I must thank Steve Shu for passing on this Chinese proverb.  For some reason I don’t fully understand, we learn more from our failures than from successes.  Does anyone know why?

Whatever the reason, we can learn lot more by putting some effort into it, asking others who were involved in the sale, both clients and colleagues what happened.  Here are just a few of the things I have learned over the years from lost sales:

• That how you look and what you do in a sales meeting is often more important than what you say.  Specifically, the client informed me that our carefully selected team may have said that they worked well together, but sent a different nonverbal message.  For the next sale we carefully programmed their appearance and actions, so that they exemplified teamwork, and we won.
• That a competitor was beating us by delivering a specific message more effectively than the firm I was with.  Because I then knew what to look for, a month later, when I saw the competitor present at a conference I was able to identify a specific slide that delivered the message.  Knowing what he was saying and how he was saying it allowed us to neutralize this advantage.
• That my little firm could compete with big ones.  A near win and a follow-up debriefing with the client showed me that we could compete with firms much bigger and better established than ours.  This helped me set my sights higher.  Six months later, I had a big win with a big client, a sale which transformed the firm.
• How to interpret body language better.  Early in my career, I came away from a meeting feeling it had been a big success.  My boss, who had participated largely as an observer, told me that we would never hear from this client again and why.  He was right.  He had read the body language better than I had.
• That specific marketing materials were ineffective.  They needed an update, which we quickly gave them . . . and then started to win more work.
• That debriefings after a loss may not always provide much insight, but doing them is worth it anyway.  Perhaps one in five post mortem interviews with clients provided real insight, but that one gave me so much insight that was worth all time spent on those that didn’t.
• That a client expected things that we could not ethically provide and so we could walk away from the loss with our heads held high.
• That the client would like us to bid again on future work.  The client had really liked us and wanted to find a way to work with us.  We just weren’t right for the current assignment.

For more on this subject see my post, Learning from Loss. What have you learned by debriefing a client after a loss?

(This post is another in our series of Rainmaking Problems. We invite your comments on this problem and would also welcome any problems you would like to submit to get comments from other readers.)

I recently received this problem from a reader in New York, whom I will call Steve . I have blinded it to protect the anonymity of those involved. Steve wrote:

I came across your blog this evening as I sought answers/understanding for a prospective job that went south. Perhaps you can use this for your Rainmaking Problems; it’s at least cathartic to type this confessional and I thank you for your indulgence.

I first met the prospective client, a [charity organization], in the summer of 2008, introduced by an acquaintance who was a member of the board and said they were looking for [the kinds of services we offer]. I had two good meetings with them, developed a thorough and very reasonable proposal, and was led to believe that we would be authorized to start work soon.

After a few weeks of being told approval was pending, my acquaintance informed me that the board was also talking to other [firms in our field] - and that they’d used my proposal as the basis for these conversations (after stripping any identifying or cost language). I felt this was somewhat unethical but I was interested in the project and didn’t make a protest.

After many more weeks, the board apparently narrowed the selection to us and one other firm. My acquaintance sent me a copy of the other firm’s proposal - the language of the scope was nearly identical to ours, but there were many more restrictions and [their cost] was higher. The other firm, however, had strong allies on the Board (so says my acquaintance) and they were awarded the project. I was a gracious loser, sending notes thanking everyone who’d I met, and genuinely disappointed not to be doing the work.

Then, a few days later, my acquaintance calls to say they want to see us again. We put together a new presentation to support our proposal and I’m told we were far superior to the other guy.

I reach out to my acquaintance to learn the verdict, and he tells me they want us to return again, this time [after doing some upfront work at our expense to get a sense of our approach] - no decision yet.

At this point, five months since the initial meeting and one apparently rigged loss already, I’m a little frustrated; given what had happened with my proposal am distrustful of their motives in seeking new original content; and feel [preliminary free work] would be grossly premature & would foul the planning process should we actually get the work. However, I accept the invitation.

I elect to not provide [the free work] and instead focus on planning issues, as if it were the beginning of the work as layed out in my proposal. The other guy comes in with a dog & pony show and gets the job.

So after mulling this over, I feel the critical moment was when I accepted the invitation to return the last time; that everyone would have been better served by me challenging the need to return and by me saying flat-out that thought we’d already made our case and wouldn’t be doing any [free work] (sounds arrogant as I type it!). Or perhaps we should have thrown together a dog & pony show too, but I still believe this would have come back to haunt us had we landed the job, and really would have stung if we’d lost.

Was it right to feel squeamish about the way they appropriated our proposal? Was it right to feel frustrated? Was this job better not to get, or was it even possible to get?

My gut tells me we were being used to make the rigged choice shape up, and that we should be grateful not to have gotten the job, but still, I know there’s an improved me that would have found a way to handle this better - and would be interested in a true Rainmaker’s perspective.

I have sent Steve a preliminary response, but think he would welcome the chance to hear other people’s assessment of the situation, before they are biased by mine. What are your responses to the author’s questions?

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

These are good times for professionals, many having more work than they can handle.  This glut of client opportunities gives firms a rare chance to upgrade the size and quality of their clientele.  To do so they will need to raise rates and turn away small clients and low margin work.  Many find that hard to do.  Why?
 

A client and friend who is a PhD, economist and a rainmaker at a litigation support firm argues that if you aren’t losing two out of three competitive pitches, your fees are too low.  You may not agree with his ratio, but his logic is impeccable.  It’s both good and essential to lose to competitorson price—sometimes. 
 

Operationally, that is a hard message to grasp, because it goes against all of our prior training.  What sport did you ever play where you sought to lose two thirds of the time?  When were you encouraged to go for D’s or F’s in school?  Was being passed over for promotion ever a good thing?  Whenever someone says, I’m glad I lost, it sounds like sour grapes.  Maybe a PhD economist can feel good about losing, but the rest of us don’t.
 

So, we go on competing intensely to win work only to find that we have set ourselves up to lose an opportunity to win a bigger, more strategically important client, because we can’t start soon enough or because we sent the B team to the sales presentation, or because taking the work from the small client created an insurmountable conflict.
 

Firms that overcome this problem usually do so by setting minimums in the size of assignment they take on.  One firm I know of doubled its average project size after enforcing a controversial minimum-sized-project policy.  Revenues ballooned the following year.

I know of another firm that raised its rates 20 percent in one year and didn’t reduce its conversion rate on proposals by even one percent.  But it took guts to hold to such a big price increase.

I think I’ll try a different approach.  The next time someone in the firm loses a pitch on price, I’m going to throw a wine and cheese party for the office in celebration.