It may seem like a strange title, but it certainly isn’t. Often, it is not written about how to lose an assignment, but only how to win it. How to win an assignment is something that only your own organization can really know. They are the experts in their field and also know best what a good offer is.
However, I can tell you what is often missing in organizations and why organizations lose many orders.
Fact, on average 75% of offers are lost. That’s quite a lot!
Let’s say you have a company that sells machine parts and you send out 40 quotes every day. You still get 10 orders every day and that doesn’t always have to be bad.
It is different when an organization sells complex solutions. It often takes days or even weeks to make an offer. Answering a (government) tender often costs a lot of time and tens of thousands of euros in manpower while you know that there will be multiple suppliers. Now it becomes important how you use your resources. You have to make good considerations before you start answering otherwise you waste valuable resources.
When a sales employee comes in with a request for a quote, I often see that it is acted upon in a kind of burst of enthusiasm. If there is room in the bid teams, it is decided to make an offer without any evaluation. The following week, another request comes in, but it cannot be answered because there are no more resources available. That last request may well have a much better chance of success than the first request.
There is also often a lack of good communication between the sales teams and the bid team, which means that important information is not included in the offer. The account manager often has valuable information about the client’s organization. For example, how the offer will be evaluated and what problems the client has. Information that, if used properly, can make the difference between winning and losing an assignment.
Another phenomenon I have often encountered is the mismatch between the question the customer asks in the quote request and the answer given by the supplier. Suppliers are often inclined to include their own vision and story in the offer. Terms such as ‘Unique Selling Points’, ‘Added Value’ and ‘Win Win’ are often heard but often miss their target.
Don’t get me wrong: an offer should always contain a good story and should be a fiery argument, but you should also look very carefully at what question the customer is asking and how the customer will assess your offer.
Especially in the more official RFPs or tenders it is stated exactly how the answer is evaluated. This is often done on the basis of points that you can get per answer and whether your offer meets the minimum requirements that the client has set (so-called knock-out criteria). If you cannot meet the knock-out criteria there is no point in bidding anyway, but if you do bid then you must pay close attention that the answer is also the exact answer to the question without vagueness or noise, and without all kinds of information that can cause confusion. You must realize that during the evaluation the client often has one person look at one specific answer in all the offers received. Points are then often awarded for that. A vague story or if you refer to other parts of the offer in the answer, this can have a negative effect on the assessment.
Another phenomenon are requests that ‘fall out of the blue’. The Dutch government, but also many larger organisations, are obliged to compare multiple suppliers when making a purchase. For the government, this is regulated by law in a formal tender process. For larger organisations, these are often purchasing procedures that must be followed. So you can suddenly receive a quote request that no one had seen coming. If your proposition fits the request, the temptation is often great to make an offer anyway. However, you must realise that the chance of winning is often very limited. For larger initiatives, applicants have often already gone through a whole preliminary process in which help has been requested from parties that will also be making an offer. Now put yourself in the position of the customer. During the preparation, you have had a lot of contact and input from a supplier with whom you have also built up a relationship of trust. Are you then suddenly going to choose a completely different supplier during the final selection? Very unlikely!
In my experience, winning an assignment is always a team effort, it is the interplay between marketing, sales and the bid team. Marketing ensures brand awareness, reputation and accessibility of the organisation. Sales ensures the relationship with customers and must build a bond of trust. The bid team is responsible for drawing up a suitable offer for the customer’s request. The final result, winning the assignment, can only be successful if the various departments in the chain function well and communicate optimally with each other. In some organisations, these departments are islands that operate independently of each other. Marketing aims to run all campaigns on time but feels little involvement with the sales department. Let alone that there is regular feedback from sales about what they think of the campaigns. Once the bid team has started working on an offer, the account manager is often already on his way to the next deal, while crucial information for a good offer should come from the account manager.
The title question of this blog is: how do you lose a deal?
Of course, there is no single answer to this question; it is a whole range of conditions, so-called must-haves, that an organization must meet in order not to lose orders unnecessarily. As I have tried to indicate in the examples above, it is about working together, but also about taking responsibility and making objective choices. In the beginning I indicated that organizations lose an average of 75% of their offers. However, I also know organizations that win 60% of their offers. They have organized their marketing, sales and bid teams well. This automatically also means that there are many organizations that score worse than average and perhaps lose 90% or more of their offers. As a commercial manager, I would not feel happy if I were average, let alone if the loss percentage is even higher. In that case, many must-haves are missing and things can be improved, often relatively simple matters but sometimes also more complex processes. I am convinced that if an organization meets the necessary must-haves, it is possible to convert at least 50% of the offers issued into orders. iddeld zou zijn, laat staan als het verliespercentage nog hoger ligt. In dat geval ontbreken er veel must-haves en kunnen er zaken worden verbeterd, vaak gaat het om relatief simpele zaken maar soms ook complexere processen. Ik ben ervan overtuigd dat als een organisatie voldoet aan de noodzakelijke must-haves, het mogelijk is om minimaal 50% van de uitgebrachte aanbiedingen om te zetten in opdrachten.
