Written by: LMiller | October 19, 2015
How Front-Runners Lose the Deal
Originally published by RainToday.com
This summer was spent under construction as hubby and I destroyed and redesigned our entire backyard. The first of many surprises: our favorite landscaper lost the bid to someone we didn’t even know. How we chose the underdog for this expensive project can provide lessons for all of us in the sales business.
The back story: our choice came down to two vendors. Both had great reputations. One was the front-runner. We had worked with the company years ago and loved the results. The other was unknown and recommended by our architect. The former was highly favored; the job was theirs to lose. And lose it they did. Here are the three tipping points that knocked them out of the running.
1. Little Collaboration
Thanks to the architect, we had a vision and plan of what we wanted. And like most clients, we were delusional about how much it would cost. Both vendors broke the bad news, but their approaches were polar opposites.
The front-runner presented her proposal first. As expected, the total amount blew our minds. Her response: what do you want to cut out? We gave her a list, and left—sticker shocked and worried about our needs getting met. The underdog’s proposal also destroyed the budget. His response: “I have some ideas you might find acceptable. Let’s talk about where we can compromise.” I felt better immediately.
Example: I originally wanted a high-falutin’ paved patio, but I was terribly disappointed when I saw the cost. The underdog showed us examples of stamped concrete. I loved one of the samples. Disaster averted. The front-runner only gave us a quote for the killer tile with no other alternatives. My unspoken response: if I can’t get what I want, I’m not doing this thing at all.
What I learned: Give folks a reality check without dashing all of their hopes. If your proposal is coming in high, have a mental list of other options ready to present. The sooner you collaborate, the sooner the buyer will get over the shock and still believe they can get what they need.
2. Big Price Gap
Both vendors gave us detailed proposals. They did a great job outlining the costs line by line so we could delete any extras. At this stage, the front-runner had the advantage. If the proposals were in the same range, we would’ve gone with the front-runner. Because we knew the quality of her work, we were prepared to pay more. We weren’t looking for the low-cost provider.
The problem: The front-runner couldn’t explain a couple of the red flags in her proposal. The underdog explained the investment by outlining his process and the materials used.
Example: The front-runner’s quote for the patio concrete was five times higher than the underdog. After recovering from heart palpitations, we asked why. She acknowledged that the price was prohibitive and explained, “We don’t do that, so we have to subcontract it out.” Fair enough, but even the architect couldn’t understand why the price was so high. This one line item became a major sticking point.
What I learned: Most folks understand premium pricing, but there had better be a good reason for the different investment levels. Any price over 50% of the closest competitor will become an obstacle. When buyers don’t understand your pricing, they start making up stories.
3. High Hassle Factor
There were a lot of elements to this project beyond the standard grass and plants: expanding the patio, building a fire pit/waterfall combo, raised gardens, etc. This complicated project had to be managed, and we knew it.
When discussing the roles, the front-runner said, “We can’t handle that part” at least four times. That meant we would have to manage that portion of the project ourselves. The underdog not only never said that, but he also demonstrated his experience in managing big projects. He showed us similar structures his company built. Even though the front-runner built walls and flagstone patios for us before, I just felt better about working with the underdog. It seemed easier.
Example: We found a resource for a partial shade structure that wouldn’t degrade in our Arizona heat. The front-runner said, “Sorry, we don’t handle that.” The underdog said, “Well, let me check it out.” He went to the factory, talked to the staff there, and made sure the roof was feasible—all before we signed on with him. That extra effort impressed us enough to make him the new front-runner.
What I learned: Don’t make a potential client do things that are outside of their expertise. Buyers are already worried about all of the unknowns, and this added role will play into their fears. If a project has a lot of moving parts, take over the management and make that either another price point or a huge value-add. A high hassle factor can derail you fast.
Use These Tipping Points
In their search for solutions, potential clients discover tipping points that make or break your proposal. These hidden needs are largely unstated, but they can be easily discovered if you pay close enough attention. If you are the front-runner, these problems can be your undoing. If you are the underdog, these are your opportunities to shine.