requirement. The objectives can be summarised as:

  • Building relationships with those who will use the solution, once it is acquired, as well as those who will be involved solely in the procurement and decision making process
  • Use this period before procurement commences to understand the full set of issues the users are struggling with
  • Use the time to demonstrate to the potential users’ new and different ideas they may not have thought of.  Suppliers are an excellent source of information in effect providing a free source of research so the suppliers need to ensure there is mutual respect in the relationship at this point
  • The interactive nature of the relationship building process enables both the supplier and the users to influence and shape the eventual opportunity to the advantage of the user, who will get a closer fit to their real need.  This is also an advantage to the supplier who will be seen as providing thought leadership creating a shared vision of the final outcome and this will put them in a strong position when the formal procurement process commences.

We would think that scenario two would appeal to many suppliers as it leads to more business for them and more happy customers but, to enjoy the benefits of this approach, one important change in thinking needs to be made.  Many companies now focus their sales and selling efforts on working with prospects that have an actual and current requirement.  If this is your situation then you will rarely engage with a prospect before the requirement has been defined internally which means you will miss out on the opportunity to build the relationships before procurement commences.  This also means you will probably end up fighting over that last 24% of potential new business.

So, the question is; are you willing to change your go-to-market approach and modify the objectives and incentives of your sales people to encourage them to build relationships rather than simply chase already defined requirements?

In his article Richard makes the point that “Any sales training consultancy would claim that they train sales people to be customer focused.”  In most cases this is based upon the supplier’s view as to what customer focus should look like.  Real customer focus is demonstrated by those suppliers who are willing to let the end user have a say in what they want the supplier to focus upon and how (part of the Identify stage).

In summary; our current experience demonstrates that the optimum go-to-market model for a supplier in the 21st century is a proactive outbound strategy designed to engage widely across the prospect organisation before the formal procurement process begins.  In working with the user community the model should be focused on demonstrating the Unique Value Proposition the supplier can deliver but that UVP should be arrived at cooperatively with the prospect rather than being assumed and imposed by the supplier.

This is a simple but powerful approach to supplier/customer relationships that we know works – if you haven’t already, why not try it?

Progressive Bid Management

Bid Management is a widely used term for any role within the sales cycle that is not clearly identified e.g. sales, technical, production, financial, legal. Within companies it can be interpreted differently across different divisions or countries. But isn’t the role exactly what is says – a person that manages bids? It is a poorly understood role and yet critical to the success of an opportunity.

Sally Buttery

Sally Buttery, award winning bid manager

Bids are risky and ultra-competitive with no second prize. They are critical to winning new work, as well as keeping existing contracts, and are the life-blood of any competitive organisation. Bids are detailed, complex and often large documents detailing how the sales organisation would meet a customer’s requirements. They cover a wide range of issues, from health and safety to customer care and staff issues, and are weighted for quality as well as price.

For the larger complex deals a bid manager is the essential member of the team as the facilitator and driver for timelines, governance and quality against an agreed internal budget. Many companies use project managers for this role but unless bidding is all they do this can lead to disaster. A project manager will approach a bid as another project. The difference between a project and a bid is there is a defined end or delivery point at proposal submission for a bid. There is no contingency or tolerance in a bid and without comprehensive bid planning and the bid manager’s personnel skills then all too frequently team effort will be ‘back-ended’ and the team will work through the night to complete the proposal before the customer’s deadline. A project manager will plan from the start of the engagement, whereas a bid manager has to plan backwards from the submission date. Interpersonal skills are key for the bid manager to influence team members to achieve their individual contributions within a defined and often tight deadline.

I was once asked by a senior sales account manager what my role was. Having explained the extent of the skill set and capability required of a bid manager he said to me “what do I do then?” In this instance the account manager was dealing with highly complex and large opportunities and I was staggered that he found time to manage a dispersed team towards producing a proposal as well as find time to define new opportunities AND maintain his customer relationships.

So when should a bid manager be engaged? As already mentioned, a fully experienced bid manager can be engaged from the initial opportunity identification. At this discovery stage the bid manager acts as a “Capture Manager” ensuring all relevant information is stored, researching the prospect, the competition, relevant solutions and reference-ability.  Frequently the bid manager acts as the sounding board for the sales account manager and interfaces with marketing, commercial, legal and other supporting functions.

This information is critical to a thorough qualification of the opportunity – a stage all too frequently skipped but essential for ultimate success. From this position a bid manager can support the development of the proposition with a full understanding of the requirement, solution, USPs, commercial principles, competitive strategy, win themes, customer ‘Hot Buttons’ etc.

The bid manager is responsible for the ‘look’ of the proposal – not just completing it but ensuring it is professional and suitable for the target customer market. The physical appearance can be influential for the customer and, although it doesn’t necessarily need to be professionally produced it does need to be fit for purpose. I have always considered that a good looking proposal will not necessarily win the business but a bad one can lose it! It is useful to have members of your bid team that are experienced in proposal production – formatting, graphics, print/bind/delivery or electronic upload, burning CDs or memory sticks etc.

Following the proposal submission, the bid manager should monitor the changes that take place during the negotiation period. This important activity ensures that the signed contract reflects the customer’s requirement following negotiated changes and that there are no misunderstandings during the delivery phase.

The role and responsibilities of bid manager jobs vary between organisations but in essence a bid manager manages the risks to the business during the sales or acquisition stage of a customer engagement. So what does good look like?

A senior bid manager can manage a customer engagement from the initial opportunity identification right the way through to handover to delivery. At this level the individual should have:

Competencies

  • Team identification, management and motivation
  • Process, governance and compliance management
  • Bid planning, prioritisation and scheduling
  • Bid cost management and resource utilisation
  • Qualification
  • Risk identification and management
  • Commercial awareness
  • Communication – verbal and written
  • Facilitation
  • Reporting and presentation
  • Coaching and mentoring
  • Research and data collation
  • Sales and business development awareness

Skills

  • Leadership
  • Assertive
  • Innovative
  • Drives for results and customer focused
  • Team and relationship development
  • Adaptable

At a more junior level a bid manager will have a subset of the skills and competencies detailed above and would be expected to display the ability to manage the team to develop a quality proposal.

On a more personal note a bid manager should be nimble, tactful, efficient, self-motivated, cope with pressure, conciliatory, articulate, confident speaker, presentable….. shall I go on as it sounds too perfect to be true? It no doubt is and therefore as long as the bid manager demonstrates sufficient capability in all aspects then they are to be treasured.

Article kindly provided by guest author Sally Buttery of Unify.

Image provided to Microsoft Clip Art by A Bit Better Corporation

The role of the Sales Account Manager in bidding

In Sally’s excellent article on bid management she makes it clear what the bid manager has to achieve to ensure the proposal containing the bid that goes to the prospect maximises the chances of winning the work.

It is not uncommon to find sales people who see a bid management function as the “sales prevention” department. The feeling is that “these people” just delay things, increase the quotation and the timescale of the project and generally make it harder to win the work. However, rather than being the enemy of the sales person they are a crucial component of a winning team.

So are feelings that the bid management function is the “sales prevention” department justified?

Regrettably such feelings almost always stem from poor selling rather than poor bid management. If, to improve their chances of winning the work, the sales person has given assurances and made commitments to the prospect which cannot be delivered, then the bid team will indeed present problems for that sales person. The bid team is responsible for producing bids with the optimum chance of winning the work but they also have the responsibility for producing bids that are an honest representation of the solution the prospect needs including how long it will take to complete and how much it will really cost.

So what can the sales person do to make bid management a valuable selling aid?

The first thing to do is to recognise that with or without a bid management function, misleading a prospect (and hobbling your delivery teams) is never going to be a successful selling technique. It might win a particular piece of work, although less likely these days as decision makers are better informed, but it certainly won’t create a customer for life if they find the solution is not what they need and/or that it takes longer and costs more than the proposal suggested. This is bad; both for future business potential and the supplier’s reputation.

So let’s think positively about bid management and use it as the selling asset that it is.  The main things for the sales person to do are:

  1. Ideally when joining the company the sales person will have gone through a thorough induction which will have included some sessions with bid management and delivery. I would also recommend that each new recruit spends some time in the bid management department observing what actually happens. If this has not happened then sales people should seek out the bid manager and organise a session for themselves.
  2. As a result of the above, the sales person will understand what the bid manager needs to complete their part of the selling process and will be able to conduct their selling activities to create a seamless handover with bid management. In her article Sally said “At the discovery stage the bid manager acts as a “Capture Manager” ensuring all relevant information is stored …” If the sales person understands what constitutes “relevant information” they can structure their prospecting activities to collect or make easily available that relevant information.
  3. Sally also said “Frequently the bid manager acts as the sounding board for the sales account manager and interfaces with marketing, commercial, legal and other supporting functions.” The sensible sales person will understand how useful the bid manager can be as that sounding board. By discussing the opportunity with the bid manager, involving a delivery representative too, before the formal bidding stage has been reached, the sales people can equip themselves to shape and steer the prospect towards a winning frame of mind. For example; if the discussions reveal some things that may be difficult to deliver and others that would be beneficial but that have not been specified by the prospect the sales person is better equipped to set the expectations of the prospect in terms of what the eventual solution might look like.
  4. Two very powerful selling tools that are very close to our hearts at Performative are Qualification and Quantification. The former is used to drive the process of developing an initial contact through the stages of; suspect, prospect and eventually to customer. The latter is the process of assessing an individual opportunity in terms of its probability as a successful bid. Taken together these two tools help the sales person ask structured questions which gather the crucial information required to develop a winning bid. It is clear that the bid manager can make a major contribution to the sales persons’ decisions on what questions to ask and when so as to elicit the required information.
  5. The final point is to recognise that the bid manager will have access to different people in the prospects’ organisation e.g. technical staff and purchasing/procurement staff. These people will be a part of the prospect’s decision making unit and will have varying degrees of influence over the decision. As a result, the bid manager must be seen as an extension of the sales persons’ front line selling activity not just a back-room administration function. This is a case for team selling where the sales account manager and the bid manager should become an inseparable double act.
Image provided to Microsoft Clip Art by A Bit Better Corporation

A winning combination!
Image courtesy of Microsoft Corp

In summary, treat the bid management function as your ally; it will enhance the strength of your selling efforts if you work together. If a bid review does expose that the prospect’s budget is too low or the timescales impossible, the sales person will gain the opportunity to go back before the bid is submitted and discuss the true position with the prospect. This may result in losing some deals but you would most likely have lost them anyway once the bid was submitted. It is probable that some will appreciate the honesty and diligence and give the work to the supplier who provides the right solution even though they are not necessarily the cheapest or fastest.

Customer engagement for win-win deals

Customer Engagement

If your customers are slow to make decisions and your pipeline forecast is forever moving, we can help you.

If your sales force are submitting bids with a low uptake so you feel you are just providing free consultancy, we can help you.

Markets are changing and customers have more opportunities for research before they buy, consequently the sales force has different challenges in order to engage with customers. Gaining insight into your Customer’s world and thereby understanding how you can deliver greater value than your competitors can be key to how you approach your target market.

We have helped companies in various sectors re-focus their propositions and markets for greater customer engagement, leading to more new and extension business. This also assisted the sales management to obtain more reliable forecasts.

“Working with Performative greatly improved the quality of engagement with potential customers and our ability to forecast outcomes from those.” MD, Mobile Technology company.

Feel free to call us for a confidential discussion.

shorter sales cycles, new customers, more business, increased profilts, better cashflow