Bad News Early is Good News:
Confront Reality or Lose

Don Linder

“Bob Ramsay, the President and majority owner of a medium sized company, has just finished an awful week.

On Monday, Mary, one of Bob’s sales managers, told Bob that her biggest potential order was being delayed for at least six months by her customer. The customer’s reason? “We’re going ahead with another project that has a higher return on investment. We’ll call you again in six months.”

On Friday, Lance, another sales manager, delivered even worse news. After Lance and his team had invested six months of intensive sales effort, their biggest prospective customer had decided to order from a competitor. Why this decision? “Not only was your price too high, your product is missing some features that we need.”

Bob is stunned by the wave of bad news.

Based on the confidence of his sales managers in forecasting these two sales, he had already purchased some of the material needed to deliver to the customer. He’d also added another technical support person to ensure the new customers would be delighted with his company’s service.

Bob realizes that his company can’t survive more disasters like this and resolves to find a way to prevent these terrible surprises.”

Most sales teams and their managers are overly optimistic about their competitive status and their chances of winning major contracts. This state of mind is an extension of the natural optimism a sales person must have to function effectively in sales. Unfortunately, not facing the (sometimes harsh) reality of your exact status will frequently cause you to select inappropriate sales strategies and tactics, which usually lead to catastrophic results.

The sales team’s confidence needs to be verified by a reality check that determines bad news as well as good news. Bill Gates has been quoted as saying: “Sometimes I think my most important job as CEO is to listen for bad news. You have to be consistently receptive to bad news, and then you have to act on it.”

Understanding what is actually happening in a complex sales environment is a challenging task, but it is possible. Through the use of structured processes that confront reality, you can determine if you should keep investing in a potential sale and develop the optimum strategy to win the contract.

Executive management must use a structured process to guide the sales team. You must have a realistic picture of your present position with the customer relative to your competition and, just as important, relative to other potential investments that the customer is considering.

Here’s an example of how this structured process works in real life.

In reviewing an opportunity with one of our clients, we determined that while our client understood their customer’s issues very well, following their present strategy would cause them to lose the contract to another supplier. Because winning the contract was very important to our client, we continued to drill deeper into their knowledge of the customer organization and the specific issues of each of the major customer contacts.

While doing this exploration, we realized that the solution favored by the customer was the most effective short-term solution but it was a very poor long-term solution.

Based on this essential insight, we created a strategy of helping the customer understand the long-term difficulties that would result from their favored solution. A detailed action plan followed that included the need for our client’s executives to communicate the long-term benefits at the top executive level of their customer because the initial investment for a long-term solution was much higher than had been budgeted.

Key Learnings:

  1. Sales strategies that aren’t based on reality have a very low chance of succeeding. Remember, “Bad news early is good news.” You must be willing to confront reality at a number of stages in the campaign and then adjust your strategy to ensure you win.
  2. To effectively change a client’s buying criteria, you must understand their needs very well. Your strategy will only work if it helps the client as well as you.
  3. Pursuing major contracts is a very expensive undertaking. The investment to come in second is the same as winning the contract, but the reward is much, much worse.

 

About the author

Don Linder, the founder of Major Client Selling, uses structured tools and creative strategies to solve the complex puzzle of selling to big customers. He's the author of "The Seven Deadly Mistakes that Cause You to Lose Large Sales." You can reach Don at don_linder@majorclients.com.

 

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