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JUNE 2009
Issue: 29

  Loss Letters & Loss Feedback Meetings
"How To Lose And Win"



Last month we covered "Win Letters".  This month we will address the "Loss Letter", the second of four letters employed in the closing stages of your transactions (a Win Letter, Loss Letter, Close Plan Letter, and Negotiation Follow-Up Letter). 
Q.
Hi Dan,

I want to ask you about a $600,000 custom robotic automation deal I think we may have lost.

I think this client is about to make a huge mistake.  They told us we're not going to be recommended due to price.  The lowest and leading bidder is $300,000.

The leading bidder is barely hanging on and is taking jobs with no margin just to get work. If they do deliver the product, they probably won't be around to support it in the future. By the way, they didn't meet all the specs and only have only eight employees.

Maybe this is a case where the client just wants a low price and are blind to the red flags.  

Anyway, do you have thoughts on what could have been done or could still be done?  

Thanks,

Amy  
Seattle, WA




A.  Amy:

Sounds like you are facing a familiar predicament.

You attribute price as the cause for your possible loss. Usually price is the primary problem when the customer views your solution as a commodity and nothing more. This does not appear to be likely when your customer is buying something as complicated as a customized robotic solution.
 
In your situation, a sales pro will probe for the real problem, asking the customer to explain what he perceives when he is driven by "price". The goal is to help the customer understand the major difference between initial selling price and TCO (Total Cost of Ownership) or ROI (Return on Investment).   


The following excerpt from my book Building Trust, Growing Sales, will help you, Amy.


Loss Letter & Loss Feedback Meeting

When an average sales rep loses a sale, she gives a silent harrumph, closes the file, and walks away. Many reps contact the customer and whine like little babies. I'm amazed at how many reps act this way. All this does is confirm in the customer's mind that he made the right decision to work with someone else. A superstar sales rep knows all about cognitive dissonance (buyer's remorse), knows that the customer is buying continually, and therefore stays in touch to nurture that long-term relationship. She understands that there is only one thing worse than a big loss...not learning anything to help you and your company improve the way you serve customers. She sends a loss letter (example below) and follows up with a phone call with wishes of good luck and a request for a feedback meeting on how he could improve in the future. Here are the "Loss Feedback Meeting" key questions:

1.    What would you say was the number one reason that eliminated us from consideration?


2.    What was the key difference between our approach to your business and the winner?


3.    Did the solution we presented actually match your business need?


4.    Did you trust that we could deliver on all of our commitments to you?


5.    What message can I bring back to our company that you believe will make us a stronger contender for your business in the future?
 

6.    What is your opinion or advice to me as someone who would like to earn your business in the future?


7.    What are the most important lessons I personally can learn from our interaction?

And who knows? Yes, the customer picked another vendor, but perhaps your competitor will allow cognitive dissonance to set in - or perhaps she will even cause it. Many vendors don't keep their promises; they dine and dash. Business catastrophes might occur, and the customer may decide to jump to another vendor. If you've kept the lines of communication open, that other vendor might well be you. A loss letter, which invites the continuance of the relationship even after the loss of the sale, is good business. I have personally seen where this approach has paid off handsomely. These so-called small steps - Loss Letters, Win Letters, Close Plan Letters, and Exceeding Expectations Meetings - cost you little more than a few minutes of your time but can reap huge payoffs. Make them second nature. They help you, as a Superstar, 3-D - Develop, Document, and Drive the customer's buying process.

SAMPLE LOSS LETTER

June 21, 20XX


Mr. Jack Nicholas
Senior VP of Services
ABC Systems
Chicago, IL 60603

Dear Jack:

Over the past several months I have been working closely with the staff of your _________ department to satisfy your __________ project needs.  Last week I was informed of your decision to work with another supplier for this project.

Though naturally disappointed that ABC has not selected our company, I would like to extend my sincere appreciation for the opportunity to have presented our offering.

I wish you the best of luck as you begin the challenging and rewarding process of providing ________________ to your customers.
 
Please feel free to contact me if my team can be of any assistance to you during the design, installation and training process of your new systems.

Sincerely,

Michele Wie




If the order has not been given to another vendor you now have two key major account strategies to deploy:


First, you must use the Delay Strategy.  For obvious reasons, this strategy is deployed anytime you are not winning.  

Your second strategy will be a Change The Game - New Game Strategy.  Rather than simply making a decision on Price (Initial Selling Price), you would convince them to redefine Price and consider ROI (Return on Investment) or TCO (Total Cost of Ownership).  Additionally under this strategy you will put tactics in place to add and elevate another key decision criterion to their decision criteria:  Investment Risk & Long Term Vendor Viability.  I would very careful when you raise this issue with them.  You will be on VERY thin ice!!! You may be seen as a typical sad, crybaby, loser sales rep.  Your genuine goal must be to protect  your client from disaster.  Do not call out any specific vendor, rather speak in generalities:  "Mr. Client, you are about to select a long-term partner on this strategic, key investment.  An excellent best practice I have seen your peers utilize is to require audited 3 year financials from all vendors under consideration.  Additionally, your agreement with the winner should include an out clause if key milestones: a, b, and c are not met. This serves as an additional way to reduce your investment risk."  Again, as a reminder, you CAN NOT TAKE THIS APPROACH AFTER YOU HAVE BEEN OFFICIALLY NOTIFIED OF YOUR LOSS.

Next month's newsletter we'll take a look at Close Plan Letter

Good luck, and Close 'Em.


 

Dan Adams, Adams and Associates

 

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from Sales Books Awards!

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Building Trust, Growing Sales
How to Master Complex, High End Sales Using The Principles of
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Daniel Adams
Adams and Associates
532 Walker Road
Hinsdale, IL 60521
630-215-5090

Email: [email protected]

Web:  www.trusttriangleselling.com


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