Deals Lost to No Decision, Status Quo & Buyer Indecision
Guide to episode
- The status quo is a strong competitor. We train sales teams to push for change.
- But there's another insidious factor at play - buyer indecision that often arises even after the status quo is beaten.
- The sales team needs to be trained on how to recognize and overcome buyer indecision.
- Qualifying deals out quickly will help to focus efforts on winnable deals.
Hi, I’m Ed Marsh. Welcome to this episode of Signals from the OP. My biweekly videos are intended to be thought-provoking for industrial manufacturing company execs. If you know of one who you think might find some value, please share it with them.
Losing Complex Deals to The Status Quo?
Let’s talk about that deadly competitor – the status quo.
You know, that long-standing and intimidating barrier to your industrial sales team’s success.
You’ve got great solutions and loyal customers. It sometimes feels like the only thing standing between you and huge sales success is customers' aversion to change. And so the status quo prevails in many cases.
You’ve probably trained your team rigorously to overcome the status quo. You’ve helped them learn how to identify and fully develop pain. You’ve got sales enablement tools like case studies and ROI calculators that help them develop and quantify the cost of doing nothing.
And it works!
You know it does because often in the sales process prospects tell them something along the lines of “Yes. I agree. We need to change. Let me get this process going internally so we can move ahead with you.”
Everyone high fives. The sales methodology worked. You’ve got a verbal commitment, and now the only steps left are dotting the "I"s and crossing the "T"s as we say.
But you’ve seen this movie countless times, so you know what happens next.
Sure they may ask for revised quotes or more references or another case study or a pilot or demo. You’re going through steps that feel like they’re a bit excessive but reasonable in the context of actually getting a contract for some expensive, complex machinery.
But eventually, you start to get worried. It’s always supposed to be wrapped up next week, then next month, then next quarter. It’s going to happen, there are just a few details left to address. It seems reasonable and makes sense...until it doesn’t. So your team huddles up, reviews the justification, and comes up with a plan to review and reiterate to cost of inaction and the justification with the buyer. That's the same buyer who already told you (s)he agreed and was ready to move forward.
It doesn’t help. Time continues to pass. No signed agreement results.
The deal dies right on the one yard line.
How do you track that in your CRM pipeline? Closed lost? But nobody got the order. Closed dead? Stagnant? (And what does that do to forecast accuracy?)
How long do you allow a deal to sit in the pipeline and distort your forecast until you “kill it for cause?”
And most importantly, did you really lose to the status quo?
Certainly, the status quo prevailed, but did it win? The short answer, according to new research from DCM Insights, is probably not. In his new book The JOLT Effect, Matt Dixon who you may know from Challenger Sales argues that deals like this are lost to customer indecision.
Deals Lost to Buyer Indecision
Buyers are more afraid of messing up than they are of missing out.
Let me say that again. They are more afraid of messing up than missing out.
In other words, it’s not the status quo (missing out), but it’s fear of making a mistake.
This is true for many reasons. You’ve probably heard about Daniel Kahneman’s research into behavioral economics. People feel the pain of loss and mistakes much more acutely than they do the gain of a win.
This ties into Omission Bias which basically means that we feel the pain of a mistake – making the wrong choice – much more strongly than missing an opportunity – making no choice.
Everyone sees the former, but often nobody sees the latter. And after all, we’re told that we need to focus on a few priorities, so that provides an easy justification to ignore problems.
It also happens because people might have made mistakes in the past, and worry that this project might blow up too. Or because there are such an overwhelming number of options that they don’t know how to choose from them. Or even because they worry that they don’t have quite enough information to make an informed choice.
In each case they become a bit more indecisive.
Here's the kicker – according to Dixon’s research, when buyers verbalize an intention to buy, a full 70% of the time the end result is inaction. And worse, going back to the playbook that we’ve all refined to beat the status quo, just makes it worse.
Tools to Help Your Marketing & Sales Team Recognize, Quantify, and Overcome Buyer Indecision
So your sales team needs some additional tools that get incorporated into your sales methodology, and some new qualification checkpoints in the deal process.
Maybe you already have some of these – your superstars probably already do some – but you might need to codify them for the whole team.
The key is to constantly qualify and requalify deals out.
In addition to the standard attributes we’re taught to consider – the prospect’s ability to buy – now you need to also measure their ability to decide in parallel.
The Revenue Impact of Deals Lost to Buyer Indecision
The bottom line is that many companies see 40% of deals end in no decision. Of those, it turns out, maybe 70% are lost to indecision (only about 30% to the status quo.) And the factors that lead to indecision:
- overwhelming information and options
- large buying teams
- buyer hesitance about making mistakes
Well, they are all rapidly increasing.
In other words, buyers are even more worried about messing up than they are about missing out. Yet our sales emphasis is on the latter. As a result, we shoot ourselves in the foot.
That means your team needs to understand indecision and train in key methods of recognizing it, measuring it, and overcoming it. They should be praised for quickly walking away from unwinnable deals.
I’d recommend you read The JOLT Effect as you do your annual planning, consider what latent impact indecision has had, and how you can arm your team to succeed as the problem grows.
I’m Ed Marsh. Thank you for joining me for this episode of Signals from the OP. If you enjoyed it, please share it and subscribe – either to my YouTube channel EdMarshSpeaks.TV or at the related blog SignalsFromTheOP.com.