"Manager's Minute" Tip

(Article Archive)

Just Received An RFP That You Don't Like? Letting The Customer Define The Solution
by Don Linder

Have you ever had a potential customer issue a rigidly defined request for proposal that doesn’t fit well with your normal product or solution? Or, even worse, have you received a request for proposal that favored another supplier’s strengths?

Most sales teams first reaction in this situation is to ask the technical group in their company to do custom work to match the customer’s specifications. Typically, the result is a very expensive, clumsy solution that doesn’t win.

More sophisticated sales teams realize that the customer may be wrong - or at least not completely right – in so closely defining the solution to their problems. What causes customers to define a solution for their problems that is clearly less than optimal includes:

Incomplete knowledge of potential solutions

We’re all limited by our experience and knowledge. Especially in rapidly changing fields, the customer may not be able to envision potential solutions that use products with which they are not familiar. So they produce solutions based on their comfortable knowledge, and thereby end up missing potentially better solutions.

Undue influence by technical people

“Standardization” has become a common theme for many customer organizations in the belief that having common technical standards throughout the organization will reduce support costs – which is true. What gets ignored is the lower productivity of the actual users of the product from being forced to use a “standard” product rather than one optimized to solve their problems. In most cases, the loss in productivity outweighs the savings in support costs.

Undue influence by existing suppliers

Existing suppliers are normally the first source of information that customers consult thinking that it’s easier and more comfortable to deal with a known supplier. This supplier, of course, is very happy to define solutions that are tailored to their strengths even though the solution may not be optimal for the customer.

In light of these factors that lead to rigidly defined solutions, let’s examine two common examples of customer buying criteria:

a) Lowest initial cost

Many customers try to establish initial cost as a buying criteria without thinking of the long-term total cost of ownership over the expected life of the solution. Factors such as support costs, maintenance costs, residual value and the cost implications of reliability, compatible upgrades, etc. are overlooked even though they can have a major impact on the customer’s return on investment.

b) A “standard” solution to solve multiple problems

“Standard” solutions inevitably involve compromise and result in sub-optimal solutions. Breaking multiple problems into specific problems and then examining the benefits of optimal solutions for each problem will frequently result in a more effective total solution.

So how would a sophisticated sales team go about helping a customer adjust their buying criteria to ensure that the customer gets a better solution? A real life example from one of our clients started with our client’s potential customer having specified two buying decision criteria: a minimum performance standard and the lowest price product that met the standard.

Recognizing that having their solution evaluated based on these decision criteria would cause them to not win the contract, our client decided to investigate whether these criteria were really optimal for the customer by exploring the customer’s real needs. After much discussion, the customer revised their decision criteria to be:

1) Highest possible product performance

The minimum performance standard initially established by the customer was actually a major concern as they anticipated significant growth in their business. The standard they stipulated was inadequate for the future, but they didn’t think any supplier could provide higher performance.

2) Acceptable price

When the customer understood their concerns for growth could be solved, their lowest price criteria quickly changed to one of acceptable price.

This investigation of the real needs of the customer resulted in a much more productive solution for the customer and a significant contract for our client. How did our client achieve this change in buying criteria by their customer?

First, the sales team defined the distinctive value that they could bring to their customer but restrained themselves from immediately telling the customer. Then, they defined what problems the customer would have to have to really appreciate a solution with those distinctive values.

Next, they engaged the customer in an in-depth discussion about these problems - the frequency, the severity, and the consequences of these problems - to determine if the customer was really concerned about these issues. Finally, they discussed their distinctive value with the customer and gained agreement on the benefits that the customer would receive.

Investing some effort and skill in helping your customer define the solution that best fits their needs will greatly benefit both your customer and your sales team that helps with the solution. Your sales team can become a “trusted advisor” to the customer and reap all the benefits of having that status.

About The Author:
Don Linder
Raising Your Success Rate in Complex Sales
Office: 604.925.4153 or 1.866.657.4736
Cell: 604.626.6245 Fax: 604.925.4156
www.majorclients.com

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