Learning from Loss
When you lose a sale, it’s an opportunity to learn something about yourself and your firm and also about your competitors. Recently, I spoke with Ken Sawka, Managing Partner of Outward Insights, a competitive intelligence consulting firm, and asked him how a firm could get the most from these opportunities. He had suggestions well worth passing on.
Where I had expected to learn some unusual questioning techniques, he immediately spoke of how the debrief with the client fit into a larger process. Sawka suggests that you seldom learn the most valuable insights from a single debrief. Rather, you learn lots of pieces from a variety of sources that allow you to put together a picture of how to fix a competitive disadvantage. The sources include:
- Debriefs with the partners leading all major pursuits, whether wins or losses.
- Debriefs with clients on both wins and losses.
- Interviews with alumni of firms you compete with.
- Competitors’ and your own marketing materials, such a websites, with specific attention to how changes in them suggest changes in what the competitors view as how best to compete.
All of these sources have their weaknesses and biases, but combined they can give you lots of raw information.
Your own biases complicate the analysis of this information, says Sawka. “If you are convinced that the competitor is beating you on price, you can probably find validation in the data, even if price is only a part of the problem.”
To avoid making this mistake, Sawka recommends developing a number of competitive themes, such as, a) the clients are buying on price, b) Competitor A’s reputation for x is stronger than ours, c) our range of service is a major factor when we win. Then see what information you have supporting or negating each. This usually provides you with a richer and more valuable understanding of your competitive situation.
Ken provided this illustration of his point: When a large technology consulting firm began to lose projects to competitors who were outsourcing work to India, they tried to compete on price. Though they cut costs as fast as they could, competitors matched and exceeded every price drop, and the firm continued to lose.
Research, encompassing all the sources listed above, showed them that clients didn’t think of the firm as low cost. Rather, they valued its processes and methodologies which increased the chance of success on complicated projects. They didn’t want to risk giving that kind of work to the cost-cutting competitors.
The more they had tried to compete on price, the more they had lost. As soon as they focused on complex, demanding projects, their win rates climbed—and at higher prices.
Ken’s blog can be found at www.outwardinsights.blogspot.com
February 2nd, 2009 at 8:44 am
Really interesting to see a loss review set in the context of a wider process.
I’ve always been a big proponent of win reviews - with the purpose of not just back-slapping, but identifying the characteristics of the sort of projects/clients your firm wins and the sort it loses. Rather than always trying to change what you are and what you offer to capture the losses, you’re often better off targeting & qualifying more to focus on the sort of clients & projects where your strengths are valued and you’re more likely to win.
By the way - did Ken mention anything about having an “independent” partner do the loss review with the client rather than the partner who led the bid. That might remove an element of bias (although at the cost of losing the opportunity to restore the bid partner’s relationship with the client through listening well and handling the review professionally).
Ian
February 2nd, 2009 at 12:14 pm
Ian:
Ken can comment, himself. though in my experience, the person doing the debriefing is seldom criticized by the client being debriefed. So, there is, I believe, a bias when a participant in the sale conducts the interview.
Ken’s approach supports your belief in the value of win reviews.
Thanks for the comment.
Ford Harding
February 2nd, 2009 at 6:14 pm
There is a trade-off between having someone in your firm versus an outside party conduct these interviews. No one will know your business with all its innuendos like someone in your firm does. However, I find that customers are often more comfortable sharing full information to a third party, especially in losses. I also have found customer testimonials for clients from wins, which were a surprise for my customer.
Ford you are right: don’t have sales conduct these interviews. Not only are they biased, but this is not how you want them positioned with customers. You want them out closing the next deal!
February 3rd, 2009 at 12:39 am
Ellen:
At professional firms, which is all I know about, there is often no sales group dedicated exclusively to closing the next deal. The partners who lead sales also help deliver the work. They sometimes have relationships with clients that allow them to get a debriefing when others can’t. Still, I lean towards having someone not involved in the sale debrief the client for the other reasons you state. It can be someone else in the firm or an outsider, depending on the size of the problem and the budget. But a lost sale is too costly not to eek all the learning from you can.
Thanks for the comment.
Ford Harding
February 3rd, 2009 at 10:03 am
Another reason for having a pitch outsider do it: sometimes it’s hard for billable professionals involved in the process to not “sell” during the conversation. Losing sometimes hurts. Feelings can get in the way of listening to what the prospective client is really saying. The decision has been made already. And depending on how the pitch went, this is still an active, working relationship with value.
This is a great subject and a terrific reminder of how competitive intelligence can be used in business development. (So long as it’s done in a way that would make our mothers proud.)
February 3rd, 2009 at 11:38 am
Steve
Good point. By the way, there is a chapter in my book “Rain Making-2nd Edition” on how to conduct a debriefing to avoid this and other problems. It includes an interview form for the purpose.
Ford Harding
February 3rd, 2009 at 11:47 am
Steve that’s a great point: losing hurts. I sold for several years before getting into competitive intelligence, and I didn’t go to my customers to conduct loss interviews. However, I was only to happy to conduct a post-mortem within my company and we learned a lot from that too.
There are so many ways to capture competitive intelligence through sales, but we also need to be sensitive since win/loss interviews can be touchy as sales owns the customer relationship. However, if you can include sales feedback and ideas before conducting the interviews, it’s the best of both worlds since the interviewer is armed with important interviewing information like the personality type of the person they’ll be talking to so they can adjust their interviewing style to maximize cooperation.
February 3rd, 2009 at 1:55 pm
Thanks for sharing your book. It looks great and I just bought it from our friends at Amazon.
February 3rd, 2009 at 2:18 pm
Ellen
Getting the views of the partner who had the sales meeting before debriefing with the client is a good practice. Thanks.
Ford Harding
February 4th, 2009 at 10:54 am
[...] I’ve conducted win/loss interviews and analysis for years, and enjoyed reading Ford Harding’s post, “Learning from Loss,” where he shared findings from Ken Sawka of Outward Insights about what can be obtained from conducting win loss interviews. [...]