As part of my client work, I often immerse myself in data. In looking at the win-loss reports, I’m always driven to look at the “loss reasons.” You know that field, it’s the convenient drop down in your CRM and you can select one of several alternatives. While there are usually CRM fields that allow more of an explanation, those are almost always blank.
In doing the analysis, 99% of the time, the reason for the loss is “Price!” Very rarely, do I see “Product fit,” or “We screwed up.” Though I’ve never seen that latter option in any of the CRM drop down choices.
This causes me to think and pose uncomfortable questions to my clients.
“If 99% of the time you are losing on price, what are you doing about it?”
When I pose that question to execs, 100% of the time, they roll their eyes, saying, “That’s BS, Dave. Price isn’t the reason we are losing!”
It gets uncomfortable when I press them. “If that’s not the reason you are losing, why are you permitting them to cite that in CRM?” Or the tougher question, “Then why are you losing?”
The first question is important and draws into question everything we might talk about on CRM data hygiene. But that’s, potentially, another post.
But let’s dive into the second question, “Why are you losing?”
Before I go further, I can’t hide my critique. The fact that execs roll their eyes acknowledging that price can’t be the real explanation but choose to do nothing, to understand where they might change, is inexcusable.
It seems most of the time we don’t bother to find out. We may ask a question in a review, “Why did we lose?” The answer always comes back as price, with perhaps a small explanation wrapped around it.
But if we pay attention to losses, it’s usually the big ones, the mega deals. And usually, it’s less to learn about why we lost, but more about, “Can we recover it?”
So, this gets me to the core of this article, “Do we really lose on price?”
Charlie Green and I were talking about this, his reaction was, “The customer is lying!”
Charlie had a much deeper point behind it. His point was it becomes a convenient excuse. It’s the easiest thing for the customer to say to get aggressive sellers off their backs trying to win a deal.
And it’s a convenient excuse for sellers, they don’t have to take the time to understand what they might have done differently or why the customer made the choice for an alternative.
Maybe saying the customer is lying is a little extreme, perhaps we can call it “confabulating.” Customers may just be reconstructing a complex decision, much of which they may not remember or understand themselves. The expedient answer becomes price.
If a seller asks why they lost, in their question, they hand the customer the convenient out, “Was it our pricing?” The buyer takes it so they can stop the conversation and move onto more important things.
This creates an interesting dynamic. Sellers come to believe they lose on price, so they lead on price, offering discounts before they are even requested. Buyers are then trained on price, then they make price an issue. Price becomes the focal point even though there are far more important issues they aren’t articulating.
Conversation after conversation follows the same pattern, we and the customer get distracted by the discounting death spiral. All these actions and reactions are rational responses to the issue we’ve trained our customers to raise.
But there’s another more important issue.
Price is the only thing left when the customer can’t tell you apart. Each alternative solves their problem. Each alternative offers similar features, functions, and capabilities. While we might say, “We have this feature the competitors don’t have,” the competitors are identifying the features you don’t have.
But none of this makes a difference to the customer, and when they look at alternatives that look alike, the only differentiator is price.
So the decision is made on price.
The problem in recognizing “The only thing the customer found different,” is we learn it at the end of the process. After all the discovery, meetings, demos, proposals, and objection handling sessions.
We learn after all that work, the only difference the customer could discern was price.
The sharp eyed among you may be going back to my original premise. You might be thinking, “Dave you are contradicting yourself. You said price is a convenient excuse, but now you are saying that’s the reason people are losing!”
Now here’s the irony: “Lost on price,” is an absolutely accurate CRM description. But it’s worthless as an explanation.
The failure wasn’t our pricing. The failure was in the work we did in qualifying, discovering, proposing. Through all that work, we couldn’t show we were different, so the customer had no other basis for making a decision.
There is a second failure in this, a leadership failure.
We know it’s happening. The eye-roll reaction I mentioned earlier demonstrates we know this is happening.
So the challenge is, “Why do we continue to let this happen? Why do we accept this and choose to do nothing about it?”
The questions are there, why do leaders fail to take the time to question their sellers throughout the process? To ask them early what makes us different? To help them think about how they demonstrate this in every interaction with the customer?
If your strategy is to be the lowest priced alternative, then “lost on price” is useful information. You need to drop your prices!
If that’s not your strategy, price is not the problem. It’s the evidence. It tells us that after everything your team did, the customer still couldn’t find a better reason to choose you.
Afterword: Another great AI driven discussion of this post. Enjoy!
